What is the role of contingencies in real estate contracts?

Contingencies in real estate contracts serve as specific conditions or clauses that must be fulfilled for the contract to become enforceable. They provide a framework for both buyers and sellers to ensure that certain critical obligations are met before the agreement can progress to completion. Common contingencies include stipulations related to financing approval, home inspections, or the sale of a current home. If these conditions are not satisfied, the party affected by the contingency can typically withdraw from the contract without penalties, preserving their rights and financial interests. This conditional nature is essential because it helps protect the parties involved against unforeseen circumstances that could affect the transaction.