What are "contingencies" in a real estate contract?

Contingencies in a real estate contract refer to specific conditions that must be met for the contract to become fully binding on the parties involved. These conditions serve as safeguards for the buyer and may include things like securing financing, having the property inspected, or ensuring the sale of an existing property. The purpose of these contingencies is to protect the interests of the parties and to provide a clear path for either confirming the contract or allowing for its cancellation if certain criteria are not met.

For example, if a buyer includes a financing contingency and is unable to secure a mortgage, they have the right to withdraw from the contract without facing penalties. Thus, contingencies play a crucial role in real estate transactions, helping to manage risks and commitments.