The California Residential Purchase Agreement is an 8-page document filled with numerous instructions and clauses designed to make the real estate transaction move as smoothly as possible. When making an offer on Irvine real estate for sale, one of the biggest negotiating sticking points is the length of time allotted to satisfy the contract’s contingencies. While sellers may want you to shorten or even eliminate some or all contingencies before opening escrow, you will be doing yourself a disservice by taking away the main protections you have in the transaction.
Sellers want to close the transaction in the shortest time possible, so many will try to shorten the contingency periods. Buyer contingencies fall into three main categories: Inspections, Appraisal, and Loan. The default contingency period to complete your due diligence in the CA purchase contract is 17 days; during this time, you will need to complete all of your inspections, obtain a property appraisal, and receive approval for your home loan if you require one. At the end of the 17 days, the seller will request that you remove your contingencies; if you do not, you will receive a 48-hour Notice to Perform that in essence allows the seller to cancel the transaction if you do not comply.
What contingencies do, more than anything else, is allow you to complete a thorough review of the property and your financial situation to determine is a)the home is right for you, b)the home is worth what you are willing to pay for it, and c)that you are financial capable of paying your monthly mortgage. These contingency periods serve to protect your initial investment in the transaction: your earnest money deposit. If you are dissatisfied with anything having to do with the transaction related to these contingencies, you are allowed to cancel the deal and recoup your earnest money. Once you remove contingencies, or if they were never a part of the contract, your earnest money will be at risk if you decide to cancel.
As an Irvine home buyer, it is your responsibility once escrow opens to complete your investigations and work with your lender to obtain your loan approval. Even if you receive pressure from the other side, keep your contingencies in place until you are satisfied with your home or condo purchase.