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Important contingencies to include in a real estate contract

On Behalf of | Jul 26, 2024 | Civil Litigation |

When drafting a real estate contract in Alabama, it is essential to include specific contingencies to protect the buyer and the seller. These contingencies ensure that certain conditions are met before the sale is finalized. 

Here are some important contingencies to consider including in a real estate contract. 

Financing contingency

A financing contingency protects the buyer by making the purchase dependent on securing a mortgage. This clause allows the buyer to withdraw from the contract without penalty if they cannot obtain financing. This is a crucial provision, providing a safety net for buyers facing unexpected financial hurdles.

Inspection contingency

This contingency ensures the potential buyer can have a professional inspection conducted on the property. If significant issues are found, the buyer can negotiate repairs, ask for a price reduction or withdraw from the contract. Alabama law supports the buyer’s right to ensure the property is in acceptable condition, making this contingency vital for avoiding unforeseen repair costs.

Appraisal contingency

An appraisal contingency ensures that the property’s value, as determined by a licensed appraiser, meets or exceeds the purchase price. The buyer can renegotiate or cancel the contract if the appraisal is lower than the agreed-upon price.

Title contingency

This contingency ensures that the seller can provide a clear title to the property, free of any liens or legal encumbrances. A thorough title search is necessary to confirm that the seller has the legal right to transfer ownership. Including a title contingency protects the buyer from potential legal disputes over property ownership.

Including these contingencies in a real estate contract under Alabama law helps protect both parties and ensures a smoother transaction. Buyers and sellers can avoid common pitfalls and proceed with greater confidence by addressing potential issues upfront.

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