📄 What Is a Contingency Removal Clause in Real Estate?

A contingency removal clause is a section in a real estate contract that outlines how and when a buyer must remove their contingencies—such as inspection, appraisal, title, or financing—to move the transaction forward. Removing contingencies makes the contract binding and reduces the buyer’s ability to cancel without penalty.

How a Contingency Removal Clause Works

Most purchase agreements include deadlines for when contingencies must be removed. The contingency removal clause explains the procedure, required notice, and the consequences of failing to remove contingencies on time.

Common contingencies buyers must remove:

  • Inspection contingency
  • Appraisal contingency
  • Financing contingency
  • Title contingency
  • Home sale contingency

Removal can be done through a formal Contingency Removal Addendum or automatically when deadlines expire, depending on the contract.

Why the Contingency Removal Clause Matters

For Buyers:

  • Clarifies when they are committing to the purchase.
  • Provides time to complete inspections, appraisal, and loan approval.
  • Protects earnest money if issues arise before removal.

For Sellers:

  • Reduces uncertainty and ensures the buyer is progressing.
  • Prevents buyers from canceling late in the transaction without cause.
  • Indicates when the home is effectively “sold” pending closing.

For FSBO Sellers:

  • Understanding removal deadlines prevents disputes and delays.
  • Helps enforce buyer obligations when selling via Flat Fee MLS.
  • Ensures smoother negotiation of extensions or repair requests.

Examples of Contingency Removal

Example 1: Inspection Removal

  • Buyer finishes inspection and removes the contingency in writing.
  • The contract becomes binding for this condition.

Example 2: Appraisal Removal

  • Home appraises at value; buyer submits appraisal removal form.
  • Earnest money becomes more protected for the seller.

Example 3: Automatic Removal

  • Buyer misses a contingency deadline.
  • Under “time is of the essence,” contingencies may be considered removed.