[quote=ltsdd]urbanrealtor,
Interesting that you brought the contingency thing up. We’re more than a week past that 10-day “remove contingencies” period. What exactly is the ramification for that? (No, my agent didn’t provide any firm response to this question). I am moving forward with this transaction because it’s been a long and arduous struggle to get to this point (and, of course, because I think I’m getting a reasonably good deal). Otherwise, I would have walked.
Regards.[/quote]
When you buy a place there are 2 main types of contingencies.
Investigation contingencies:
These are the contingencies that state if you are unhappy about the inspection or about the HOA’s finances (or the zoning or the color of the neighbor’s dog), you can back out. That contingency fails. In most RPA’s, you are presented with a default of 17 days (10 days in your version; see paragraph 14 and any counters) within which you need to remove investigation contingencies. In other words to either decide you hate it and want to cancel; or to request repairs (and come to a consensus with the result of that request) or to fall in love and decide you don’t want to ask for anything else. This contingency is automatically extended by the revelation of new material disclosures after the original 7 days that the seller had to give them to you. The bottleneck on disclosures could be caused by anything (your agent, the seller, the listing agent). I am prepping today disclosures that are 2 weeks late. This is the fault of the seller being out of town after accepting an offer. This means the buyer has more time to back out.
Lending contingencies:
These are the contingencies related to loans.
Generally the loan is a requirement (and contingency) of the purchase (most people don’t buy for cash). If some part of that breaks down (the appraisal comes in low, or the borrower writes off half his income), then that contingency will fail and the buyer will not buy.
Removal of contingency:
Generally, in CAR RPA’s, active contingency removal is needed. That means you need to remove your contingency manually. So day 10 can come and go but until you sign a piece of paper stating “the buyer hereby removes xxxx contingency” that contingency will remain in effect. On the expiration of those time frames, the seller can demand that the buyer remove contingency or cancel escrow. So being bullheaded can cost you the purchase even if it does not cost you money. Some developers and flippers and banks will modify this so that contingencies cancel purely based on the date (passive removal). However, usually buyer-seller deals are active.
Once the contingencies are removed (passively or actively), the deposit is in jeopardy if the buyer backs out. I have only had a deposit dispute once and I won because the seller (demonstrably) misrepresented an engineering report that was part of the disclosures. Because that misrepresentation came to light after contingencies had been removed thus creating a new disclosure.
If your agent is not scheduling an inspection until after contingency removal dates, then you should really consider bolting on this. Really. Sounds like you have inadequate or questionable representation.
