What clause should be included in a purchase agreement to protect a buyer's interests regarding financing?

A contingency clause is vital in a purchase agreement as it allows buyers to set specific conditions that must be met for the sale to proceed. In the context of financing, a financing contingency typically allows the buyer to back out of the contract without penalty if they are unable to secure the necessary financing to complete the purchase. This clause protects the buyer's interests by ensuring that they are not committed to the purchase if they cannot obtain a mortgage or other financing, thereby minimizing financial risk.

Including a contingency clause in the agreement provides buyers with an essential safeguard, as it helps ensure that their obligations are contingent upon their ability to secure financing, which is a common concern during real estate transactions. This allows for a degree of flexibility and protects the buyer's investment in the event that financing options fall through.