Contracts
What is a 'contingency' in a Pennsylvania real estate contract and how does it protect the parties?
AA fee paid to hold a property off the market while the buyer arranges financing
BA condition that must be satisfied (or waived) for the contract to become binding; if not met, either party (depending on whose benefit it serves) may terminate without penalty✓ Correct
CA penalty clause applied when a party fails to close on the agreed date
DAn addendum modifying the standard Agreement of Sale form
Explanation
A contingency is a condition precedent — a condition that must be satisfied before the parties are obligated to complete the transaction. Common Pennsylvania contingencies include: mortgage financing, satisfactory home inspection, sale of buyer's property, and appraisal at or above purchase price.
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