Contingency

What is a Contingency?

A provision of the contract that keeps the agreement from being fully legally binding until a certain condition(s) is met.

For example, the purchase of a home can be contingent upon the buyer selling their home first.

Common contingencies include loan approval, satisfactory inspections, and appraisal.

• An appraisal contingency gives the buyer the right to back out if a professional property appraisal comes in lower than a specified minimum, usually the asking price of the property.
• A financing contingency loan approval gives the buyer time to obtain a mortgage and the right to cancel if financing is denied.
• An inspection contingency gives the buyer the right to have the home inspected by a set date.