Contingencies
TLDR: Contingencies are the hurdles you have to overcome to get to closing.
You can think of each contingency as a hurdle in an obstacle course to get to closing. Because the timeline for each contingency will be ticking concurrently, it's important to keep track of all due dates. Missing a deadline is the primary reason for contracts to fall through in direct buyer-seller transactions.
Contingencies Overview
As a recap, here’s a quick description of some common contingencies:
A Financing Contingency allows you to cancel the contract if you're not approved for a loan
An Appraisal Contingency allows you to terminate the contract if the property doesn't appraise for at least the sales price
An Inspection Contingency enables you to back out of the contract if you and the seller can't come to an agreement about what repairs should be made or credited after receiving the inspection report
A Radon Contingency ensures that radon levels are beneath the recommended limit or are mitigated to achieve such levels
A Termite Contingency stipulates that the seller is responsible for mitigating and repairing damage caused by termites
Fun Fact
While the HOA and Condo clauses of the contract are technically disclosures, they function in much the same way as a contingency since you’re legally permitted to excuse yourself from the sale within a certain timeframe.