Understanding Contingencies in Illinois Real Estate Contracts

 Posted on September 17, 2025 in Residential Real Estate

A contingency clause outlines a condition in a contract that must be met before the agreement becomes legally binding. If the condition is not met, the buyer or seller may have the right to walk away without penalty.

As of 2025, the Illinois housing market remains highly competitive. While buyers are frequently urged to act quickly, contingencies offer legal protections against risks. If you are considering a purchase agreement, a Stoney Island, IL real estate sales and purchases lawyer can help you understand which contingencies apply to your case and how to use them to your advantage.

Common Contingencies in Illinois Real Estate Contracts

The six most common contingencies in residential real estate contracts include:

• Financing contingency: A financing contingency gives the buyer time to secure a mortgage. If financing is denied despite a good-faith effort, the buyer may cancel the deal and recover their earnest money. This protection is especially important given Illinois laws like the Mortgage Act, which regulate the release of mortgages once loans are satisfied.

• Inspection contingency: Buyers can hire a licensed inspector to check for issues. If significant problems are found, they can negotiate through this contingency to have the issues fixed. The Illinois Residential Real Property Disclosure Act supports this process by requiring sellers to disclose known defects up front.

• Appraisal contingency: This protects the buyer if the property appraises for less than the purchase price. In that case, the buyer can walk away or request changes to the contract. Lenders typically require this contingency to ensure they are not financing more than the property is worth.

• Home sale contingency: This allows a buyer to make their purchase dependent on selling their current home first. If the buyer cannot sell in the agreed-upon time, they can exit the contract without losing earnest money. Many contracts also include a "kick-out" clause, allowing sellers to consider other offers during this time.

• Attorney review contingency: Common in Illinois, this gives each party’s attorney a short window to approve or suggest changes to the contract. If the parties cannot agree on modifications, the contract can be canceled. The Illinois Real Estate License Act requires licensed real estate agents to clearly explain contract terms, ensuring both parties understand what is being reviewed.

• Title contingency: If a title search uncovers liens, unpaid taxes, or other issues that are not resolved, a title contingency allows the buyer to cancel the deal or request more time.

What Are the Risks of Waiving Contingencies in a Real Estate Contract?

When the market is competitive, a buyer may waive contingencies to make their offer more attractive. While that may seem like a great way to secure a property, it carries significant risks. For example, waiving an inspection contingency means you are accepting the property "as is," even if major repair needs are discovered later. Without the protection of the law and a proper inspection, the buyer is left with the financial burden of fixing these issues. Similarly, giving up a financing contingency means losing earnest money if a loan is denied.

Schedule a Free Consultation With a Stoney Island, IL Real Estate Attorney

If you are in the process of buying a home, waiving contingencies should only be done after careful discussion with an attorney. At The Sherrod Law Firm, Ltd., you receive personal attention from start to finish. We walk clients through every step, and many return for future transactions because of the trust we build. To learn more about how we can help you, contact our Oak Lawn, IL real estate sales and purchases lawyer today at 312-321-6910.