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Other Common Contingencies

Contingencies in a Purchase Offer
Other contingencies that are commonly included in a purchase offer are:

Home Inspection
It is highly recommended that you make a purchase contract contingent for a period of 10-15 days to allow time for a professional home inspection by a home inspector of your choice and at your expense. The inspector checks the physical structure of the home plus all of the major systems such as heating and cooling, plumbing and electrical. All systems should be in normal working order. A home inspector has general knowledge of many fields but is not an expert. If you or the inspector suspects that there are serious problems with the property, you may want to make the purchase contract contingent on having an additional structural, radon, lead-based paint or mold inspection. If this further inspection shows that there are significant needed repairs or replacements, you have several options: (1) you can cancel your offer; (2) you can request the seller to repair or correct all, or some, of the problems identified; or (3) you may ask the seller to issue you a monetary credit during the closing process in the amount necessary for you to make the repairs after the sales transaction has concluded.

Canceling or Not Canceling
Even if the seller will not agree to make repairs, and you choose not to cancel your offer but to proceed with the purchase, the home inspection report provides a basis for budget planning over the next few years. Be sure you receive a copy of the complete report and review it carefully. The ASHI (American Association of Home Inspectors) has a directory of members who have agreed to abide by their standards of practice and code of ethics. But again, be aware: if you should choose to cancel your offer you are at risk of losing money you have already paid for the appraisal, credit report and application fee.

C.L.U.E® Report
You can make your contract contingent on receiving a satisfactory C.L.U.E. (Comprehensive Loss Underwriting Exchange) Home Seller’s Disclosure Report from the seller. The C.L.U.E®. report is used by insurance companies and shows a history of claims made on a particular property. This is important because without homeowners insurance coverage, a lender will usually not make the home loan.

Home Warranty
There are several companies that issue a home warranty that covers certain needed repairs or replacements of items in the home for the first year. The types of items covered, the amount of coverage provided, the service fee which must be paid each time a claim is made and whether or not coverage is provided, should be carefully reviewed so that you understand the limitations of such programs. You can make your contract contingent on the seller providing you with this warranty, or you can pay for the warranty if the seller will not. A home warranty may be especially beneficial for first-time homebuyers who may not have money in reserve for unexpected repairs or replacements.

Expiration Date
Some people make the contract contingent on the seller either accepting or rejecting the offer by a certain date. Buyers obviously do not want to be kept waiting for an unreasonable amount of time for a response from the seller. Inserting an expiration date on your offer also legally protects you should you later submit another purchase offer on a different home. Without the expiration date, the first purchase offer could be accepted months later and suddenly you become legally obligated to purchase two homes!

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