Contracts
A 'contingency' in a purchase contract functions as a:
APenalty clause if the buyer defaults
BCondition that must be satisfied for the contract to become fully binding✓ Correct
CGuarantee that the property will appraise at the purchase price
DRequirement that the seller make all requested repairs
Explanation
A contingency is a condition that must be met before the parties are obligated to complete the transaction. If the condition is not satisfied, the affected party may have the right to exit the contract.
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