Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and the potential legal and financial consequences.
Real Estate Contingencies
Contingencies are certain conditions that must be satisfied in order for a real estate transaction to proceed. They protect the buyer’s earnest money deposit because until the contingency is satisfied, the buyer can cancel the deal and get their deposit back. The most common contingencies include: financing contingency, appraisal contingency, and a title contingency.
The buyer initially determines which contingencies (if any) to include in the offer. The seller can accept the offer or make a counteroffer that removes a contingency or alters the contingency period. A contingency date is the deadline specified in the purchase and sale agreement by which the buyer must waive or satisfy the specified condition.
When a buyer submits a non-contingent offer, they agree to waive some or all contingencies and assume the risk and liability that may result. For instance, a mortgage contingency allows a buyer to cancel a purchase and sale agreement without losing money if they are unable to secure sufficient financing.
Benefits of Making a Non-Contingent Offer
There are several reasons why a buyer would make an offer without contingencies. Below are some of the most significant:
Stand Out from the Competition: A non-contingent offer shows that the buyeris seriously committed to the transaction and financial prepared to proceed. So, if there are multiple offers on a property, making a non-contingent offer can increase your chances of acceptance.
Streamline Negotiations: The lack of contingencies can streamline a real estate transaction and make negotiation more straightforward.
Fast-Track the Transaction: A non-contingent offer also helps ensure that the transaction will proceed quickly as there are fewer potential roadblocks.
Risks of Making a Non-Contingent Offer or No-Contingency Offer
While non-contingent offers can be appealing, they come with significant risks. Below are a few to consider:
Risk of Waiving Mortgage Contingency: If the buyer fails to secure financing, they must cover any shortfall in cash. Without a mortgage contingency, the buyer can’t cancel due to lack of funds without breaching the contract.
Risk of Waiving Appraisal Contingency: Similarly, if the property does not appraise at the agreed price, the lender may not approve the required loan amount, and you may need to make up the difference.
For sellers, no-contingency offers are very attractive. Nonetheless, it is important to verify that buyers making a non-contingent offer have sufficient funds for a down payment or the entire purchase price, particularly when making an all-cash offer or an offer waiving a financing contingency.
Consult With an Experienced Real Estate Attorney
For buyers who can afford to risk their deposit and absorb any other costs of cancelling the contract, a non-contingent offer may make sense, particularly in a seller’s market. If not, buyers should seriously consider the risks and benefits. There may also be other options —experienced real estate attorneys can often negotiate a deal that is attractive to the seller, but still offers legal protections.
Whether you are looking to buy or sell a property, the best course of action is to seek the assistance of seasoned professionals. At Scarinci Hollenbeck, our experienced real estate attorneys are intimately familiar with the New York City real estate market. We can help negotiate a deal that accomplishes your goals, while also safeguarding your legal rights.
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
