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 and for the transaction to proceed. These conditions create a framework that protects the interests of the involved parties, allowing a buyer or seller to back out of the agreement without penalty if certain stipulations are not met. Common contingencies include the buyer securing financing, satisfactory home inspections, and the sale of the buyer's current home.

This definition highlights the crucial role that contingencies play in real estate transactions, ensuring that both parties have clear expectations and protections throughout the process. They allow buyers to assess risks associated with the purchase and provide sellers with assurances that their interests will be safeguarded as well.