The Complete Guide to Real Estate Contract Clauses: Terms, Types & Key Provisions
Every real estate purchase agreement is made up of clauses—legal terms that control price, financing, inspections, repairs, title, timelines, contingencies, and what happens if someone breaches the contract.
This guide explains every major contract clause in plain English, how each one affects sellers and buyers, and how FSBO sellers can confidently manage contract terms like a pro.
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📘 Quick Summary: What Are Contract Clauses?
Real estate contract clauses are the legally binding terms inside a purchase agreement that define rights, deadlines, protections, obligations, and remedies for both buyers and sellers. They control everything from how price adjustments work to what happens if financing falls through.
- ✔ Clauses define how the transaction works
- ✔ They determine rights, deadlines, and responsibilities
- ✔ Some clauses protect buyers; others protect sellers
- ✔ Many include contingencies that allow cancellation
- ✔ FSBO sellers must understand these terms to avoid mistakes
New to contract terms? Start with: What Is a Real Estate Contract?
Want to understand what makes a contract legally valid? Begin with: Essential Elements of a Real Estate Contract →
🔍 How Contract Clauses Work in a Real Estate Transaction
Real estate contracts are built from dozens of clauses that explain how the purchase price is handled, what inspections are allowed, what deadlines apply, how title must be delivered, and what happens if one party fails to perform.
📌 1. Clauses Define the Rules of the Transaction
Each clause sets expectations and procedures for buyers, sellers, agents, lenders, and title professionals. The clearer the clause, the fewer disputes arise.
📌 2. Clauses Protect Both Sides
Some clauses protect buyers (like the inspection clause), while others protect sellers (like liquidated damages). Together, they create a balanced agreement.
📌 3. Clauses Control Timelines
Deadlines for inspections, financing, appraisal, and closing appear in specific clauses. Missing a deadline can mean losing the deal or being in breach.
📌 4. Clauses Interact With Each Other
For example, an appraisal contingency affects the financing clause. A title clause affects closing. Understanding these interactions prevents surprises.
📌 5. Clauses Can Be Customized or Negotiated
Standard state contracts include pre-written clauses, but addendums and amendments allow customization. FSBO sellers must know which clauses are non-negotiable.
Related Guide: Real Estate Contingencies Guide
📋 Key Real Estate Contract Clauses (Explained)
Below are the most important clauses found in residential purchase agreements. Major clauses include “Learn More →” links to full What Is guides.
💵 Price & Payment Clauses
✔ Purchase Price Clause
Defines the agreed price and how it may adjust during the transaction.
Learn More →
✔ Earnest Money Deposit Clause
Specifies deposit amount, when it is due, and what conditions allow refund.
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✔ Escalation Clause
Automatically increases price above competing offers.
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✔ Appraisal Gap Clause
Defines how much the buyer will pay if the appraisal comes in low.
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✔ Seller Concessions Clause
Allows seller credits toward buyer closing costs.
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✔ Inclusions & Exclusions Clause
Lists the appliances, fixtures, and personal property included or excluded.
Learn More →
🏦 Financing & Appraisal Clauses
✔ Financing Contingency Clause
Allows the buyer to cancel if financing is denied.
Learn More →
✔ Mortgage Commitment Clause
Sets deadlines for loan approval and lender documentation.
Learn More →
✔ Appraisal Contingency Clause
Allows the buyer to renegotiate or cancel if the home appraises below the purchase price.
Learn More →
✔ Loan Assumption Clause
Used when the buyer takes over the seller’s existing mortgage (assumable loans).
Learn More →
✔ Seller Financing Clause
Outlines terms when the seller acts as the lender.
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🔍 Inspection, Repairs & Property Condition Clauses
✔ Home Inspection Clause
Gives the buyer the right to inspect and negotiate repairs.
Learn More →
✔ Radon / Mold / Termite Clauses
Allow specialized inspections and remediation requests.
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✔ Repairs Clause
Specifies which repairs seller must complete before closing.
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✔ As-Is Clause
Means the seller won’t make repairs but still must disclose defects.
Learn More →
📜 Title, Survey & Legal Clauses
✔ Title Contingency Clause
Allows buyer to review title, liens, encumbrances, restrictions.
Learn More →
✔ Marketable Title Clause
Requires seller to deliver clear, insurable title.
Learn More →
✔ Survey / Boundary Clause
Covers encroachments, easements, and property line disputes.
Learn More →
✔ Deed Type Clause
Specifies whether seller will provide a warranty deed, grant deed, etc.
Learn More →
⏱️ Deadlines & Timeline Clauses
✔ Deadlines & Timeline Clause
Sets the required closing date and contract timeline obligations.
Learn More →
✔ Inspection Deadline Clause
Sets the timeframe for completing home inspections and requesting repairs.
Learn More →
✔ Appraisal Deadline Clause
Sets the timeframe for completing the appraisal required by the lender.
Learn More →
✔ Financing Deadline Clause
Sets the timeframe for securing loan approval and completing financing steps.
Learn More →
✔ Time Is of the Essence Clause
Creates strict deadlines enforceable by law.
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⚖️ Contingency Clauses
✔ Home Sale Contingency
Buyer must sell their current home before closing.
Learn More →
✔ Kick-Out Clause
Allows the seller to keep accepting offers while the buyer works to sell their current home.
Learn More →
✔ Backup Offer Clause
Keeps a secondary buyer in line to purchase the home if the primary contract falls through.
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✔ Assignment Clause
Allows buyer to assign the contract (wholesaling).
Learn More →
✔ Novation Clause
Replaces the original buyer with a new one.
Learn More →
🏡 Occupancy & Possession Clauses
✔ Post-Closing Occupancy / Rent-Back Clause
Allows the seller to stay in the home after closing for an agreed period.
Learn More →
✔ Pre-Closing Occupancy Clause
Allows the buyer to move in before closing under agreed terms.
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✔ Holdover Clause
Explains what happens if a seller stays past the agreed move-out date, including fees and responsibilities.
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✔ Vacant Possession Clause
Requires the seller to deliver the home empty and free of occupants at closing.
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⚠️ Default, Breach & Legal Remedies
✔ Default Clause
The default clause explains what happens if either party fails to meet their contractual obligations. It outlines the consequences of a breach, such as loss of earnest money, contract cancellation, or other legal remedies.
- Buyer Default: Usually results in loss of earnest money, termination of the contract, or potential liability for damages.
- Seller Default: May allow the buyer to recover earnest money, pursue damages, or seek specific performance.
✔ Liquidated Damages Clause
Specifies financial consequences if buyer backs out improperly.
Learn More →
✔ Specific Performance Clause
Allows one party to force the other to complete the sale.
Learn More →
✔ Mediation / Arbitration Clause
Requires buyer and seller disputes to be resolved through mediation, or if needed, binding arbitration.
Learn More →
✔ Attorney’s Fees Clause
States which party must pay attorney’s fees and legal costs if a contract dispute arises.
Learn More →
✔ Force Majeure Clause
Protects both parties if unforeseen events—like natural disasters or emergencies—delay or prevent contract performance.
Learn More →
📝 Amendments, Addendums & Contract Changes
✔ Amendment Clause
Explains how any changes to the contract must be made in writing and signed by both parties.
Learn More →
✔ Addendum Clause
Allows extra terms or attachments to be added to the contract with both parties’ agreement.
Learn More →
✔ Entire Agreement Clause
States that the written contract is the full and final agreement, overriding any prior verbal promises.
Learn More →
✔ Severability Clause
Ensures the rest of the contract remains valid even if one section is found unenforceable.
Learn More →
🏡 How Contract Clauses Work in FSBO Transactions
FSBO sellers use the same contract clauses as agents — but with more control, less cost, and clearer communication. Understanding the clauses gives FSBO sellers confidence when reviewing offers or negotiating terms.
✔ What Stays the Same
- All contract clauses still apply
- Inspections, appraisal, and financing follow the same rules
- Title and escrow use identical procedures
- Deadlines and contingencies function the same
- Recording and legal requirements do not change
✔ What’s Better for FSBO Sellers
- No 6% commission
- Direct communication with buyers
- Full visibility into contract terms
- Ability to negotiate clauses without agent pressure
- Complete transparency during due diligence
FSBO Guide: DIY Home Selling Playbook →
Cost guide: Seller Closing Costs (Full Guide)
📚 Explore Related Guides
❓ Contract Clauses FAQ
✔ What are the most important contract clauses?
Financing contingency, inspection contingency, appraisal contingency, earnest money, and title clause are the most critical.
✔ Can a seller reject certain clauses?
Yes. Sellers can negotiate or refuse terms such as repairs, extended deadlines, or buyer-friendly contingencies.
✔ Can buyers add additional clauses?
Yes — buyers often add appraisal gap clauses, repair requests, occupancy terms, or concessions.
✔ What clause protects the seller if the buyer backs out?
The liquidated damages and default clauses determine seller remedies.
✔ What clause lets a seller force the buyer to close?
The specific performance clause allows a seller to enforce the contract in court.
✔ What clause lets a buyer cancel safely?
Inspection, appraisal, financing, and title contingencies give buyers lawful exit options.
✔ Do FSBO sellers need a lawyer?
In attorney-required states, yes. Elsewhere, the title company typically handles legal compliance.
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