Condition(s)

January 1, 1 6 min read Conditions Real Estate Contracts Terms Alteration Contingent Contracts Cancellation Clause

Condition(s) provision(s) in a contract that specify certain events or circumstances that can alter or negate the terms of the contract. Common examples include events such as destruction of property or inability to secure financing.

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Definition§

Condition provisions in a real estate contract are clauses that set specific events or circumstances under which some or all terms of the contract will change, or the contract will cease to exist. Conditions protect both parties by providing clear stipulations in situations like property damage or financing issues, ensuring fairness and economic feasibility.

Examples§

Property Destruction Before Closing:
- Example: If a house is destroyed by fire before the closing date, the buyer is not obligated to complete the purchase. This condition shields the buyer from incurring a loss on a property that no longer exists in its agreed-upon condition.
Financing Condition:
- Example: If a loan, specified as a condition, cannot be arranged, the buyer does not need to complete the transaction and may receive a refund of any earnest money. This condition ensures that the purchase is financially viable for the buyer.

Frequently Asked Questions§

What are contingencies in a real estate contract?§

Contingencies are specific conditions or clauses in a contract that must be met for the contract to be binding. These might include financing contingencies, inspection contingencies, or titling contingencies.

Can a seller refuse to include a condition in the contract?§

Yes, a seller can negotiate and refuse to include certain conditions. Agreements between the buyer and seller must be mutually acceptable.

What happens if a condition is not met?§

If a condition specified in the contract is not met, the contract may become void, and parties may be released from their obligations without penalties, depending on the terms of the condition and the overall contract.

How can conditions be enforced in a real estate contract?§

Conditions can be enforced through legal remedies, such as seeking specific performance or damages, if one party fails to comply with the terms specified in the condition.

Are conditions only for the buyer’s protection?§

No, conditions can protect both buyer and seller, ensuring that all stipulations are clearly understood and agreed upon before proceeding with the transaction.

Cancellation Clause: A contractual clause that allows a party to void the agreement upon the occurrence of a specified event.
Earnest Money: A deposit made to a seller representing a buyer’s good faith to buy a home. If certain conditions are unmet, this money may be refunded.
Contingent Offer: An offer on a property dependent on specific conditions being met before finalizing the deal.
Due Diligence: The investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement.

Online Resources§

References§

Williamson, Mary Lou, and Williamson, Viviene. Real Estate Contracts. HarperCollins, 2019.
Barnes, Paul W. Real Estate Law and Practice. Wiley, 2018.

Suggested Books for Further Studies§

Balyoz, Steven. Advanced Real Estate Contracts. Springer, 2017.
Johnson, Phillip. Real Estate Law for Paralegals. Aspen, 2020.
Kratovil, Jack, and Landis, Frank. Real Estate Law. West Academic, 2016.

Real Estate Basics: Condition(s) Fundamentals Quiz§

Sunday, August 4, 2024