What is an example of a "contingency" in a real estate contract?

A contingency in a real estate contract refers to a condition that must be met for the contract to be binding. The buyer's ability to secure financing is an essential example of such a contingency. This means that the contract is contingent upon the buyer obtaining a loan or mortgage to finance the purchase. If the buyer is unable to secure the necessary funding, they can usually terminate the contract without penalty, which protects them from being locked into a purchase they cannot afford.

In contrast, a seller's commitment to make repairs, while important, is typically part of a negotiation or agreement rather than a contingency that needs to be fulfilled for the contract to proceed. The price agreed upon by both parties is a significant element of the contract, but it is not contingent; it is simply an agreed-upon term. Similarly, the time frame for closing the sale establishes deadlines within the contract but does not represent a conditional requirement that must be satisfied for the agreement to be valid.