What are contingencies in a real estate contract?

Contingencies in a real estate contract refer to specific conditions or requirements that must be satisfied for the agreement to become legally binding. These contingencies protect the interests of the parties involved, allowing them to back out of the contract if certain terms are not met. For example, a common contingency might involve a buyer securing financing or obtaining a satisfactory property inspection. If these conditions are not fulfilled, either party typically has the right to terminate the contract without facing penalties.

The other options do not accurately represent the role of contingencies in a real estate contract. Some may refer to decisions made in the negotiation process, but contingencies are clearly defined conditions rather than irreversible decisions. Additionally, contingencies are not solely terms that favor any one party, such as the seller; instead, they are meant to balance the interests of both the buyer and the seller in the transaction. Lastly, while assessments of property condition are often part of contingencies, they do not encompass the broader meaning of what contingencies are within real estate contracts.