When purchasing a home in San Diego, CA what are Buyer Contingencies? How long do they last? How many are there? Most buyers are not even aware they exist, what they even are, or what the contingencies do to protect them while they are in escrow.
Buyer contingencies are a significant portion of the purchase contract between the seller and buyer. The buyer contingencies consist of clauses relating to conditions, or contingencies, that must be satisfied, each within a certain timeframe, in order for the sale to go through. These are the legal loopholes that allow you to back out of the contract under certain circumstances. For example, many buyers write into the contract that being able to close on the sale of their own home is a condition of the offer to purchase the new home. That way, if the sale of their own residence falls through, they will not be obligated to go through with the purchase of the new property.
I inform each of my buyers that they can cancel the agreement any time they would like within the first 17 days. Some agents in my office look at me like I'm crazy! But it's the truth, and as their Realtor, it is my obligation and fuduciary responsibility to look out for my buyers' best interest and do the very best job I can for my clients.
For buyers, contingencies are important because they can protect the buyers should they be unable to fulfill the obligations of the contract, or should they decide that they no longer want to purchase the property.
Contingency time periods can be negotiable. Here in California, a buyer is required to "remove all contingencies" within 17 days from contract execution and or when the agreement took place between the buyer and seller in writing. That time frame can be shortened or extended in the contract. In fact everything in the purchase agreement can be negotiated. At the end of that time frame, if the buyer has not signed a release of contingencies form, the seller can cancel the contract after delivering to the buyer a Request for Buyer to Perform, giving the buyer 24 to 72 hours, typically, to perform.
Once all contingencies are removed (in writing), whether or not the Buyer has satisfied himself/herself regarding all contingenices or received any information of the contingencies, the Buyer may not be entitled to the return of the buyers earnest money deposit if the buyer does not close escrow. This could happen even if, for example, the Buyer does not approve of some aspect of the property or lender does not approve the buyers loan.
Sample contingencies are...
Purchase of Sellers replacement home
HOA documents and or CCR's
Clear title for the buyer
Sale of Buyers property
So if you are currently thinking about purchaseing a home, please be aware of all your buyer contingencies. They are there for a reason.