Which type of clause can protect buyers during a real estate transaction?

A contingency clause is a critical element in real estate transactions as it establishes specific conditions that must be met for the contract to become binding. This clause protects buyers by allowing them to withdraw from the agreement without penalty if certain conditions are not satisfied, such as obtaining financing, passing a home inspection, or the sale of their current home.

For example, if a buyer includes a mortgage contingency, they are safeguarded against losing their deposit if they fail to secure financing. This clause creates a more secure transaction by ensuring that buyers have a clear path to back out should the necessary conditions not be fulfilled, ultimately reducing their financial risk.

The other options, while they serve various functions in contracts, do not provide the same level of protection specifically for buyers. Performance clauses relate to the obligations of parties, termination clauses refer to conditions under which a contract can be ended, and hold harmless clauses often deal with liability issues. None of these directly address the buyer's need for assurance regarding specific circumstances that must be met during the transaction.