What Is Contingency?
Contingency: A condition in a contract that must be met for the sale to go forward, letting you cancel if it isn't.
A contingency is a condition written into the purchase agreement. If it isn't satisfied by its deadline, you can cancel the contract and usually get your earnest money back.
Common contingencies
- Inspection: you can cancel or negotiate after inspecting the home
- Appraisal: protects you if the home appraises below the price
- Financing: protects you if your loan isn't approved
- Home sale: makes the purchase depend on selling your current home
- Title: lets you cancel if title problems can't be fixed
- HOA documents: time to review association rules and finances
Removing contingencies
Each contingency has a deadline. Depending on your state's contract, you may need to remove it in writing, or it may be removed automatically if you don't act.
Good to know
Waiving contingencies can make an offer more attractive, but it shifts risk to you. Shortening the time periods is often a safer way to compete.