Title Contingency

Title Contingency

A specific type of contingency. A title contingency allows a buyer to inspect and approve the preliminary title report¬†before the contract becomes binding. This gives the buyer a chance to identify encumbrances on title that may affect the buyer’s use of the property (like a shared driveway). The buyer typically doesn’t have the right to¬† rescind the contract, though. Rather, the seller first gets an opportunity to fix the issue. If the seller does so before closing, then the contract remains binding. If the seller can’t remove the encumbrance, then and only then does the contract lapse and the buyer is entitled to her earnest money.

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