Contingent contracts in Texas, like in many other places, refer to contracts where the performance of one party’s obligations is dependent on the occurrence or non-occurrence of a specific event. These contracts are also commonly known as “conditional contracts” because the parties’ obligations are contingent on certain conditions being met. Contingent contracts can cover a wide range of situations, and Texas law recognizes and enforces these contracts under certain conditions.
Here are some key points related to contingent contracts in Texas:
- Definition: A contingent contract in Texas is one in which the parties agree that the performance of their respective obligations will be dependent on the happening or non-happening of a specific event. For example, a contract to purchase a property may be contingent on the buyer obtaining financing.
- Enforce-ability: In Texas, contingent contracts are generally enforceable, as long as they meet the basic requirements of a valid contract. This includes an offer, acceptance, consideration, legal purpose, and certainty of terms. The contingency itself must also be legal and possible to occur.
- Common Types of Contingencies: Some common types of contingencies in contracts in Texas include:
- Financing contingencies: The purchase of real estate is often contingent on the buyer obtaining a mortgage loan.
- Inspection contingencies: Contracts for the sale of real estate may be contingent on the results of a home inspection.
- Appraisal contingencies: In real estate transactions, the purchase price may be contingent on the property appraising for a certain value.
- Contingencies based on specific events: Contracts can be contingent on specific events, such as the issuance of necessary permits or licenses.
- Proceeds from Sale of other Property: Contracts to purchase a property can be contingent upon the buyer obtaining funds from the sale of another property. If for some reason the buyer does not close on their current owned property then the contract they enter into to purchase their future home will terminate and they can obtain their earnest money back.
- Termination of Contract: If the contingent event does not occur or is not met within the specified time frame, the contract may be terminated or become voidable at the option of one or both parties. In some cases, earnest money or deposits may be returned to the buyer if a contingency is not met.
- Specific Language: Contingent contracts in Texas should clearly specify the conditions or contingencies, the time frame within which they must be satisfied, and the consequences of non-satisfaction.
- Legal Advice: Parties entering into contingent contracts in Texas should consider seeking legal advice to ensure that the contract is drafted correctly and that their interests are protected.
It’s important to note that contract law can be complex, and the specifics of contingent contracts can vary based on the type of contract and the parties involved. If you are dealing with a contingent contract in Texas, it is advisable to consult with an attorney who specializes in contract law to ensure that your rights and obligations are clearly defined and legally protected.