Hi all. It’s the Carlsbad transaction coordinators at Transaction 911 here to speak with you about Contingency Removal in the state of California.
The California Residential Purchase Agreement (RPA) has boilerplate language stating that contingencies will be removed in 17 days. You can customize the language in the RPA if you wish, but if you do not, the period will be 17 days. The RPA also has a small spot where you can mark that the loan contingency will remain in effect until the loan is funded.
We’ve seen a lot of deals fall through these days where people get a little confused about contingency removal. There are all kinds of contingencies, such as contingencies for loan, appraisal, disclosures, and inspections. If you remove some (and not all) and your time runs out, your transaction could fall through and the buyer could lose his or her deposit. That’s why you want to be mindful of the time frames in your next real estate transaction.
But, where these Carlsbad transaction coordinators see the boo-boos most is with the reasons people are cancelling. Recently, we saw the buyer’s agent tell the listing agent that she was cancelling because the buyer recently learned she was pregnant. Sadly, pregnancy has nothing to do with loan, appraisal, disclosures, or inspections. Another time, we saw a buyer who already removed his inspection and disclosure contingency say that he would only move forward if the roof was repaired. Yet, the repairs had already been negotiated and he had removed his inspection contingencies.
Buyers’ agents need to set expectations accordingly and make sure that buyers understand that a contract to purchase a home is serious business. If you change your mind at the eleventh hour, that is okay. But, know that you may lose your deposit and then some.