Contingency Release: Lecture 17

Contingency Release

The buyers bear most of the responsibility for things that must be accomplished during escrow and for moving the escrow ahead. The buyers, along with their agent, are responsible for reviewing & approving the home inspection, submitting loan documents, ensuring the appraisal is done, and finalizing their mortgage loan.

Then, it’s time for the buyers to release their contingencies. In other words, the transaction goes “hard” and the buyer is fully committed to the purchase. If they decide to cancel after they remove their contingencies, they may forfeit their deposit or have to pay a penalty.

In California, our standard contract contingency period is 17 days, but can be changed per mutual agreement of both parties. Also, they can release some of the contingencies but not all of them.

For example, the buyers can release the inspections, reports, disclosures, and appraisal, but NOT release the loan approval contingency until the loan is funded. That way, if they can’t get the mortgage loan, they won’t be stuck paying a penalty without buying a house.

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