Simply put, a contingency is an event that might not occur.
In Westchester County, we often see mortgage contingencies in a residential contract of sale. If the buyer cannot obtain a mortgage commitment within a specified time period (usually 30 days) then the buyer may cancel the contract.
Contingencies may be used to address other buyer concerns as well. Another common contingency is for radon testing. Because the radon test typically takes 48 hours and must then be submitted to a laboratory for analysis, a buyer may be reluctant to sign an “as is” contract without knowing whether radon levels exceed the EPA’s limit of 4.0 picocuries/liter. The radon contingency allows the buyer to sign before receiving the lab tests because it allows the buyer to cancel the contract if the lab tests exceed the EPA limit.
As noted by the foregoing examples, a contingency is a tool that allows the parties the flexibility to enter into a contract without committing to full performance in the event that certain contingencies (like a mortgage commitment or “clean” radon test) don’t materialize.
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The Law Offices of Keith R. Betensky, Esq.
The Empire Building
26 Village Green, Suite 4
P.O. Box 22
Bedford, New York 10506-0022