Most purchase agreements have "contingencies" in them, to make sure a party only has to perform if certain conditions are met. Here's some help understanding what certain contingencies could mean in a purchase agreement for a home: (These are generalities. Read your purchase agreement, and ask your agent and/or attorney any questions you may have.)
• Financing: The buyer can back out if their loan is not approved, as long as the buyer made their best efforts to obtain the loan. Often, the seller can back out if the buyer's loan is not approved within a specified time period.
• Subject to the sale: A buyer or seller can back out if the buyer's current home fails to sell within a certain time limit.
• Title: The buyer can back out if the Seller can't deliver clear title to the property.
• Inspections: The buyer can back out if specific items in the home inspection are not in safe working order, or if the buyer and seller do not agree on remedies to the problems revealed in the inspection.
• Contract review: The buyer or the seller has the right to have the contract reviewed by (typically) their attorney before the sale can move forward. Not a commonly used clause, but useful in some circumstances.
These are just a few of the contingencies you might see; there are many others.
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