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What is meant by the term “contingency” in a sales contract?

April 26, 2017Contingency contract meant sales term

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What is meant by the term “contingency” in a sales contract?

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Sales contracts typically contain several “contingency” clauses, or stipulations that the sale is subject to. For example, with a mortgage contingency, if the buyer is unable to obtain financing within the specified timeframe, neither the buyer nor the seller is required to complete the purchase. Among other common provisions in the “subject to” section are termite and other inspection issues and the purchaser’s need to sell a current home first.

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A. Sales contracts typically contain several contingency clauses, or stipulations that the sale is subject to. For example, with a mortgage contingency, if the buyer is unable to obtain financing within the specified timeframe, neither the buyer nor the seller is required to complete the purchase. Among other common provisions in the subject to section are termite and other inspection issues and the purchasers need to sell a current home first.