What is a condition precedent in a contract?

A condition precedent in a contract refers to a specific condition or event that must occur before the parties are obligated to perform their contractual duties. In the context of real estate or other contracts, this means that certain requirements must be fulfilled prior to the closing of the deal. For instance, a buyer may need to secure financing or a seller may need to complete specific repairs before the transaction can proceed. If these conditions are not met, the contract may not be enforceable, or it may allow one party to withdraw without penalty.

This concept is fundamental in ensuring that both parties have met their obligations before finalizing the agreement. Understanding this allows both buyers and sellers to navigate potential pitfalls that could arise from unmet conditions, facilitating a smoother transaction process.