What is a "contingency" in a real estate contract?

A "contingency" in a real estate contract is indeed a condition that must be met for the contract to be valid. This means that the finalization of the contract is dependent on certain criteria being fulfilled, which can include various conditions like securing financing, conducting satisfactory inspections, or obtaining necessary approvals.

For example, if a buyer includes a financing contingency in the contract, it means that the buyer's obligation to go through with the purchase is contingent upon their ability to secure a loan. If they are unable to obtain financing, the contract may be terminated without penalty. This protective measure ensures that both parties are aware of and agree to specific conditions that need to be satisfied for the sale to go through.

This concept is crucial in real estate transactions as it provides flexibility and safeguards for buyers and sellers, allowing the parties to negotiate terms that reflect their respective needs and protections during the buying process.