A contingency is a condition that must be satisfied before the parties have a legal duty to perform their contractual obligations. The parties must make a good faith effort to satisfy the condition. When all contingencies are satisfied (or waived), the contract becomes legally binding and each party must perform its obligations (i.e. the buyer must buy and the seller must sell) or face liability for not doing so. If a contingency is neither satisfied nor waived prior to the stated closing date, the contract expires and the parties are relieved of their contractual obligations.

There are many different types of contingencies. The most common are the financing contingency, the inspection contingency, and the title contingency.