Short Answer
A closing contingency is a condition in the purchase contract that must be satisfied before the closing can occur. Common closing contingencies include the financing contingency, appraisal contingency, and home sale contingency. Each contingency has a specific deadline, and if it is not met by that deadline, the buyer can typically cancel the contract and receive their earnest money back. The contingency protects the buyer from being forced to close under unfavorable conditions.
Closing contingencies are the safety nets built into your purchase contract. The most common is the financing contingency, which gives you a set period, typically 30 to 45 days, to obtain a mortgage commitment. If your loan is denied, you can cancel the contract and get your earnest money back. The appraisal contingency protects you if the home appraises for less than the purchase price. If the seller will not lower the price and you cannot or will not cover the gap, you can cancel. The home sale contingency allows you to back out if you cannot sell your current home within a specified period. Each contingency has a specific expiration date, and you must act before that date to exercise your rights. In New Jersey, the attorney review contingency is also common, giving both parties time to have their attorneys review the contract. Your agent should explain every contingency in your contract and help you meet each deadline.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
Contingencies are your protection, but they also have deadlines. Missing a contingency deadline can mean losing your right to cancel or renegotiate. I track every contingency deadline for my clients and make sure nothing falls through the cracks. If you are approaching a deadline and the contingency has not been satisfied, I will advise you on your options. The key is knowing your timeline and acting before it expires.
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