When a purchase agreement has a "contingency," what does it mean?

(08.03.02) Real Estate is frequently sold with the sale dependent on certain things occurring or certain facts being identified. Blacks Law Dictionary defines "contingent" in part as "dependent on something else; conditional." This permits Buyers and Sellers to negotiate the sale of property while providing protection for either party if things don't work out as planned. A Buyer might purchase a property contingent on securing a specific kind of loan, a satisfactory inspection of the property or subject to the sale of their current home. A Seller might sell a property contingent upon finding an acceptable property to replace the one they are selling. Contingencies always have dates that define the time period within which they must be satisfied. Generally speaking, if things don't work out as carefully defined by a contingency within the time frame as described, any funds held (earnest money) are returned to the Buyer and the purchase agreement is voided.

Disclaimer: These answers are in general terms and may vary with specific factual circumstances.