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.
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