Real Estate Contingency in Florida

In Florida real estate, contingencies is a legal term that is used to refer to conditions commonly included in a purchase agreement that must be satisfied before the transaction becomes final. These clauses serve as safeguards, allowing either the buyer or seller to cancel or renegotiate the contract if specific requirements are not met.

A real estate contingency is often essential in Florida home sales and contracts, as it provides a structured method for both parties to manage risk and maintain transparency. Common examples include contingencies for a mortgage loan, property inspections, and appraisals.

Under Florida law, contractual obligations may be conditional, meaning they only become enforceable once certain terms are fulfilled. For example, a buyer may include a financing contingency in the purchase agreement, which permits them to withdraw from the deal if they are unable to obtain loan approval by a specified deadline.

Each contingency typically includes a defined timeline, which is referred to as a contingency period. During this period, the condition must be met or waived. If the buyer fails to remove the contingency in writing by the deadline, they may cancel the contract without penalty. However, once contingencies are waived or satisfied, the buyer is generally expected to proceed with the purchase or risk forfeiting their earnest money deposit.

What Are Some Common Examples of Real Estate Contingencies in Florida?

As mentioned above, contingencies are standard clauses in a Florida real estate purchase agreement that allow buyers, and sometimes sellers, to cancel or renegotiate a deal if specific conditions are not met. These safeguards are especially important in Florida’s dynamic housing market, where buyers aim to protect themselves from unforeseen issues without risking their earnest money deposit.

The following is a list of some of the most common contingencies that are found in Florida home purchase contracts:

• Inspection Contingency: This contingency gives the buyer a defined period, typically 10 to 15 days, to conduct a home inspection and either cancel the contract or renegotiate terms if significant defects are found
  • This is especially relevant in “AS IS” contracts, which are widely used in Florida
• Appraisal Contingency: This contingency protects the buyer if the property appraises for less than the agreed purchase price
  • If the appraisal falls short, the buyer may renegotiate or cancel the contract without penalty
• Financing (Loan) Contingency: This allows the buyer to cancel the agreement if they are unable to secure mortgage financing within a specified timeframe, usually 30 days from the effective date, under the Florida Association of Realtors / Florida Bar (“FAR/BAR”) contract
• Sale of Buyer’s Property Contingency: This makes the purchase conditional on the buyer successfully selling their current home
  • This clause must be added separately to Florida contracts and is often negotiated with a “kick-out” provision for sellers
• Title Contingency: This ensures the seller can deliver marketable title free of liens, encumbrances, or legal disputes
  • Buyers typically receive a title commitment and have time to object to any issues before closing
• HOA Document Review Contingency: This gives buyers time to review homeowners association rules, budgets, and restrictions
  • Under Florida law, buyers must receive certain disclosures if the property is governed by an homeowners association
• Insurance Contingency: This allows the buyer to cancel the contract if they cannot obtain satisfactory homeowners insurance, which is especially relevant in coastal areas prone to hurricanes or flood risks

It is important to note that each of the above contingencies typically includes a contingency period, and buyers must remove them in writing to proceed. If contingencies are not waived or satisfied by the deadline, buyers may cancel the contract and recover their deposit.

If you have any questions about which contingencies are appropriate for your situation, it’s recommended to schedule a legal consultation in Florida with Florida lawyers experienced in real estate transactions. They can also advise you on how contingencies may affect escrow timelines, mortgage approvals, and closing obligations under Florida law.

What Are the Common Contract Contingency Issues a Client May Experience in Florida?

As can be seen, contract contingencies are essential safeguards in Florida real estate transactions. However, they frequently become sources of stress or conflict, especially if not properly managed.

Buyers and sellers alike may encounter issues when contingencies are misunderstood, poorly timed, or not clearly communicated. These problems can delay closings, lead to disputes, or even cause deals to collapse.

Examples of some of the most common contingency-related issues clients may face include:

• Missed Contingency Deadlines: Each contingency, such as those for financing approval, inspections, or appraisal, has a defined timeframe, typically 10 to 15 days under the FAR/BAR “AS IS” contract unless otherwise negotiated
  • If the buyer fails to remove a contingency in writing by the deadline, the seller may issue a Notice to Buyer, giving them a short window (often 2 to 3 days) to comply. If the buyer still doesn’t act, the seller may cancel the contract
• Insufficient or Rushed Inspections: Buyers may feel pressured to move quickly, especially in competitive Florida markets.
  • However, skipping inspections or hiring unqualified professionals can lead to missed issues, such as roof damage, mold, or outdated electrical systems, which can become costly surprises after closing
• Appraisal Shortfalls: If the lender’s appraisal comes in lower than the agreed purchase price and the buyer has waived or removed the appraisal contingency, they may be forced to pay the difference in cash or risk losing their earnest money deposit if they walk away
• Loan Denial After Contingency Removal: Even with pre-approval, financing is not guaranteed
  • If the buyer’s loan is denied after the financing contingency expires or is waived, then they may be unable to close and could forfeit their deposit unless another clause offers protection
• Poorly Worded Contingency Language: Vague or ambiguous contingency clauses can lead to confusion
  • For example, if a repair request or performance condition isn’t clearly defined, it may be unclear whether the requirement has been met, potentially triggering disputes between parties
• Failure to Officially Remove Contingencies: Florida real estate contracts require contingencies to be removed in writing, and simply allowing the deadline to pass does not automatically waive the contingency
  • If the buyer doesn’t formally remove contingencies, the transaction may stall until the seller issues a notice, which could lead to cancellation
• Unexpected Disclosures or HOA Concerns: If the seller or homeowners association provides troubling disclosures late in the process, such as pending litigation, special assessments, or restrictive covenants, the buyer may feel blindsided

Understanding all of the above pitfalls and working closely with a knowledgeable Florida real estate agent or attorney can help you navigate contingencies with confidence and avoid costly missteps throughout your real estate transaction.

Do I Need an Attorney for Help With Real Estate Contract Contingencies?

If you are having any issue related to real estate contracts contingencies, then it is recommended to immediately consult with an experienced Florida contract lawyer. LegalMatch can assist you with locating a Florida contract attorney near you who handles cases similar to the issues you may be facing.

Having an attorney can be incredibly helpful, especially in complex or high stakes transactions. As can be seen, contingencies often require a very nuanced understanding of contract law and real estate law. Because of this, a lawyer’s knowledge is paramount when navigating contingencies.

Once again, contingencies are legally binding conditions in a purchase agreement. Thus, if they’re misunderstood or mishandled, they can lead to disputes, financial loss, or even litigation. An experienced real estate attorney will be able to help you review contingency clauses to ensure they’re clearly written and protect your interests.

They can also help you negotiate terms, interpret inspection or appraisal results, and make sure you meet all legal deadlines, such as the requirement to remove contingencies in writing. Because these conditions can affect whether a deal moves forward or falls apart, legal guidance can give you peace of mind and help you avoid costly mistakes.