What are contingencies in a real estate contract?

Contingencies in a real estate contract refer to specific conditions that must be fulfilled for the contract to become binding. These provisions protect both the buyer and seller by allowing them to set conditions that need to be satisfied before the transaction proceeds. Common contingencies might include obtaining financing, passing a home inspection, or securing necessary repairs.

When these conditions are met, the contract moves forward; if they are not met, one or both parties may have the right to terminate the agreement without penalty. This aspect of contingencies is crucial because it ensures that both parties have a mutual understanding of the requirements that must be satisfied for the deal to be valid, thus minimizing the risk involved in the transaction.