What is a "contingency" in a real estate contract?

A "contingency" in a real estate contract refers to a condition that must be met in order for the contract to become binding and enforceable. This means that if the specified condition is not fulfilled, the parties may have the right to terminate the agreement without any penalties. Common examples of contingencies might include the buyer securing financing, the completion of an inspection with satisfactory results, or the sale of the buyer's current property. These clauses are crucial for protecting the interests of one or both parties involved in a transaction, allowing them to back out if certain conditions are not satisfied.

In contrast, other options touch on aspects of a real estate transaction but do not define a contingency. A clause about property taxes addresses the financial obligations but does not inherently provide a condition for the agreement's validity. A timeline for closing the sale pertains to the schedule of transactions and doesn't encompass the conditional framework of a contingency. A warranty on property features refers to guarantees regarding the condition and attributes of the property rather than a conditional element affecting the contract's enforceability. Hence, recognizing the role of contingencies is essential for understanding how contracts function in real estate.