Contingencies

Contingencies are important to consider carefully before making an offer on a property in Bonaire. Once you reach an agreement following negotiations, a binding agreement already exists. As a buyer, you cannot add all kinds of contingencies afterwards. It is therefore important to consider these conditions carefully before making an offer on a property. At that point, there may still be some uncertainties. Will you be able to secure financing? Or are you unsure about the technical condition of the property? If so, make sure the appropriate contingencies are included in your offer.

What exactly are contingencies?

Contingencies are conditions included in the purchase agreement by the buyer and seller that allow the purchase to be terminated under certain circumstances. If a condition cannot be met within the agreed period, the purchase agreement may be terminated. Contingencies are usually included at the buyer’s request, but the seller may also include them.

What are the most common contingencies?

1. Financing contingency

You include this contingency if you are not yet certain that you will be able to secure financing for the property. If your financing application is declined within the period specified in the contingency, you can still withdraw from the purchase.

A period of 50 or 60 days is often allowed to secure financing. This may seem like a long time, but delays can occur, for example due to the time required to obtain an appraisal report or schedule an appointment with the bank. It is important to keep in mind that banks outside Bonaire generally do not provide mortgages for real estate on the island. For mortgage financing, you can contact:
1) Banco di Caribe
2) Crooij en Flipse Verzekeringen & Hypotheken
3) MCB Bonaire
4) ORCO Bank
5) RBC Bonaire

2. Property inspection contingency

With a property inspection, sometimes also referred to as a pre-purchase inspection, an independent specialist assesses the technical condition of the property. The specialist examines the structural condition of the property and estimates the cost of repairing any structural defects. The purchase agreement usually specifies a maximum amount for necessary repairs, for example, that the total cost of all required repairs may not exceed US$ 10,000. If the estimated costs exceed this amount, the buyer may terminate the purchase agreement. The cost of the inspection is paid by the buyer.

3. Contingency for the sale of your current home

If you own a home that must be sold before you can purchase another property, this contingency can be included. If you are unable to sell your home by the agreed date, either the buyer or the seller may terminate the purchase agreement. However, sellers do not always agree to this type of contingency.

4. Approval for the sale of a property on long lease land

Most contingencies are included at the buyer’s request, but the seller may also include contingencies. A common seller’s contingency is obtaining approval for the sale of a property built on long lease land. The Public Entity Bonaire (OLB) must approve the sale of a property built on long lease land. You can read more about this in our blog about long lease land. If this approval is not granted, the purchase agreement may be terminated.

The real estate agents at Harbourtown Real Estate can advise you on these contingencies. Feel free to contact us using the contact form or send an email to info@harbourtownbonaire.com.

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