CHOOSE CONTINGENCIES CAREFULLY IN OFFERS
by Jim Coleman, REALTOR®

     The state approved Real Estate Purchase Contract (REPC) provides for special considerations and contingencies when offers are prepared for purchase.  In this day of Short Sales, Foreclosures and REO properties, contingencies in offers may deny acceptance or deter favorable consideration.
Buyers may include particular contingencies or items which must be met before the sale would be consummated.  The offer is made subject to these special requirements.  The need for the contingencies from the buyer’s perspective may be very appropriate and essential to the security of the buyer’s position.  On the other hand, the contingencies may be frivolous and without merit so far as bringing the transaction to closing is concerned.  The seller must be aware of the consequence of conditional offers.  Until such contingencies are removed or otherwise satisfied, the offer may not result in a final sale closing.  
            One of the most frequent contingencies found in offers for purchase has to do with obtaining financing.  If the financing is not obtained as required in the offer, the offer, as written, fails and the earnest money deposit may be returned to the buyer. This would usually be the situation regardless of the nature or type of the contingency.  State regulations and contract law must be followed.  Because of the uncertainty that comes with conditional offers, the parties should be careful to understand alternative consequences depending upon the result of the offer.
If contingencies are not satisfied, it may be that the parties will negotiate new or modified terms and conditions and still bring the transaction to settlement.  But absent a resolution of the contingencies, the offer becomes voidable, if not void, if the requirements are not met by the specified settlement or closing date.
St. George REALTOR® Jim Coleman is Associate Broker and Partner/Owner of ERA Brokers Consolidated.  He Specializes in Residential, Investment and Commercial Real Estate, holding National Designations of Accredited Buyers Representative (ABR), Certified Residential Specialist (CRS), Resort and Second Home Property Specialist (RSPS), Seniors Real Estate Specialist (SRES), Certified International Property Specialist (CIPS), GREEN Property Specialist, and Certified Short Sale and Foreclosure Resource Specialist (SFR).