Contingencies

Contingencies ## What Is a Contingency? A contingency is a condition in a purchase contract that must be satisfied (or waived) for the transaction to proceed. If a contingency is not satisfied and the buyer properly exercises their right to cancel, they are entitled to a refund of their deposit and there is no breach of contract. Once a contingency is removed (the buyer signs a contingency removal form waiving the right to cancel based on that condition), the buyer becomes committed to the transaction. If they then back out without a remaining contingency as justification, they risk losing their deposit (up to the liquidated damages limit). Understanding CA contingencies — their default timeframes, how they are removed, and the consequences of removal — is heavily tested on the CA license exam. --- ## Inspection Contingency (Property Investigation Contingency) Purpose: Gives the buyer the right to conduct physical inspections of the property and to cancel if the results are unacceptable. Default timeframe: 17 days from acceptance in the standard CA RPA. What it covers: - General home inspection (structural, roof, plumbing, electrical, HVAC) - Pest/termite inspection (Wood Destroying Organisms — WDO report) - Pool/spa inspection - Roof inspection - Foundation/structural engineering inspection - Sewer lateral inspection - Any other physical investigation of the property Buyer's rights during the contingency period: - Have the property professionally inspected - Review the TDS, SPQ, and other seller disclosures - Investigate the neighborhood, HOA, permits, and any other conditions - Cancel for any or no reason (the contingency gives the buyer broad rights to back out) After removal: Once the inspection contingency is removed, the buyer no longer has the right to cancel…