In real estate, “contingencies” are conditions or clauses built into a purchase contract that must be satisfied before the sale can close. They protect parties—most often buyers—by allowing them to withdraw or renegotiate if certain criteria aren’t met. Contingencies help balance risk, ensuring you’re not locked into a deal with hidden defects, financing failures, or other roadblocks.
Whether you’re a first-time homebuyer, an investor managing multiple deals, a seller reviewing offers, or a real estate agent guiding clients, understanding contingencies is crucial. They drive timelines, influence negotiations, and can make or break a transaction.
A contingency clause is a contract provision stating that certain events or actions must occur by specific deadlines. If those events don’t happen, the buyer (or sometimes the seller) can cancel the contract without penalty and reclaim any earnest money deposit.
Both terms refer to prerequisites for closing, but a contingency often grants the option to cancel, while a condition precedent is a non-waivable requirement that must occur for the contract to exist at all.
Typical windows are 10–17 days for inspections, 30–45 days for financing, and 10–14 days for appraisals. Local practices may vary.
Contracts specify whether days are counted as business days (excluding weekends/holidays) or calendar days. Always confirm the type before the clock starts.
Parties can agree in writing to extend deadlines or waive contingencies. A cure period lets sellers remedy defects identified in inspections or title reports.
If a contingency deadline passes without action, the contract typically defaults to removal of that contingency—potentially binding the buyer irrevocably or giving the seller recourse.
To invoke or waive a contingency, written notice—often on a standardized form—must be delivered by the deadline. Verbal agreements usually don’t suffice.
Buyers must identify the issue (e.g., financing denied) and submit a cancellation or amendment notice before the contingency window closes to keep their deposit safe.
Waiving contingencies (like the appraisal or inspection) can strengthen an offer, but transfers risk to the buyer if problems arise.
Sellers must acknowledge notices, provide required disclosures, and (if curing) complete repairs or clear title issues within the agreed cure period.
Shorten contingency periods or waive minor ones to stand out, but keep critical protections intact.
Be specific about deadlines, acceptable defect thresholds, and cure processes to avoid later disputes.
Offer pre-inspections, provide preliminary title reports, or shorten contingency windows to give buyers confidence while limiting open-ended liability.
Avoid vague terms, hidden deadlines, or failing to meet cure obligations—these can derail deals or trigger legal action.
If a contingency isn’t met, the contract allows cancellation. Parties should follow notice procedures to reclaim or retain earnest money accordingly.
Contracts often include arbitration or mediation clauses for resolving deposit disagreements when one party claims a contingency wasn’t properly handled.
In some jurisdictions, sellers can sue for specific performance—forcing the sale—or for damages if a buyer improperly backs out.
At minimum, use inspection, financing, and appraisal contingencies. Add title, insurance, or sale-of-home clauses based on your situation and market competitiveness.
Yes—if you have an inspection contingency and submit timely notice, you can negotiate repairs or cancel and get your deposit back.
If you have a valid financing contingency and deliver proper notice before the deadline, you can terminate and recover your earnest money.
Submit a written waiver form before the deadline. You risk paying for repairs, covering appraisal gaps, or losing deposit if you later back out.
Sellers may reject or limit these contingencies, especially in hot markets. Enforceability depends on clear deadlines, proof of listing, and local contract law.
Lisa finds her dream condo for $350,000. She includes an inspection contingency (10 days) and a financing contingency (30 days).
Contingencies are essential safeguards in purchase agreements, defining conditions that must be met—or waived—for a successful closing. They protect buyers and help sellers manage risk.
For further guidance, download sample contingency forms, consult online legal guides, or speak with a qualified real estate agent or attorney.
