Most purchase agreements, whether in the context of real estate or business transactions, are contingent on certain terms and conditions. These contingencies serve to protect both parties involved in the transaction and ensure that the sale proceeds smoothly. Among the various contingencies that make up a purchase agreement, two of the most important terms are financing and inspection contingencies.

Financing contingencies are included in a purchase agreement to ensure that the buyer is able to secure financing to complete the purchase. This contingency typically requires that the buyer obtains a loan commitment from a lender within a specified time frame, usually 30 to 60 days. The contingency also specifies the conditions under which the buyer can back out of the agreement if financing falls through. For example, if the buyer is unable to obtain financing within the specified time frame or if the lender requires unreasonable conditions, the agreement may allow the buyer to cancel the sale and receive a refund of any deposits made.

Inspection contingencies, on the other hand, allow the buyer to have the property inspected before committing to the purchase. This contingency gives the buyer the opportunity to identify any defects or issues with the property that may affect its value or pose a risk to its future use. The buyer will often hire a professional inspector to evaluate the property for any potential issues, such as structural damage, mold, or pest infestations. If any issues are uncovered during the inspection, the buyer can negotiate repairs or a reduction in the purchase price to cover the cost of repairs.

Both financing and inspection contingencies can be crucial in ensuring a successful sale for both parties. If a buyer is unable to secure financing or if significant issues are found during the inspection, either party may be able to back out of the agreement without legal repercussions. As a result, it is essential to include these contingencies in any purchase agreement to protect both the buyer and the seller.

In conclusion, financing and inspection contingencies are two of the most important terms in a purchase agreement. They ensure that the buyer can secure financing and evaluate the property for any potential issues before committing to the purchase. By including these contingencies, buyers and sellers can ensure that the sale proceeds smoothly and protect themselves from any unnecessary legal issues. Whether you are purchasing real estate or a business, it is important to work with an experienced attorney to ensure that your purchase agreement includes these critical contingencies.