Home Purchase Contingencies: The Smart Buyer’s Guide to Risk and Protection

A home purchase is one of the biggest financial decisions you’ll make — and the contract terms you include can either protect your investment or expose you to serious risk. That’s where home purchase contingencies come in.

Contingencies are legal clauses built into your purchase agreement that allow you to walk away from the deal — under certain conditions — without losing your earnest money deposit.

In this article, we’ll explain what contingencies are, how they work, which ones you need (and when to waive them), and how they impact negotiations for both buyers and sellers.

What Does Contingent Mean in Real Estate?

A contingent real estate contract means the offer has been accepted by the seller with conditions that must be met before closing. These conditions — called contingencies — protect the buyer’s right to cancel the contract if specific issues arise.

Contingent statuses you might see in listings:

• Contingent – Continue to Show: The seller is accepting backup offers

• Contingent – No Show: The seller is under contract and not accepting more showings

• Contingent – With Kick-Out: The buyer must sell their current home first, and the seller can cancel if a better offer appears

Common Home Purchase Contingencies

Let’s break down the 6 most important contingencies that every buyer should understand — and how they impact your deal:

1. Home Inspection Contingency

Gives the buyer the right to cancel or renegotiate the contract if a professional inspection reveals major issues. This is one of the most commonly used clauses.

→ Learn what happens next in our article:
What Happens After a Home Inspection?

2. Financing (Mortgage) Contingency

Protects the buyer if their loan falls through. If the buyer can’t secure financing by a certain date, they can exit the contract with their earnest money refunded.

→ Not sure what you qualify for? Run the numbers with our
Loan Affordability Calculator

3. Appraisal Contingency

Ensures the property appraises at or above the agreed purchase price. If it doesn’t, the buyer can walk away or renegotiate the price.

4. Title Contingency

Protects the buyer if issues arise during the title search, such as undisclosed liens or ownership disputes.

→ Our article on Understanding Escrows explains how title and escrow companies work together in this process.

5. Sale of Buyer’s Property Contingency

Allows the buyer to cancel the contract if they can’t sell their current home before closing. These are less favorable to sellers and often come with “kick-out” clauses.

6. Homeowners Association (HOA) Review

Gives the buyer time to review HOA rules, fees, and financial documents. If the terms are unfavorable, they can cancel the contract.

When Should You Waive Contingencies?

In competitive markets, buyers often feel pressured to waive contingencies to strengthen their offer. But doing so adds risk — and it’s not always necessary.

Here’s a quick breakdown:

💡 Tip: In multiple-offer situations, consider shortening contingency periods instead of waiving them entirely.

What Happens If a Contingency Isn’t Met?

If a contingency isn’t met by its deadline and you haven’t waived your right to it, you can usually:

• Cancel the contract and retain your earnest money

• Request a repair, price reduction, or deadline extension

• Renegotiate based on inspection or appraisal findings

On the flip side, if you waive a contingency and the issue arises, you may:

• Be forced to proceed with the purchase

• Lose your deposit if you back out

Seller-Side Contingencies and Kick-Out Clauses

While most contingencies protect the buyer, sellers can also include clauses that protect their timeline and pricing flexibility:

• Kick-Out Clause: Allows a seller to continue marketing the home if the buyer has a “sale of current home” contingency

• Right to Terminate: Some contracts give sellers the right to cancel if financing deadlines aren’t met

• Home of Choice Clause: Used by sellers who need to find a replacement home before closing

These clauses help level the playing field in competitive markets — especially if the seller needs flexibility for relocation or build completion.

Timeline: When Are Contingencies Removed?

Contingency deadlines vary by contract, but common timelines include:

In most cases, contingencies are automatically removed after the deadline — unless the buyer cancels or negotiates otherwise.

Frequently Asked Questions (FAQs)