Does a buyer have to disclose his contingency to the seller?

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10/15/2014 | Author: Editorial Staff

My buyer client needs to close on the sale of his current home to afford the purchase of a new home. He doesn’t want to mention this contingency to a seller because he thinks it will hurt his offer. Should he disclose his contingency to the seller?

Yes. If your buyer client’s ability to perform under a contract (i.e., close the transaction) is contingent upon the closing of another property, the contingency should me made part of the contract by using the Addendum for Sale of Other Property by Buyer. Otherwise, the buyer is at risk of default under the contract if he fails to close because the sale of the other property doesn’t close. Default by the buyer could result loss of earnest money. It could also result in an action by the seller for specific performance or other remedies through the legal system, or both.

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Categories: Legal
Tags: legal, legal faq, contingency, forms, contracts, addendum


Guy E. Gimenez Broker/Investor on 11/02/2014


1.  Did buyer agree to allow Seller to keep personal property on the on the Property post-closing?

2.  Absent a seller’s temporary lease or other agreement, buyer will have no penalty for moving into a house the buyer now owns.  Buyer should immediately change the locks and take possession of his property. 

Peggy Taylor on 11/01/2014

Mr. Buyer closed on this property Friday noon. Seller passed the keys to buyer along with garage door opener. Between the 2 seller told buyer he could start moving in that afternoon. Saturday arrives, buyer shows up at 2:00 with possessions.  House hasn’t been removed of furnishings, clothes, etc.
What are the penalties for buyer moving in?  Sale was closed, funded, monies paid, etc.

Guy E. Gimenez Broker/Investor on 10/17/2014


The option and inspection fees are always at risk should a buyer terminate, regardless of the reason for termination.

A seller is not harmed (by buyer) simply because the buyer exercises the rights afforded buyer under the contract.  The seller is in position of losing marketing time but the seller also accepted the negotiated the terms of contract and therefore has accepted that risk.

Samantha Le on 10/17/2014

If Buyer does not want to disclose contingency, Buyer still need to be aware of monies that can be lost and the consequences…ie. inspections and option money.

As a Listing agent, would it be protective to confirm if Buyer can afford the house and ensure loan can be closed?  If Buyer terminates due to un-disclose contingency, Seller would be sitting there on market hurting the Seller at the end. 

Guy E. Gimenez Broker/Investors on 10/16/2014

A buyer is afforded a number of termination points in the standard language of the contract form, not to mention the buyer can negotiate additional language into the form that would allow the buyer even more termination points, so this contingency would be moot. 

If a buyer has a right to terminate a contract for 20 or 30 days (or even up to closing) and this is known at the time of contract, then the buyer is not at risk. Therefore buyer would have no reason to include such a contingency as doing so would harm the buyer’s negotiating position in a strong market. Failing to notify seller of such would not cause harm to the seller since the buyer can terminate without such a contingency in place.

David Bowman on 10/16/2014

Is there a promulgated follow up form to notify the seller once the contingency is met by the closing of the buyer’s other property?

Roger Vining on 10/15/2014

Equally important, the listing agent should ask buyers lender to verify that buyer can or can not buy without the proceeds of his home being sold.  (before seller signs contract) . If lender doesn’t respond than advise seller accordingly.


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Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on Any legal or other information found here, on, or at other sites to which we link, should be verified before it is relied upon.

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