General information, not legal advice

Real Estate Contract Contingencies in Tennessee

A contingency is a condition written into a purchase contract. If the condition is not met, in the way and by the deadline the contract sets, the buyer may be able to step away without buying the home and, in many contracts, get the earnest money back. Contingencies are where most of the protection in a home purchase lives, and they are also where many deals in Manchester and Coffee County are won or lost.

This guide explains the common contingencies, what federal agencies and loan programs say about them, and how sellers can compare offers that carry them. It is general information from public sources, not legal advice. Your own contract controls, so read it closely and ask a Tennessee real estate attorney about your rights.

Put every condition in writing

Tennessee's statute of frauds, TCA 29 2 101, says no action can be brought on a contract for the sale of land unless the agreement, or a note or memorandum of it, is in writing and signed by the party the other side wants to hold to it. In plain terms, a promise about a home sale that is only spoken is hard to enforce. If a condition matters to you, it belongs in the signed contract or a signed addendum, along with its deadline and what happens if it is not met.

The financing contingency

The Consumer Financial Protection Bureau (CFPB) says it is a good idea to make your purchase offer and sales contract contingent on obtaining financing and on a satisfactory inspection. That way, if you are unable to get a loan, you are not contractually required to buy the home.

A preapproval letter helps, but it is not the same thing. The CFPB says prequalification and preapproval letters are not guaranteed loan offers. They say a lender is generally willing to lend up to a certain amount based on certain assumptions. A financing contingency covers the gap between that letter and a final loan approval.

Questions to settle before you sign:

• What type of loan and how much of the price does the contingency cover?
• What is the deadline, and what notice must you give if the loan is not approved?
• What happens to your earnest money if financing falls through?

The inspection contingency

The CFPB tells buyers to schedule an independent home inspection as soon as possible after choosing a home, so there is time to resolve problems and to order any added inspections. It says that if your purchase contract is contingent on a satisfactory inspection, you have the right to cancel the sale without penalty if you are not satisfied with the results. You can also negotiate with the seller about repairs or a credit, and depending on your contract and the market, the seller may or may not agree.

FHA buyers sign HUD's notice For Your Protection: Get a Home Inspection (form HUD 92564 CN). It says FHA does not perform home inspections, an inspection only happens if you arrange one, and if you request an inspection early in the process, you may be able to make your purchase contract contingent on its results. It also says an appraisal is not a home inspection.

A Tennessee home inspection report does not cover everything. Under TCA 62 6 302, the report must state that it does not address environmental hazards such as lead based paint and radon, wood destroying insects and organisms, or subterranean systems. If you want those checked, plan for them inside your inspection period. My guides to home inspections, radon testing, termite inspections, septic systems and well water cover each one.

Lender repairs are a separate issue. The CFPB says some loan programs require the property to meet set standards, an appraisal can be made subject to repairs, and the lender can require major repairs before closing or ask you to set money aside for them.

The appraisal contingency

The CFPB says it is very risky to buy a home for more than its appraised value. If the appraisal comes in below the price, it suggests getting a copy of the appraisal, then asking the seller to reduce the price, since the appraisal is strong evidence the price was above market value. If the seller will not, the CFPB says you may want to cancel the sale and consider talking with an attorney, and that depending on your contract there may be costs to cancel, though they are likely small compared to buying a home that is not worth what you paid.

Two loan programs build appraisal protection into the contract itself:

• FHA amendatory clause. HUD Handbook 4000.1 says that if the buyer does not receive form HUD 92800.5B, the FHA statement of appraised value, before signing the sales contract, the contract must be amended before closing to include an amendatory clause. Under that clause the buyer is not obligated to complete the purchase or lose earnest money unless the appraised value is at least the price written in the clause, and the buyer may choose to go ahead anyway. The handbook says the actual sales price must be filled in, and a price increase requires a revised clause. It also lists sales where the clause is not required, such as HUD owned homes, 203(k) loans, sales by Fannie Mae, Freddie Mac, VA, USDA Rural Housing or other government agencies, lender owned homes and foreclosure sales.
• VA reasonable value clause. Under 38 CFR 36.4303(k), VA will not guarantee a loan on a purchase contract that sets a price above the reasonable value VA establishes and that the veteran signed before receiving notice of that value, unless the contract includes a clause saying the buyer will not lose earnest money or be obligated to complete the purchase if the price exceeds VA's reasonable value. The same clause gives the buyer the option to go ahead regardless of the value.

The FHA and VA clauses come from those programs' own rules. For other loans and for cash purchases, look to the appraisal and financing terms written into your contract. My home appraisal guide explains the reconsideration of value process and what to do when an appraisal comes in low.

The home sale contingency

A home sale contingency makes your purchase depend on selling your current home. Lenders care about it too. Fannie Mae's Selling Guide topic B3 6 06 says that when your current home is pending sale but will not close before the new loan, both housing payments are counted unless the lender has the executed sales contract and confirmation that your buyer's financing contingencies have been cleared. My guide to buying and selling a home at the same time covers home sale contingencies from both sides, plus bridge loans and timing.

Other conditions buyers often write in

• Lead based paint testing. For most homes built before 1978, federal rule 40 CFR 745.110 gives the buyer a 10 day opportunity to have a lead inspection or risk assessment done before being obligated under the contract, unless the buyer and seller agree in writing to a different period. The buyer can waive it in writing. See my lead based paint disclosure guide.
• Land and septic. If you plan to build or add bedrooms, TDEC evaluates the soil before it issues a septic permit, so land buyers often make the purchase contingent on a satisfactory soil evaluation. See buying land in Coffee County.
• Insurance. The CFPB suggests getting an informal insurance estimate before committing to a house, because insurance in a higher risk area can be hard to find or cost more than expected. My homeowners insurance guide and flood zones guide explain what to check.
• Title. Your closing attorney or title company searches the records before closing. My title insurance guide explains what the search and the policies cover.
• Planned developments. Under TCA 66 5 213, a seller must disclose before the contract if the property is in a planned unit development and make the restrictive covenants, bylaws and master deed available on request. Ask for them early so you can read them during your review period.

What the seller disclosure does and does not do

Tennessee's disclosure law works alongside your contingencies, not in place of them. TCA 66 5 203 says the seller's disclosure statement is to be delivered before the purchase contract is accepted, and that failing to provide it does not by itself give the buyer a right to terminate, though other remedies are not restricted. TCA 66 5 205 says that at or before closing the seller must disclose any material change in the physical condition of the home or certify that it is substantially the same. The disclosure form is not a warranty or a substitute for an inspection. See my seller disclosure guide.

Deadlines, notices and earnest money

Most refunds of earnest money come down to two questions: did a contingency apply, and was notice given on time and in the way the contract requires? Missing a deadline can cost you the protection: the NAR consumer guide on earnest money says a buyer may lose the deposit by waiving contingencies too early or missing deadlines. Mark every date on a calendar the day you go under contract, and keep copies of every notice you send or receive. My earnest money guide explains who holds the deposit and how disputes are handled under TREC rules.

The calendar is usually short. In Realtracs MLS data for October 2025 through September 2026, the median time from contract to closing for Coffee County sales was 30.5 days, with medians of 23 days for cash, 30 for conventional, 32 for FHA and 33 for VA, as shown on how Coffee County homes were bought. Inspection, appraisal and loan approval all have to fit inside that window.

Waiving a contingency

Some buyers waive or shorten contingencies to make an offer stronger. Know what you give up first. Without a financing contingency, you could be required to buy even if your loan falls through. Without an inspection contingency, you may not be able to walk away over what an inspector finds. Without appraisal protection, you may need cash to cover a gap between the value and the price. HUD's lead paint guidance notes that a seller who has two buyers may choose the one who waives the testing opportunity, which shows the tradeoff plainly. Talk with your lender and an attorney before you waive anything, and only waive what you could live without.

If you are the seller

Price is only part of an offer. When I help sellers compare offers, we look at each contingency, its deadline and how much room it leaves the buyer to walk away:

• Is the buyer preapproved, with which kind of loan, and has the lender reviewed their documents?
• How long is the inspection period, and does the buyer plan any added inspections?
• Is the offer FHA or VA, where the program's appraisal clause applies?
• Does the buyer need to sell a home first, and if so, is it under contract?
• How much earnest money is offered, and when does it become nonrefundable under the contract, if ever?

A clean, well documented offer with sensible deadlines can be worth more than a higher price that depends on several conditions. My how to sell a house guide walks through reviewing offers step by step.

A checklist before you sign

• Read every contingency and write down each deadline
• Confirm your loan type and get a preapproval letter from your lender
• Book your home inspector before the offer is accepted, if you can
• Decide which added inspections you want: radon, termite, septic, well or lead
• Ask your insurance agent for an informal quote on the home
• If the home was built before 1978, decide whether to use the 10 day lead testing period
• If you are using FHA or VA, ask your lender about the appraisal clause
• Know exactly how and to whom notices must be delivered
• Ask a Tennessee real estate attorney about anything you do not understand

How I help

I explain each contingency before you write an offer, help you choose terms that protect you without weakening the offer more than needed, and track every deadline once you are under contract so notices go out on time. When I represent a seller, I lay competing offers side by side so you can see which conditions each one carries.

Keep reading:

• Earnest money in Tennessee
• Home inspections in Tennessee
• Home appraisals in Tennessee
• Buying a home in Manchester, step by step
• Printable home buyer checklist
• Real estate glossary
• All Manchester guides

Fair housing note: I work with every buyer and seller and follow the same steps for everyone.

This guide is general information from public sources, not legal advice. Contract forms, loan rules and deadlines vary, so confirm the details with your lender and a Tennessee real estate attorney.

Writing an offer on a Manchester home?

I can walk you through every contingency before you sign. Call or text me at (615) 497 1658, or request my buyer guide below.

Common questions

Matt Sargent is a Tennessee licensed affiliate broker with Keller Williams who helps buyers and sellers in Manchester and Coffee County. Call (615) 497 1658 or send a message.