Real estate contracts often include contingency clauses, which are stipulations that must be met in order for the contract to remain binding between the two parties. Often, these are used as a way to protect a buyer when they make an offer on a property.
For instance, a buyer may have gotten preapproval from their lender, indicating that they will likely be approved for the loan necessary to buy that property. But they have not yet received final approval, which can take weeks and may only happen after certain inspections have been carried out. The buyer may include a contingency clause saying that their offer is only binding and they are only obligated to move forward with the purchase if they are given the final approval for that loan.
After all, most buyers are fairly confident that they will be given approval, but unexpected complications could arise. If they do not get the loan, then they do not have to purchase the property.
Home inspections
Speaking of having inspections carried out, that is another common contingency clause. A buyer may feel confident making an offer on a property because they have seen it themselves, but they still want to hire a professional home inspector. If there are serious issues with the property, then they often have the option to walk away from the offer or request that updates and repairs be made.
Contingency clauses are just one detail to be aware of when navigating a real estate transaction, as they can significantly impact the outcome. It can help to work with an experienced attorney when the contracts become complicated.