If you are in the process of buying or selling a property, you might have come across the term “contract contingent on buyer sale.” This language is often used in real estate contracts and it is essential to understand its meaning before signing any agreement.
In simple terms, a contract contingent on buyer sale means that the sale of the property is dependent on the buyer selling their current property. This type of contract is also known as a sale contingency clause.
When a buyer includes a sale contingency clause in their offer, they are essentially saying that they will only purchase the property if they can sell their current property first. This clause provides a level of protection for the buyer as they are not obligated to purchase the property if they cannot sell their current home.
On the other hand, if you are a seller and you agree to a contract contingent on buyer sale, you are essentially agreeing to wait for the buyer to sell their property before the sale can be completed. This can be a risky option for the seller as they are not guaranteed a sale and their property can be off the market for an extended period.
There are different types of sale contingency clauses that can be included in a contract. The most common ones are:
1. Sale and settlement contingency – This clause allows the buyer a certain period, usually 30 to 45 days, to sell their property and settle the purchase of the new property.
2. Sale contingency – This clause allows the buyer a certain period to sell their property but does not include the settlement date.
3. Kick-out clause – This clause allows the seller to continue to market their property while the buyer attempts to sell their property. If the seller receives another offer, they have the option to “kick-out” the original buyer and proceed with the new offer.
Overall, a contract contingent on buyer sale can provide an added level of security for the buyer, but it can also be a risky option for the seller. It is essential to carefully review and understand the terms of the contract before agreeing to any sale contingency clause. Additionally, it is always advisable to consult with a real estate lawyer to ensure you fully understand your options and obligations.