What are contingencies in a real estate contract?

Contingencies in a real estate contract refer to specific conditions or requirements that must be fulfilled for the contract to become legally binding. These conditions protect both the buyer and seller, ensuring that certain criteria are met before the transaction can proceed. For instance, a common contingency might require the buyer to secure financing or the completion of a satisfactory home inspection. If these conditions are not met, the involved parties may have the option to terminate the contract without facing penalties.

The other options do not accurately capture the definition or purpose of contingencies. While the terms that the seller must agree to before selling are important, they fall outside the scope of contingencies, which are more about conditions that allow a party to withdraw from the agreement if unmet. Requirements that pertain only to rental agreements neglect the broader application of contingencies across various types of real estate transactions. Additionally, clauses that allow the seller to change the sale price do not align with the concept of contingencies, which is focused on conditions rather than price adjustments.