Definition
A contingency is a condition in a home purchase agreement that must be met for the sale to go through. If the condition isn't met, the buyer can back out of the deal.
Understanding Contingencies in Mortgages
Contingencies appear during the home buying process, often in the purchase agreement. They help protect buyers and sellers by setting specific conditions. In simple terms, a contingency is a requirement that needs to be met for the deal to proceed. Example: A buyer might include a home inspection contingency, meaning the purchase will only go through if the house passes inspection. It's not a guarantee of sale or loan approval. Instead, contingencies ensure certain criteria are satisfied before finalizing a transaction. They offer a safety net, allowing parties to back out if conditions aren't met, without penalties.
