What typically happens if a contingency is not met in a real estate contract?

In real estate contracts, a contingency serves as a condition that must be fulfilled for the contract to proceed. Common contingencies include financing, home inspections, and appraisals. If such a contingency is not met, the contract is generally voided. This means the parties are released from their obligations under the contract, and neither party can enforce the agreement or hold the other liable.

This process protects buyers and sellers by allowing them to back out of the contract without penalty if essential conditions are not satisfied. For example, if a buyer's financing falls through due to not securing a mortgage, and that financing contingency was established in the contract, it allows them to withdraw from the agreement without facing repercussions.

In contrast, extending the contract, imposing penalties, or lowering the sale price are not standard outcomes when contingencies are not met. Such outcomes would only occur under specific renegotiated terms, rather than by default when contingencies fail.