Term Tuesday: Contingency Removal

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A contingency is something written into a contract to protect a buyer or seller in the event that they cannot or do not want to perform on a promise to buy or sell a home. Typically, a contract will have 17 days to remove contingencies, which is done with C.A.R. Form CR (Contingency Removal). The contingency period is negotiable and it is common to see shorter contingency periods, such as 7, 10 or 14 days, especially with short sales and bank owned properties.

Different types of contingencies include:

• Subject to the seller finding suitable housing: closing on a new property concurrent with the sale of a seller's current property
• Loan Contingency: dependent on the buyer securing a loan
• Inspection of Property: dependent on the buyer receiving results of various inspections which may result in a Request for Repair for the seller
• Appraisal: a buyer may wish to receive a formal appraisal to ascertain a home's value 

If a buyer or seller does not remove contingencies within the time period, they other party may demand that they perform. Once contingencies have been removed, the parties are obligated to move forward with the purchase.