What is a contingency in a real estate contract?

A contingency in a real estate contract represents a specific condition or requirement that must be met before the contract becomes enforceable or binding. This allows parties involved in the transaction to protect their interests and ensure that certain conditions are fulfilled before proceeding. Common examples of contingencies include those relating to home inspections, appraisals, or financing approval.

In the context of a real estate transaction, contingencies serve as a safeguard for buyers and sellers, ensuring that there are clear expectations and that participants are not obligated to complete the sale unless certain key terms are met. This flexibility helps to mitigate risk for both parties and promotes a fair transaction.

The other options refer to related concepts but do not accurately capture the broader definition and importance of a contingency in a real estate contract.