Key Takeaways
- Common contingencies in Kentucky include financing, inspection, appraisal, and sale of buyer's property
- Inspection contingencies allow buyers to have the property professionally inspected and negotiate repairs
- Financing contingencies protect buyers who cannot obtain mortgage approval
- Contingency deadlines are typically time is of the essence and must be met
- Failure to timely satisfy or waive a contingency may give the other party termination rights
Last updated: January 2026
Contingencies and Inspections
Contingencies are conditions that must be met for a contract to proceed. Kentucky real estate contracts commonly include several types of contingencies.
Common Contingencies
1. Financing Contingency
Protects buyers who need mortgage approval:
| Element | Details |
|---|---|
| Purpose | Buyer must obtain loan approval |
| Typical timeframe | 30-45 days |
| If not obtained | Buyer may terminate, earnest money returned |
| Buyer's duty | Apply promptly, provide documentation |
2. Inspection Contingency
Allows buyer to inspect the property:
| Element | Details |
|---|---|
| Purpose | Buyer inspects property condition |
| Typical timeframe | 10-14 days |
| Types of inspections | General, termite, radon, well, septic |
| Buyer's options | Accept, request repairs, or terminate |
3. Appraisal Contingency
Protects buyer if property doesn't appraise:
| Element | Details |
|---|---|
| Purpose | Property must appraise at or above price |
| Importance | Lender won't loan more than appraised value |
| If low appraisal | Renegotiate price, pay difference, or terminate |
| Waiver | Buyer accepts appraisal risk |
4. Sale of Buyer's Property
Contingent on buyer selling their current home:
| Element | Details |
|---|---|
| Purpose | Buyer needs proceeds from current home |
| Risk to seller | Property off market during contingency |
| Kick-out clause | Seller may require removal of contingency |
| Common terms | 24-72 hour response to kick-out notice |
Inspection Process
Types of Inspections
| Inspection | Purpose |
|---|---|
| General home inspection | Overall property condition |
| Termite/wood-destroying insects | Pest damage |
| Radon | Dangerous gas levels |
| Well and water | Water quality and quantity |
| Septic | Waste system condition |
| Mold | Mold presence |
| Lead-based paint | Pre-1978 homes |
Inspection Contingency Process
- Contract includes inspection contingency
- Buyer schedules and pays for inspection(s)
- Inspector provides written report
- Buyer reviews findings within deadline
Buyer's Options After Inspection
| Option | Effect |
|---|---|
| Accept as-is | Waive contingency, proceed with purchase |
| Request repairs | Ask seller to fix issues |
| Request credit | Ask for price reduction or closing credit |
| Terminate | Cancel contract if significant issues found |
Seller's Response to Repair Request
| Response | Effect |
|---|---|
| Agree to repairs | Contract proceeds with repairs |
| Agree to credit | Contract proceeds with adjusted terms |
| Counter-offer | Negotiate terms |
| Refuse | Buyer may accept as-is or terminate |
Radon Testing in Kentucky
Kentucky Radon Disclosure
| Requirement | Details |
|---|---|
| Disclosure required | Seller should disclose known radon issues |
| Testing recommended | Buyers advised to test |
| EPA action level | 4 pCi/L or higher requires mitigation |
| Mitigation | Sub-slab depressurization systems |
Radon in Kentucky
- Kentucky has elevated radon levels in many areas
- Testing is highly recommended
- Mitigation systems typically cost $800-$2,000
Contingency Deadlines
Time is of the Essence
| Principle | Application |
|---|---|
| Deadlines are strict | Must be met or waived |
| Extensions in writing | Both parties must agree |
| Failure to meet deadline | May result in loss of contingency |
| Automatic waiver | Some contracts auto-waive if deadline passes |
Best Practices
| Practice | Reason |
|---|---|
| Calendar all deadlines | Don't miss important dates |
| Communicate promptly | Keep all parties informed |
| Document everything | Written records protect clients |
| Request extensions early | Don't wait until deadline |
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Test Your Knowledge
What happens if a buyer's financing contingency cannot be satisfied?
A
B
C
D
Test Your Knowledge
If a property appraises below the contract price, the buyer may:
A
B
C
D