Most real estate contracts contain contingency clauses that allow the buyer or seller to end the transaction without a penalty if certain conditions cannot be met. These are commonly referred to as “escape clauses.” Here are the three most common real estate contingencies that include escape clauses:
- A home inspection contingency gives the buyer the right to have the home inspected within a specified time period. This protects the buyer by allowing them to cancel the contract or negotiate repairs based on the findings of a professional home inspector.
- A financing clause stipulates that the offer is contingent on the buyer obtaining financing on the property within a set period of time and delivering a written loan commitment to the seller.
- In cases where the buyer must sell their current home first, a home sale contingency gives the buyer a specified amount of time to sell and settle their current home to finance the new one.
Escape clauses protect both buyers and sellers. Consult with your REALTOR® to ensure that the appropriate clauses are included in your agreement.