A contingency allows a Buyer (or Seller) to cancel a purchase agreement based upon the happening of a certain event. By default, all of the CAR purchase agreements contain contingencies for loan, appraisal, title, disclosures and investigations.
If a Buyer properly cancels based upon an open contingency, do they lose their deposit?
No. The buyer would be entitled to retain their deposit. Since the buyer has the right to cancel, it is not a breach of the contract.*

These are the 3 main contingencies you may come across during your Escrow:

1. INSPECTION: The Investigation Contingency is all-encompassing. It includes inspections of the physical attributes of the property, such as a home inspection, lead-based paint inspection, wood pest (termite) inspection, and other conditions that may affect a Buyer’s property use.
   If the Buyer has a good faith dissatisfaction with the property or any condition affecting it, the buyer may cancel the transaction during the investigation contingency period.**
2. APPRAISAL: The Appraisal Contingency allows the Buyer to withdraw from the transaction if the property does not appraise at the purchase price.
3. LOAN: The Loan Contingency allows the Buyer to back out of the transaction and receive their earnest money deposit back if they can’t qualify for a loan by the date specified by your contract terms.

Escrow Opening Package | Disclosures, Reports & HOA Documents
In the next several business days, you will receive a Buyer’s Opening Package from escrow containing forms to be completed as soon as possible. The most important forms are your “Vesting Form,” which tells them how you will be holding Title to your property and the Fire Insurance Form. Please note that most lenders will require your Fire Insurance Policy to be in effect before they send out loan documents for signing, so you must get your insurance in place as soon as possible.

• We will be using Docusign to sign all of your documents.
• Please be sure to look out for the emails from your Agent & Transaction Coordinator team to review and acknowledge at your earliest convenience- this helps ensure that we are keeping your transaction on the established timeline.
  • Disclosures will be provided by the Seller within the first 7 days of Escrow (unless otherwise stated in your contract terms).
  • You will receive the Seller Property Disclosure (SPQ) & Real Estate Transfer Disclosure Statement (TDS) filled out by the Seller, along with all statutory & Broker required disclosures & reports, such as the Natural Hazard Disclosure (NHD).
  • You will be receiving a copy of the preliminary title report.
    • The Prelim, as we call it, is an offer to issue a title insurance policy, and it will describe the terms under which a policy will be issued. The preliminary report will include the owner’s name, property legal description, and any exceptions to the title policy. While every property will have some exceptions, certain exceptions must be removed before a title policy can be issued.
    • Typically, there will be a HYPERLINK in your Preliminary Title Report, which is a link that allows you to review and/or print the Title Report and any items recorded or associated with the property.
    • Please review this report once you see it, and if you have any questions/concerns, either let us or the title officer listed on the report know so that we can help find those answers for you.
• If your property is located within a Homeowners Association, escrow will provide you the Homeowners Association documents in the form that they are provided to the escrow team. It typically takes anywhere from 10 to 15 days from when we open escrow to see these documents.
  • If the documents are provided in hard copy form, escrow will send them to you via UPS or FedEx.
  • If the documents are provided to the escrow team by the HOA in a link, escrow will forward the link to you for review. Please note that many HOA links will expire, so we suggest that you save a copy of the HOA documents on your computer if you are not requesting them to send you a hard copy.
• You will need to start shopping around for Homeowners Insurance for your new home. Escrow and your lender will ask for this information from you, and the sooner they have it, the better.
  • Most people like to check first with who they currently have for their car, for example, but it is usually a good idea to shop around and compare quotes!

Negotiations: Request for Repairs | Appraisal [If Applicable]
The negotiations or requests surrounding the inspection results.

• You may request that the Seller repair or replace defects prior to the close of escrow, lower the purchase price, and/or provide a credit towards your closing costs.
  You may also request the Seller complete Section 1 and/or 2 clearance based on pest inspection reports. (unless otherwise stated in your contract terms)
• The Seller may agree to all terms, some terms with modifications or may NOT agree to any terms at all.

If the Appraisal comes in under the purchase price, and an appraisal gap has not been incorporated into the contract, the Buyer can request that the purchase price be lowered to the appraised value or back out of the transaction and receive their earnest money deposit back.