Buying a property anywhere is a big financial commitment. When you buy an Island property, there are some additional factors that weigh in that may make you a little more uncertain. Contract contingencies can help alleviate some of these factors by allowing you to re-negotiate or sometimes, cancel the contract if some things aren’t right.

  1. Inspection Contingency

All properties should have inspections when you contract to purchase it. Typically the inspection period is 15 days however may be adjusted during the negotiation if there is a particular need or interest in either a longer or shorter time. Houses and Condos need to have a general inspection of all the appliances and mechanicals (does the AC work properly? Do all the electrical outlets work? Does the Ice Maker work? Etc.) Houses and Condos also need a Wood Destroying Organism (Termite included) inspection. Moisture and bugs are a part of the environment here and wood and other building materials are subject to being affected. Additional specialized inspections may also be advised, roof and pool being common.

  1. Financing and Appraisal Contingencies

A financing contingency allows time for the Mortgage company to fully review your credit-worthiness and the condition and value (appraisal contingency) of the property you are purchasing. Typically the contract allows 30 days for you to get the OK from the lender that the loan will go through.

The appraisal contingency can be used whether there is a loan or not. If you want to be assured that you are not over-paying for the property, have a professional appraisal. If you are financing, the bank will order this as part of their process for granting you the loan.

  1. Insurance contingency

Island properties are expensive to insure. If you are purchasing a property that either was not insured by the previous owner or may have been partially insured, you may want an Insurance contingency. This states that if you cannot obtain insurance for the property within a set % of the value of the property or $$ value, you can cancel the contract.

With any purchase contract be especially aware of the timeframe within which you must either accept the contract or have to provide written notice of ending the contract. It is your money!