Mortgage Contingency Clause Law and Legal Definition
A mortgage contingency clause is a real estate provision that is usually seen in the home purchase contract. This clause conditions the buyer’s performance on obtaining a mortgage loan. Pursuant to this clause, if the prospective buyer can not get a mortgage within a fixed period of time, this prospective buyer will be able call the whole deal off. Therefore, this clause makes the whole agreement conditional on the buyer being able to obtain a mortgage on the property.
A mortgage contingency clause in a contract gives the seller the right to terminate the agreement, if the purchasers were unable to obtain a mortgage to finance their purchase of the seller’s property within the period specified in the contract. [McClintock v. Rivard, 593 A.2d 1375, 1376-1377 (Conn. 1991)].