What is the purpose of a contingency in real estate transactions?

The purpose of a contingency in real estate transactions is to benefit the buyer, the seller, or both by providing specific conditions that must be met for the transaction to proceed. Contingencies serve as safeguards that protect the interests of the parties involved. For example, a common contingency might require a property inspection to be completed successfully, which allows the buyer to back out of the sale if significant issues are found. Contingencies essentially create a framework for the transaction to move forward only if certain criteria are satisfied, thereby ensuring fairness and reducing risks for both buyers and sellers. This dynamic helps maintain a level of protection and clarity in the transaction process.