11:19
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Simple English definitions for legal terms
mortgage-contingency clause
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A quick definition of mortgage-contingency clause:
A mortgage-contingency clause is a part of a real estate contract that says the buyer can only buy the property if they can get a mortgage loan. This means that if the buyer can't get a loan, they don't have to buy the property.
A more thorough explanation:
MORTGAGE-CONTINGENCY CLAUSE
A mortgage-contingency clause is a provision in a real estate sale contract that makes the buyer's performance dependent on their ability to obtain a mortgage loan.
For example, let's say you want to buy a house for $300,000, but you need to take out a mortgage loan to pay for it. The seller agrees to sell you the house, but only if you can obtain a mortgage loan within 30 days. If you are unable to secure a mortgage loan within that time frame, the sale will not go through.
Another example is if you are buying a house for $200,000, and you need to take out a mortgage loan for $150,000. The mortgage-contingency clause in the contract would state that if you are unable to obtain a mortgage loan for at least $150,000, the sale will not go through.
The examples illustrate how a mortgage-contingency clause works in a real estate sale contract. It protects the buyer by making the sale dependent on their ability to obtain a mortgage loan. If the buyer is unable to secure a mortgage loan, they are not obligated to purchase the property, and the seller must find another buyer.