What is a Contingency?
The best way to think of a contingency is as an ‘if’ in your contract.
- ‘If I am able to sell my house, then I will by yours’ is a contingent contract
- ‘If I am able to obtain a mortgage, then I will buy yours’ is a contract contingent on
- ‘If the home appraises for sales price of above, then I will buy it’ is a contract contingent
- ‘If the 10 acre lot will allow for a conventional septic system to build a 5 bedroom house,
then I will buy the lot’ is a contract contingent on a valid health permit
The contingencies are typically conditions that are considered reasonable to be met and thus, likely to allow the contract to proceed, but not always. They are generally used to protect one side of the transaction or the other.