contingent financing clause

Definition

A contract provision allowing buyers to back out if they can't secure a loan, essentially making the deal conditional on a bank's approval. It's the escape hatch that makes sellers nervous and buyers sleep better at night.

Example Usage

They came in with a strong offer but included a contingent financing clause, so we're still showing the property in case they can't get approved.

Origin

Real estate contract law terminology

Fun Fact

In hot markets, sellers often favor offers without financing contingencies—which is why cash buyers have such an advantage, even if they're secretly planning to refinance immediately after closing.

Source: Real estate contract and transaction terminology

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