Contingencies Explained

Real estate contract & paperwork


What are contingencies; where do they come from; what do they do?  Contingencies are found and defined in the purchase and sale contract between a real estate buyer and seller.  This discussion will need to reference the standard contract we use here in Central New York.  It was created by attorneys and adopted for use by the Greater Syracuse Association of Realtors.

Any reference to our standard contract will be general in nature and should not be considered legal advice.  For your particular contract and individual situation, please contact your attorney for legal advice.

You are entitled to use the attorney of your choice, but I recommend selecting an attorney who specializes in real estate transactions as they are intimately familiar with our standard contract and established procedures used in CNY.  Your Realtor should be able to give you referral choices if you don’t already have an attorney identified.


When a seller and buyer agree to a sale, both sign the purchase offer which will become the contract.  This event is called “seller acceptance”.  From this event through closing, the contract establishes the price, terms, conditions, rights and responsibilities for both parties.  Within the contract are conditional clauses that allow either the buyer and/or seller to terminate the contract without penalty.

  • For a buyer, “without penalty” means they are no longer obligated to purchase the property and are entitled to have their earnest money deposit returned.
  • For a seller, “without penalty” means they are no longer obligated to sell their property to the buyer and they are free to market the property to find another buyer.

Our local contract and its associated contingencies have been created by attorneys, based on NYS laws, established local procedures and the vast experience gained from thousands of previous transactions.  Consider the contract as road map to guide the involved parties from seller acceptance to closing.  To use an analogy, if the contract is the interstate you use to get to your destination, then the contingencies are the exit ramps that allow you to cancel your trip.  The contingencies occur at specific phases in the contract timeline just as the exit ramps are available at specific physical locations.

Most Common CNY Contingencies

Okay, we’ve discussed contingencies in the general sense, now we need to put some meat on those bones and consider some specific examples.  There are a few major contingencies in our standard contract that are common to most local transactions, occurring in the contract timeline in the order presented:

Attorney Approval

This is a mandatory contingency.  A Contract, signed by both parties, is not binding until the buyer and seller attorneys approve it.   A Specific timeline is defined in terms of the number of business days from the time the contract is fully executed (aka seller acceptance).  The important thing to understand is that the contract you sign is not binding until it is approved by both the seller and buyer attorneys.  Due to the details of the approval period and the day of the week when seller acceptance occurs, the attorney approval period could take from four to eleven calendar days.

Home Inspection (Radon Test)

This is an optional contingency to allow the buyer to perform their due diligence to decide whether the property is acceptable and suitable.  The seller must provide access and supporting utilities to conduct the inspection.  A specific timeline to conduct the inspection is expressed by the number of calendar days beginning at seller acceptance.  If the home inspection is unacceptable to the buyer, there is a provision to allow a specified number of calendar days to reach an acceptable agreement with the seller, otherwise the contract terminates.  It should be noted that whether the home inspection is satisfactory or not is left entirely to the buyer’s own definition.

Radon testing is another optional contingency that is very similar to Home Inspection.  It usually runs parallel to and concurrent with the Home Inspection Period.  The significant difference is that an unsatisfactory radon test is clearly defined as radon levels exceeding the EPA standard.

Miscellaneous (Lender Required Repairs)

This is an optional contingency, but mandatory if the buyer intends to apply for a mortgage to purchase the property.  The lender may require repairs to the property as a condition for issuing a mortgage due to the appraisal report.  This contingency defines the maximum cost of repairs and what percentage of the repair costs is to be paid by the seller and/or buyer.  Since the lender will require confirmation that the repairs are satisfactorily completed, this contingency also identifies who pays for the re-inspection fee.  Should these repairs exceed the stated maximum, this contingency identifies which party may terminate the contract unless the other party agrees to pay the repair costs exceeding the stated maximum.


This is an optional contingency, but mandatory if the buyer intends to apply for a mortgage to purchase the property.  This contingency establishes a deadline expressed by the number of calendar days from seller acceptance for the buyer to make a good faith application for their mortgage.  It also establishes a deadline expressed by a specific calendar date to provide a written mortgage commitment or reasonably satisfactory proof of financial ability to close.  Failure on either of these deadlines allows the seller to terminate the contract with notice.

If the buyer is denied a mortgage, either buyer or seller may terminate the contract.  For any termination under this contingency, seller costs associated with updating the Abstract of Title, survey and obtaining tax searches, not to exceed $750.00, will be deducted from the earnest money deposit refunded to the buyer.  If the termination is associated with a mortgage denial due to appraised value, the buyer will be refunded the full earnest money deposit.

Other Less Common Contingencies

There are other contingencies available within the standard contract that are less common, but readily available when applicable:

Subject to Sale of Buyer’s Property (Recall)

This contingency is used when a buyer wants to purchase a new home but needs to sell their existing home as it is not currently under contract to be sold.  This contingency establishes a deadline for the buyer to have their current home under contract with the home inspection contingency removed by a specific time and calendar date.  The deadline may be extended by mutual agreement between the buyer and seller; otherwise the contract terminates.

There is what is commonly referred to as a “Recall” associated with this contingency that specifies the following:

  • The seller may continue to market their property for new offers and if the seller accepts another offer before the deadline, the seller issues a “Recall” to the buyer.
  • Upon “Recall” the buyer has a predefined number of hours to remove this contingency and show suitable financial ability to close or the contract will terminate.  Upon termination under this contingency, the seller may enter into a contract from the new buyer.

Subject to Closing of Buyer’s Property Pursuant to Existing Contract

This contingency is used when a buyer already has their home under contract to be sold when they make an offer to buy the seller’s home.  The contingency states that the buyer must close on the sale of their home before closing on the purchase of the seller’s home.  The contingency sets a specific calendar date deadline for the buyer to close on the sale of their home.  If the buyer’s closing does not happen by the established deadline, the seller has 72 hours to decide to extend the deadline by a predefined number of calendar days or terminate the contract.

Special Contingencies

There is an option to draft any unique contingency to meet an unusual situation that would be subject to attorney approval.


In summary, the structure of contract contingencies is as follows:

  • Pre-Defined – Baked in the cake; established and agreed upon when the contract is signed.
  • Conditional – Based on NY LAW, established procedures, previous contract and transaction experience and/or special conditions associated by one or more parties involved
  • Sufficiently detailed to define the contingency, including, as appropriate, duties and responsibilities of the parties, deadlines, standards, etc.

About Michael Liepke

Licensed Associate Real Estate Broker with Howard Hanna Real Estate Services in the Manlius, NY office
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