What is a contingency in a real estate contract?

A contingency is a specific condition written into a purchase contract that must be satisfied before the contract becomes fully binding and the sale can proceed to closing. Common contingencies include a mortgage contingency (the buyer must obtain financing), an inspection contingency (the buyer must be satisfied with the results of a home inspection), and sometimes a sale contingency (the buyer must first sell their current home). If the stated condition is not met within the agreed timeframe, the affected party typically has the right to cancel the contract without penalty.

In the Western Catskills, inspection contingencies are particularly important given the age and rural nature of much of the housing stock in Delaware, Otsego, Greene, and Ulster counties. Older farmhouses and country homes may have aging septic systems, private wells, oil tanks, or structural elements that warrant professional evaluation. Buyers should also consider including contingencies for well water quality testing and septic system inspection, as these are not standard utilities and their condition can have a major impact on both livability and future resale value.