In California, contingencies stay active until the buyer or seller removes them in writing.
California is an active contingency state. What does that mean? Well, when you’re purchasing a property or you’re selling a property, you have certain contingencies on the contract. So the contingencies, basically, there are certain conditions that you have to meet by certain date in order for the sale to go through. For example, I am buying a house and I have a loan contingency of December 1. That means by December 1, I need to get my loan ready. So let’s say December 1 comes and my lender calls me and says, you know what? I’m sorry, your loan is not ready. We have a conditional approval, but we don’t have a full approval. So December 1 is my due date. Right? But then December 2, it doesn’t mean that it expired. So, in California, we have to actually remove the contingency by signing a form that says, I am removing my loan contingency.
So you need to understand, as a buyer and also as a seller, you need to understand what contingencies you have and what are your obligations, and you need to make sure that you meet those deadlines. And if you don’t meet it, what are the risks of not removing your contingencies? And what are the risks of removing contingencies? If you have a conditional loan approval, make sure you don’t remove your contingency, because many times lender may tell you you have a conditional approval and it’s good, but it’s not really, because sometimes it’s rare. But it happens where, especially in a difficult loan, that you may not be able to get the full approval. So if you remove your loan contingency before you have the full approval, you may lose all your earnest money deposit. So if you put a deposit of, let’s say, 3%,you may lose like 50,000, depending on your purchase price.
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Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379