What is Contingency?
A contingency is a condition written into the purchase contract that must be satisfied before the sale can close. Common ones are the inspection (property), appraisal, and loan/financing contingencies. Contingencies protect the buyer by giving defined opportunities to investigate, renegotiate, or cancel — usually without losing the deposit — if something doesn’t check out.
Example: A buyer’s offer includes a loan contingency; when financing falls through, it lets the buyer cancel the contract and recover the earnest money deposit.