What Is the Difference Between Homes Sale Contingency and Home Close Contingency?

Buyer and seller closing and sale contingencies can create a precarious chain.
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A real estate contract may include contingencies, or specific conditions which must be met, before the transaction is complete. Both the buyer and seller may write contingency clauses into a sale agreement. A buyer misses out on buying another property when he commits to purchase a home. Likewise, a seller misses out on other offers when he accepts an offer. As such, both parties can cancel an agreement when contingency periods are not met and may seek damages.

Sale Contingency

A seller may stipulate certain events that must take place before he agrees to follow through with the sale of his home. A common home sale contingency is that of finding suitable housing. Sellers who plan to use proceeds from the sale of their home to buy another house might make the sale contingent upon their entering into a contract for a new home first. Sellers may require that buyers close a few days before closing on a new home or concurrently, so sellers aren't left without housing for any period of time.

Close Contingency

Buyers usually write loan, appraisal, insurability and inspection contingencies into their contracts. A loan contingency states that the buyer has a certain amount of time -- usually two to three weeks -- to obtain a loan commitment from a lender. Because lenders require a home appraisal, which reports the home's condition and value, the two contingencies typically go hand-in-hand and must both be met in order to close. The buyer also may ask for time to confirm that the home qualifies for title insurance and hazard insurance coverage. He may also ask for a few days to inspect the home and research the community, its rules, taxes and other details.

Earnest Deposits

At the end of a contingency period, the seller and buyer must release or remove any respective contingencies, showing that they are ready to move forward with closing. Contingency release is a contract duty the buyer or seller may be held to. A buyer's earnest deposit, also known as the good faith deposit, is usually tied to contingencies. A seller may cancel the deal and keep all or a portion of the deposit as damages if the buyer fails to get a loan or backs out after releasing his contingencies. Likewise, the buyer may legally pursue a seller for damages if he decides not to sell the home after releasing sale contingencies.


Buyer and seller contingencies can create a chain effect in the purchase and sale of homes. For example, the buyer of a home can make the sale of his previous home a closing contingency; while the seller of the home he wants to buy may also have a sale contingency for finding suitable housing. When buyers and sellers have simultaneous closing and sale contingencies, multiple deals can fall through due to just one kink in the chain. This often makes buyers and sellers with closing and sale contingencies less appealing.

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