It’s Time to Remove Your Contingencies
When making an offer here in Carlsbad, buyers normally do so subject to a number of contingencies that are spelled out in the standard Residential Purchase Agreement (we know it as the RPA). The contingencies typically include the buyer investigation (inspections), seller disclosures, HOA documents, appraisal, and loan approval (if applicable - read Your Loan Commitment Has Conditions You Must Meet), among others [note – contracts differ from state to state as does the offer process - we are speaking specifically of the California contract here].
The default contingency, or due diligence, period in the RPA in CA is 17 days, which is negotiable between you and the seller, as are other inspectional time frames.
At the end of the agreed-upon time frame you are supposed to either remove the contingencies, using the Contingency Removal Form (CR), or decide to not move ahead. Some circumstances may require requests for a extension of time (e.g., not receiving the HOA docs in time; underwriter needs more time for loan approval).
The time to remove contingencies is, like making and waiting for offer acceptance, an emotional one. It’s a big decision to sign the Contingency Removal Form stating that you are willing to move ahead, having completed your investigations and knowing what you know about the property, and having secured a loan approval (an emotional process by itself!).
While you do not want to remove the contact contingencies until you are sure, you must not take this process lightly, as there can be serious implications for not doing a proper investigation. And not removing contingencies in a timely manner in accordance with the contract may put your transaction at risk.
Keep in mind that removing contingencies means that changing your mind later, or not closing for some other reason (even if the lender does not fund), puts your deposit at risk.
Comments(7)