Contingency

A contingency in commercial real estate is a condition or requirement that must be met for a transaction to proceed or close. Common contingencies include financing contingencies (the buyer’s ability to secure a loan), inspection contingencies (satisfactory review of the physical condition), and due diligence contingencies (review of leases, financials, and title).

Contingencies protect buyers by providing an exit if specific conditions are not met within a defined timeframe. Sellers generally prefer fewer and shorter contingency periods to reduce deal uncertainty. Negotiating the scope and duration of contingencies is a key part of the CRE transaction process.