What is a contingency in a real estate contract?

• A. Fees payable at closing
• B. An unconditional clause
• C. Conditions that must be satisfied before the contract is fully enforceable
• D. A requirement for lender approval

Answer: (C)

A contingency is a condition that must be satisfied before a real estate contract becomes fully enforceable. This gives both parties time for due diligence—financing, a home inspection, title search, or an appraisal—without binding themselves to the purchase if something can’t be resolved. If the specified condition isn’t met by its deadline, the contract can often be terminated with earnest money returned.

The option that describes conditions that must be satisfied before the contract is fully enforceable is the best fit. Fees at closing are part of closing costs, not contingencies. An unconditional clause means there are no conditions at all, which contradicts the idea of a contingency. Lender approval is a common example of a contingency, but it’s just one specific type, not the general concept.