Last week we talked about the term contingency and what it means. As a recap, contingencies are a way of qualifying your obligation to fulfill a contract. In real estate contracts we talk often of removing or waiving your contingencies.
What does it mean to remove or waive your contingencies?
Simply put, it means that you are now saying that the particular contingency you are removing or waiving is no longer a part of the contract. Though waiving and removing an item from a contract are technically different legally, in real estate the end result is usually identical - you can no longer use that particular contingency as a way to back out of the contract gracefully.
What is the effect of removing or waiving a contingency during a home sale?
If you remove or waive a contingency during the purchase or sale of a home, you are in effect saying, "I agree that this particular item is no longer a valid reason to cancel the contract." For instance, if you were to waive the appraisal contingency and subsequently the home appraised for less than the purchase price, you would still be obligated to complete the purchase. What usually is at issue is the disposition of the earnest money deposit. If you cancel because one of the contingencies in the contract is in effect and allows it, usually it is returned to the buyer. However if the contingency is removed, and you attempt to cancel the deposit may go to the seller to be split with the seller and his agent. It may even be that you end up in court to decide what will happen to it. Or you could end up with a specific performance lawsuit that forces you to complete the purchase. This is why you and your agent need to be aggressive in fulfilling all of your obligations according to the contract in the correct timeframe, so that if you do need to cancel you can and still be protected by your contingencies.
Do you need an aggressive agent to look out for you? Give me a call @ 916-376-9328 or email Nick@bignicksells.com I look forward to hearing from you.