Crucial Contingencies to Include in a New Hampshire Purchase and Sale Agreement

Before wiring an earnest money deposit to an escrow agent for a colonial in Bedford, a historic triple-decker in Manchester, or a coastal cottage in Portsmouth, buyers must recognize that New Hampshire does not use a prolonged attorney-review grace period after a contract is signed. Once both parties execute the Purchase and Sale Agreement (P&S), the document becomes a legally binding contract governed by strict performance deadlines.

If a hidden structural defect, a low bank appraisal, or a delayed sale of your existing residence derails the transaction, your ability to walk away with your deposit intact depends entirely on the written contingencies negotiated into the contract before signing. Structuring precise contingency clauses-and tracking every notification deadline to the hour-is the primary way New Hampshire buyers shield themselves from forfeiting thousands of dollars in liquidated damages.

Core Protective Contingencies in a New Hampshire P&S Agreement

The Home Inspection Contingency

Even though sellers of one-to-four-family dwellings must provide written disclosures covering private water supplies, private sewage disposal systems, insulation, and federally designated flood hazard zones under the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 477:4-d), along with statutory warnings for radon, arsenic, lead paint, per- and polyfluoroalkyl substances (PFAS), and flood risk under the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 477:4-a), those forms only reflect what the seller actually knows. A comprehensive home inspection contingency grants the buyer a dedicated window-typically 7 to 14 calendar days from the effective date of the P&S-to hire licensed home inspectors and environmental laboratories at the buyer's expense.

In New Hampshire's geology and housing stock, a standard structural and mechanical inspection is rarely enough. Buyers should ensure their inspection contingency explicitly encompasses:

• Airborne and Waterborne Radon Testing: Granite bedrock across Hillsborough, Merrimack, and Rockingham counties frequently produces elevated radon levels in basements and drilled bedrock wells.
• Private Well Water Quality and Quantity: Testing for naturally occurring arsenic, bacteria, lead, and PFAS compounds, plus a multi-hour well flow test to confirm recovery rates.
• Septic System Evaluation: A hydraulic load and camera inspection of the tank, baffle, and leach field (and mandatory statutory evaluation for shoreland systems within 250 feet of protected waters).
• Pest, Mold, and Lead Paint Inspections: Particularly critical for pre-1978 homes in Nashua, Concord, and Dover.

Watch the contract's default mechanism closely. In the standard Form NHAR-PS, New Hampshire, Association of Realtors, Purchase and Sales Agreement, failing to deliver written notice of unsatisfactory inspection findings and an election to terminate before the deadline expires automatically waives the contingency, locking in the buyer's deposit.

Appraisal Gap Coverage Clauses

In competitive southern New Hampshire and Seacoast markets, bidding wars often push contract prices above recent comparable sales. When a mortgage lender orders an independent licensed appraisal, a valuation that comes in below the agreed purchase price creates an appraisal shortfall. Because lenders calculate maximum loan-to-value (LTV) ratios using the lesser of the purchase price or the appraised value, a $550,000 contract price paired with a $520,000 appraisal leaves a $30,000 funding gap.

A standalone appraisal contingency allows the buyer to terminate the P&S and recover the earnest money deposit if the property fails to appraise at or above the purchase price and the seller refuses to lower the price. To make an offer more competitive without assuming unlimited risk, buyers can draft a capped appraisal gap coverage clause. Under a capped clause, the buyer agrees to bring up to a fixed dollar amount in extra cash to the closing table (for example, up to $15,000) to bridge an appraisal shortfall, while retaining the absolute right to terminate the contract and recover the earnest money deposit if the appraisal deficiency exceeds that $15,000 cap.

Financing (Mortgage Commitment) Contingencies

A financing contingency protects the buyer's earnest money if an institutional lender denies the mortgage application despite the buyer's good-faith, timely efforts. To be enforceable in New Hampshire courts, the financing clause must specify the exact loan amount (or percentage of the purchase price), the loan type (such as Conventional, FHA, VA, or New Hampshire Housing Finance Authority financing), the maximum interest rate, the amortization term, and the Commitment Date-which typically falls 21 to 30 days after the P&S is signed.

As the New Hampshire Supreme Court established in Ross v. Eichman, 129 N.H. 477 (NH Supreme Court 1987), a financing contingency in a purchase and sale agreement is inserted for the protection of the buyer and may be unilaterally waived by the buyer if they elect to proceed with alternative funds or cash. However, if the buyer needs the loan and cannot obtain a clear written mortgage commitment by the Commitment Date, the buyer must deliver written notice of inability to obtain financing (or secure a signed written extension) before the deadline passes. Under New Hampshire's Statute of Frauds in the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 506:1), agreements transferring an interest in land and modifications to material contract terms must be in writing and signed by the party to be bound.

The Hubbard Clause (Sale and Settlement of Buyer's Current Home)

Named after a classic New England real estate drafting convention, a Hubbard Clause makes the buyer's obligation to purchase the new New Hampshire property expressly contingent upon the successful sale and closing of the buyer's existing home. Without a Hubbard Clause, a buyer whose current home sale falls through remains legally obligated to close on the new property-or forfeit their earnest money deposit under the contract's liquidated damages clause.

Because sellers are reluctant to take their property off the market indefinitely while waiting for a buyer's house to sell, a properly structured New Hampshire Hubbard Addendum balances both parties' interests through three components:

1. Marketing and Under-Contract Deadlines: Requires the buyer to list their current property on the Multiple Listing Service (MLS) within a specified timeframe and secure a binding P&S on that departing residence by a set date.
2. The Seller's Kick-Out (Bump) Right: Allows the seller to continue marketing the home to backup buyers.
3. The 48-to-72-Hour Right of First Refusal: If the seller receives an acceptable bona fide backup offer, the seller serves written notice on the original buyer. The buyer then has a strict window-typically 48 or 72 hours (excluding weekends and state holidays)-to either waive the Hubbard home-sale contingency and prove financial ability to close without selling their current house, or terminate the P&S and receive a full refund of their earnest money deposit.

Step-by-Step Process in New Hampshire

Step 1: Audit Mandatory Statutory Disclosures Before Signing

Before submitting a written offer in Manchester, Nashua, Concord, or anywhere in the state, review the seller's completed Form NHAR-SPD, New Hampshire, Association of Realtors, Property Disclosure Form. Verify compliance with the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 477:4-c) and the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 477:4-d) regarding water supply, septic history, insulation, flood zone status, methamphetamine history under the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 477:4-g), and public utility district fees under the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 477:4-h).

Step 2: Draft Custom Contingency Addenda

Work with a New Hampshire real estate attorney to tailor Form NHAR-PS, New Hampshire, Association of Realtors, Purchase and Sales Agreement. If your purchase depends on selling a current home, attach a customized Hubbard Clause addendum; if bidding above asking price, insert a precise dollar cap on any appraisal gap coverage.

Step 3: Deposit Earnest Money into a Regulated Escrow Account

Deliver the earnest money deposit within the 2-to-5-day window specified in the P&S. When held by a licensed brokerage, escrow funds are strictly regulated under the New Hampshire Real Estate Practice Act in the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 331-A:13) and overseen by the New Hampshire Office of Professional Licensure and Certification, Real Estate Commission, Concord.

Step 4: Complete Inspections and Lab Testing Within the Contingency Window

Schedule your general home inspector, septic evaluator, and accredited water laboratory immediately upon contract execution. Because comprehensive PFAS and arsenic water tests at the New Hampshire Department of Environmental Services, Water Analysis Laboratory, Concord or private labs can take 7 to 10 business days, draft at least a 14-day inspection period for homes on private wells.

Step 5: Serve Timely Written Notices or Addenda

If inspections uncover defects or your lender experiences underwriting delays, your attorney or buyer's agent must serve a formal written notice or obtain a countersigned extension addendum before 11:59 p.m. on the contingency expiration date. As reinforced by the New Hampshire Supreme Court in C & M Realty Trust v. Wiedenkeller, 133 N.H. 470 (NH Supreme Court 1990) and Orr v. Goodwin, 157 N.H. 511 (NH Supreme Court 2008), when a buyer defaults after contingencies expire, courts routinely enforce reasonable liquidated damages clauses allowing the seller to retain the earnest money deposit.

Step 6: Clear Title, Execute Closing Documents, and Record at the County Registry

Prior to closing, your title company or real estate attorney examines records at the county registry-such as the Hillsborough County Registry of Deeds, Nashua, the Rockingham County Registry of Deeds, Brentwood, or the Merrimack County Registry of Deeds, Concord. At closing, both parties pay the Real Estate Transfer Tax under the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 78-B:1) and file Form CD-57-P, New Hampshire, Department of Revenue Administration, Real Estate Transfer Tax Declaration of Consideration (Purchaser), Form CD-57-S, New Hampshire, Department of Revenue Administration, Real Estate Transfer Tax Declaration of Consideration (Seller), and Form PA-34, New Hampshire, Department of Revenue Administration, Inventory of Property Transfer with the New Hampshire Department of Revenue Administration, Concord.

How Much Does It Cost in New Hampshire?

• Earnest Money Deposit at Risk: Typically 1% to 5% of the purchase price (e.g., $5,000 to $25,000 on a $500,000 home) held in escrow.
• Home & Environmental Inspection Costs: General home inspection runs $450 to $750; air and water radon testing costs $150 to $300; comprehensive well water testing (including arsenic, bacteria, lead, and PFAS) costs $250 to $500; and a septic inspection costs $450 to $850.
• Bank Appraisal Fee: Generally $550 to $850 for a standard residential property.
• Real Estate Attorney Review Fee: Hiring a local New Hampshire real estate attorney to draft or review P&S contingencies and handle closing representation typically costs $850 to $1,800.
• NH Real Estate Transfer Tax: Assessed at $0.75 per $100 of the purchase price on the buyer and $0.75 per $100 on the seller (a combined $1.50 per $100, or $7,500 total on a $500,000 sale) under the New Hampshire Revised Statutes Annotated (N.H. Rev. Stat. Ann. § 78-B:1).

How Long Does the Process Take?

A financed residential real estate transaction in New Hampshire typically takes 30 to 45 days from the signing of the Purchase and Sale Agreement to the recording of the deed. Within that window, the earnest money deposit is due within 2 to 5 days, the home and water inspection contingency runs for 7 to 14 days, the bank appraisal is completed within 14 to 21 days, and the written mortgage financing commitment deadline falls between 21 and 30 days. If a Hubbard Clause is included, the overall closing timeline may extend to 45 to 75 days to coordinate simultaneous back-to-back closings. Should an earnest money dispute require litigation in the Hillsborough County Superior Court North, Manchester or the Rockingham County Superior Court, Brentwood, resolving the escrow dispute can take 4 to 9 months.

Frequently Asked Questions (FAQ)