Just like the “undo” button while working on a laptop, contingency clauses can also be an invaluable tool if you want to sell or buy a home.
The contingent house meaning lies in a way for both or one of the parties to back out of the property contract in a case where certain conditions are not being met. This means that the sale is contingent in real estate deals upon such conditions. Some common ones can include appraisals, funding, or inspection.

Today, let’s take a closer look at contingency in real estate.

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Contingent House Meaning

In the real estate market, contingencies refer to clauses in any purchase agreement document that specify a requirement that needs to be met for the contract to become legally binding. The seller and buyer must both agree to the terms of the contingency and sign it before the contract becomes binding.

This allows both the seller and the buyer to have some space to withdraw if conditions are not being met. Contingency clauses are designed to safeguard the sellers and buyers by offering the right to cancel a contract where terms are not being met.

For example, a buyer may require a contingency where the sellers must find a new home before they make the move to sell their current home. If they cannot find another house within specified timelines, the buyer is allowed to cancel the contract without any issues. As long as the contingency is carefully laid out in the contract, it can protect the buyer’s interest.

Types of Contingent in Real Estate

Contingencies offer a structured way for the buyer or seller to break the contract without financial penalties in specific instances.

Home Inspection Contingency

This is definitely one of the most important ways to safeguard the buyer. Home inspection contingencies offer some time for the buyer, such as 7 to 14 days after the offer is accepted, to conduct professional inspections of the property.

Hence, the buyer is able to take their time to identify any hidden defects or issues in the home that could impact the safety of residents or the value of the property. They can look into areas of concern like plumbing, electric systems, foundation, roof, or even the use of hazardous materials like lead paint or asbestos.

There are two ways to solve these problems. Firstly, the buyer and seller could come to an agreement about price adjustments or repairs. Any significant problems that have been discovered in the inspection can be used by the buyer to leverage a better deal.

Secondly, if the buyer doesn’t meet the demands of the buyer or negotiates a better deal, the buyer might withdraw from the deal without losing their money deposit. However, any moves should be outlined in writing before the contingency period has finished.

Financing Contingency

Also known as mortgage contingency, this protects the buyer who is financing the deal. Such clauses state that the sale of the property is contingent upon the buyer being able to secure a loan from the bank. Usually, buyers are given 30 to 60 days to do so.

In such cases where buyers are not able to secure financing during the pre-set time, they are able to back out of the deal without any financial penalties. Financial contingencies in real estate help ensure protection for the buyer and seller in situations where the loan approval is tentative due to changed lending policies or the financial status of the buyer.

Since there are many factors that impact the decision of the lender, any changes in down payment, employment status, or credit scores can impact the loan approval. Hence, the earnest deposit at the state will be returned to the buyer if this contingency is not met.

Appraisal Contingency

This protects the buyer since it ensures the property is valued at a specific minimum amount. Property appraisals that are under the agreed-upon price usually result in the buyer renegotiating the deal or backing out of the purchase.

If the appraisal turns out to be low, the buyer can request sellers to lower the sale price to match it. They can cancel the contract if the seller refuses without losing the earnest money deposit. This is crucial because lenders often only offer loans according to the appraised value of the home. Low appraisals can mean that buyers will be unable to secure the necessary funding to buy the property.

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Home Sale Contingency

These types of contingencies are used if the buyer’s ability to buy a new home is dependent upon selling their current residence. Buyers will have some peace of mind since they will be able to make it a condition, just in case they are unable to sell their current dwelling.

However, sellers can hesitate to accept offers from such buyers since there is an uncertainty that buyers will be able to sell their current residence quickly. Sellers should definitely avoid such contingencies since there can be too much risk in such deals.

Clean Title Contingency

Clean title contingencies help by ensuring that the property title doesn’t come attached with any legal disputes, encumbrances, or liens. Such things hinder ownership transfers, and contingency clauses allow the buyer to conduct a thorough search of the title.

In cases where the title deed has problems, buyers can ask the sellers to fix such issues before they proceed with the deal. If sellers are unable to clear the title deed, buyers are allowed to back away from the contract.


We hope you now know the contingent house meaning. As buyers or sellers, we should know about the different contingents in real estate to protect both parties. Make sure to read your contingency clauses in detail before signing anything!