đź“‘ GENERAL CONTINGENCY QUESTIONS

  1. What is a contingency in the RPA?

Explanation:
A contingency is a condition that must be satisfied for the contract to remain in effect. If not met, the buyer can typically cancel the contract without losing their deposit.

  1. What are the standard contingencies in the RPA?

Explanation:

  • Inspection contingency
  • Appraisal contingency
  • Loan (financing) contingency
    These are pre-written into the California RPA but can be modified or removed.
  1. When do contingency periods start?

Explanation:
Contingency periods begin the day after the contract is accepted (fully signed and delivered). They are counted in calendar days unless specified otherwise.

📆 CONTINGENCY TIMELINE & DEADLINES

  1. What are the default contingency periods in the RPA?

Explanation:

  • 17 days for inspections and investigations
  • 17 days for appraisal
  • 21 days for loan approval
    Agents often ask if these can be shortened or extended by mutual agreement.
  1. Can we shorten or waive contingencies in the offer?

Explanation:
Yes, buyers can make their offer more competitive by shortening or even waiving contingencies—though this increases risk.

  1. What happens if we miss a contingency deadline?

Explanation:
If the buyer doesn’t remove contingencies by the deadline, the seller can issue a Notice to Perform, giving the buyer 2 additional days to comply before the seller can cancel.

✍️ CONTINGENCY REMOVAL FORMS & PRACTICE

  1. What form is used to remove contingencies?

Explanation:
Use the Contingency Removal form (CAR Form CR). The buyer checks the applicable boxes (loan, appraisal, inspections, etc.) and signs.

  1. Can the buyer remove contingencies one at a time?

Explanation:
Yes, contingencies can be removed individually or all at once using the CR form.

  1. Can the buyer back out after removing contingencies?

Explanation:
Not without risking their earnest money deposit. Once all contingencies are removed, the contract becomes “non-contingent,” and canceling could trigger a liquidated damages clause.

🛠️ BUYER-SIDE STRATEGIES & QUESTIONS

  1. Should my buyer remove contingencies early to be more competitive?

Explanation:
Only if they fully understand the risks. Brokers usually advise against early removal unless inspections, appraisal, and loan are already complete or unnecessary.

  1. Can we cancel the contract after inspection but before removing contingencies?

Explanation:
Yes, if the buyer is within the contingency period and hasn’t removed them in writing, they may cancel and receive their deposit back.

  1. What if the seller asks for contingency removal before the deadline?

Explanation:
The buyer doesn’t have to agree, but doing so may be requested in competitive markets. Broker guidance is often needed to weigh risks.

🏠 SELLER-SIDE CONTINGENCY QUESTIONS

  1. Can a seller reject an offer with too long a contingency period?

Explanation:
Yes. The seller can counter with shorter timeframes or a requirement to remove certain contingencies early.

  1. What happens if the buyer doesn’t remove contingencies by the deadline?

Explanation:
The seller’s agent can issue a Notice to Perform. If the buyer still doesn’t act, the seller can cancel the deal and retain backup offers.

  1. Can a seller force the buyer to remove contingencies?

Explanation:
No. The seller can only issue a Notice to Perform; they cannot force removal but can cancel if the buyer fails to act.

⚠️ CONTINGENCY-RELATED RISKS

  1. What is the risk of removing contingencies too early?

Explanation:
If issues arise (e.g., a low appraisal or denied loan), and the buyer has already removed those contingencies, they could lose their deposit.

  1. What if a buyer removes loan and appraisal contingencies but doesn’t get final approval?

Explanation:
The buyer could default, and the seller may retain the earnest money deposit.

  1. What if there are repairs needed after inspection, but the buyer has removed contingencies?

Explanation:
The buyer would be responsible for accepting the condition “as is” or negotiating repairs with less leverage. They cannot cancel without penalty.

🧾 LEGAL & CONTRACTUAL GUIDANCE

  1. Does removing contingencies in writing protect the seller?

Explanation:
Yes. Once the buyer removes contingencies, the seller has more control and protection if the buyer later cancels.

  1. Is a verbal contingency removal valid?

Explanation:
No. All contingency removals must be in writing to be legally binding.

đź“‹ Summary Table for Agents

Contingency Type

Default Days

Form to Remove

Can Be Waived?

Risk If Removed Early

Inspection

17

CR

Yes

Unseen defects

Appraisal

17

CR

Yes

Low appraisal

Loan Approval

21

CR

Yes

Denied loan, deposit loss