The standard Oregon Residential Real Estate Agreement has several contingencies that are included or can be included in the contract. It is helpful for both Seller and Buyer in a residential real estate transaction to know and understand the contingencies available to the Buyer, so they can better understand the ‘ins and outs’ of the agreement. I am a licensed real estate professional – not an attorney! You may want to seek legal counsel if you have questions regarding any points made here or regarding any real estate transaction you are involved with.
1. Financing Contingencies – There are three financing contingencies included in the standard contract: 1) Buyer must qualify for a loan from Lender, 2) Property must qualify for the loan from Lender and 3) Lender’s appraisal shall not be less than the Purchase Price. Certain procedures are set out in the section ‘Failure of Financing Contingencies’ if one of these three contingencies are not met.
2. Property Disclosure Contingency – from the time the Buyer receives the Seller’s Property Disclosure, they have five days to ‘unconditionally disapprove of the property relative to the property disclosure.’ This is a unilateral right for the Buyer. If they do this, the Buyer can terminate the contract and receive their earnest money back.
3. Preliminary Title Report and CC&R’s – Typically, the transaction is subject to the Buyer’s review and approval of a preliminary title report and Conditions Covenants and Restrictions (CC&R’s) for the subject property. Upon receipt of the Report and CC&R’s, Buyer may notify Seller, in writing, of any matters disclosed in the Report and CC&R’s which is/are unacceptable to Buyer. Buyer’s failure to timely object does not relieve the Seller of the duty to convey marketable title.
4. Licensed Professional Inspections – At Buyer’s expense, Buyer may have the property and all elements and systems of the property inspection by one or more licensed professionals of Buyer’s choice. If Buyer chooses, Buyer may ‘unconditionally disapprove of inspection reports by 5 pm on the final day of the inspection period and terminate the contract and receive their earnest money back.
5. Homeowner’s Association Contingency – If there is a homeowner’s association, and if documents are requested, the Buyer has the opportunity to review the homeowner’s association documents and ask questions and obtain answers. If the Buyer chooses, the Buyer can ‘unconditionally disapprove based on homeowners association documents and terminate the contract and receive their earnest money back.
6. Lead-Based Paint Contingency Period – If the property was constructed before 1978, a Lead-Based Paint Disclosure Addendum shall be included as part of the transaction. Buyer shall be provided with a pamphlet entitled ‘Protect Your Family From Lead in Your Home.’ Buyer shall have a period of time within which to conduct a lead-based paint assessment or inspection. Depending on the circumstances, Buyer may, in writing, unconditionally cancel the transaction during the Lead-Based Contingency Period and receive a prompt refund of all earnest money deposits.
Certain other contingencies can also be written into the agreement. For example, a residential real estate agreement might be ‘contingent on the Buyer selling their home within a certain timeframe.’ If the home is not sold with that timeframe then the contract could be terminated and the Buyer could possibly receive their earnest money back, depending on how the contract was written.