In a real estate contract, what are contingencies?

Contingencies in a real estate contract refer to specific conditions or requirements that must be satisfied for the contract to remain valid and binding. These are typically clauses that outline events or circumstances that could affect the continuation of the contract, such as obtaining financing, passing a home inspection, or securing necessary repairs. If the specified contingencies are not met, the affected party may have the right to terminate the contract without penalties.

This concept emphasizes the importance of ensuring all parties are protected by clearly defining the necessary actions or criteria that must be fulfilled. Understanding contingencies is crucial for both buyers and sellers, as they dictate the course of negotiations and the obligations each party must meet for the transaction to proceed smoothly.