Contingencies explained

The three usual ones

Inspection

Gives you a period to investigate the property and decide whether to proceed, ask for repairs or a credit, or walk. This is broader than it sounds - it generally covers your investigation of the property overall, not only a general home inspection. Sewer, roof, pest, structural, geological all sit under it.

Appraisal

Protects you if a financed purchase appraises below the contract price. If it does, you can typically renegotiate, make up the difference in cash, or withdraw. Without this contingency, an appraisal gap is your problem to solve in cash.

Loan

Protects you if financing does not come through. Note it protects against a genuine denial - not against changing your mind, and generally not against a denial you caused by altering your finances mid-escrow. What not to do during underwriting →

Removal is the part that matters

In California, contingencies are typically removed actively and in writing. They do not usually vanish on their own when a date passes - but a seller who is waiting can serve a notice requiring you to act, and if you do not, they may be able to cancel.

Once removed, your deposit is genuinely at risk if you walk. That is the whole significance of the date.

Which is why we track these deadlines rather than leaving them to you, and why nobody we represent should ever be surprised by one arriving.

The trade-off in a competitive situation

Sellers prefer offers with fewer contingencies and shorter periods, because those are likelier to close. So buyers under competition are tempted to shorten or waive.

That is a real decision with a real cost, and it should be made deliberately:

• Waiving inspection does not mean skipping the inspection - you can still inspect, you simply lose the right to act on what it finds. Inspecting anyway, purely for information, is usually wise.
• Waiving appraisal means committing to cover a shortfall in cash. Only sensible if you actually have that cash and know roughly how much exposure you are accepting.
• Waiving loan is the most serious. If financing fails, your deposit is exposed. Rarely advisable unless you could complete without the loan.
• Shortening rather than waiving is frequently the better move - it gives the seller most of what they want while keeping your protection. Just make sure the shortened period is genuinely long enough to get an inspector out and a lender to respond.

There is a version of this advice that just says "waive to win". We will tell you what each waiver actually exposes you to, and then it is your decision with the real numbers in front of you.

What actually happens if you walk

Within a contingency, exercised properly: you generally recover your deposit.

After removal, without a contract right: the seller may pursue the deposit, and California contracts commonly include a liquidated damages provision capping it - if the parties initialled it. Whether that applies is in your specific contract.

Deposit disputes are also a place where escrow will not simply release funds because one side asks. Resolving a contested deposit can take longer and cost more than people expect, which is another argument for not arriving there.

Other contingencies worth knowing about

• Sale of your current home - common and unpopular with sellers, because it makes your purchase dependent on a transaction they cannot see.
• HOA document review - a period to read what the association actually requires. Worth using →
• Insurance - increasingly relevant in fire-mapped areas of California, where the question is availability as much as price.

How we handle them

We calendar every contingency date the moment escrow opens, tell you what is approaching before it is urgent, and make sure removals are documented properly. Most of the anxiety in escrow comes from not knowing what happens next or when - and that part is entirely avoidable. The full timeline →