Home Buying in Fremont>Question Details

Rhea, Home Buyer in Fremont, CA

How does a contingency disappear?

Asked by Rhea, Fremont, CA Fri Feb 13, 2009

We are in a contract that is contingent on the seller releasing prior Escrow funds by 2/13. The seller has not been able to release the funds. We do not wish to back out of the contract (inspite of the contingency). Does the contingency pretty much disappear? Is the contract still valid?

Thanks.

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Answers

9
I have looked closely at both this and your other question.

From the information you have provided, it is not possible to determine where you stand from a legal perspective. The best way for you to get a solid understanding of your rights is to talk to a real estate attorney, who is going to need to take a close look at the relevant documents.

Without being too specific or referring to any partiuclar response, I would be very cautious about relying on any specific advice you receive via this website on legal questions. A couple of the answers you have received on this and your other question are good examples of why real estate agents should not venture too far into the practice of law.
0 votes Thank Flag Link Sun Feb 15, 2009
Rhea:

This is a tricky one for sure. Technically, your offer should never have been accepted UNTIL the release of contract was signed by buyer #1. In fact, if your offer was written subject to buyer #1 releasing the contract AND, in fact, buyer #1 never did, then technically you are not in contract now. However, since they are now asking YOU for a release of contract, someone somewhere thinks you ARE in contract ... it's a bit confusing to be sure.

If you signed your purchase agreement and in the documents was a statement “Subject to release of contract,” then why you are being asked to sign a release when you were not ever technically in contract to begin with? UNLESS it is just a formality. If that is the case, and you never removed any contingencies, then, in my opinion, you have no option but to sign and move on.

I still recommend that, since both agents are under the same broker, you meet with the broker and try to resolve it there.
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Web Reference: http://www.carlmedford.com
0 votes Thank Flag Link Fri Feb 13, 2009
Thanks for your advice ,Carl. So if we formally extend the contingency date and the bank refuses to accept it, does our contract stand void? I would think not, because we are still being asked to sign a release of contract. I am not entirely sure.
0 votes Thank Flag Link Fri Feb 13, 2009
Rhea:

(i) What happens if we refuse to sign the release of contract? (We are being pushed to sign a release as the bank wants to go with the original buyer now)
A: Meet with the broker over the two agents and work this through with him/her. If their brokerage cannot work this out to your satisfaction, and since the deal involves two of their agents, you might want to take your business elsewhere.

(ii) If we formally extend the contingency date, does that require an acceptance from the bank? What happens if the bank refuses to accept that?
A: The bank has to agree with any extensions. If they don’t sign, there is nothing you can do to extend this.
.
Web Reference: http://www.carlmedford.com
0 votes Thank Flag Link Fri Feb 13, 2009
Rhea:

Same with me - look at my previous answer. In California, contingencies have to be removed in writing. The time frames for removing contingencies is clearly specified in the contract as well as any additional terms, such as buyer #1 signing a release of contract so escrow can release his funds. IF buyer #1 does not sign the release, he is technically still in contract, although outside the contractual timelines in the contract, and technically in breech of contract. However, to officially leave the contract, buyer #1 has to sign the release. As buyer #2, you should not release your contingencies until all of the contractual issues have been resolved.
.
Web Reference: http://www.carlmedford.com
0 votes Thank Flag Link Fri Feb 13, 2009
Jeff and Cheryl,

Thanks for your response. I have 2 more questions:
(i) What happens if we refuse to sign the release of contract? (We are being pushed to sign a release as the bank wants to go with the original buyer now)
(ii) If we formally extend the contingency date, does that require an acceptance from the bank? What happens if the bank refuses to accept that?

Thanks,
Rhea
0 votes Thank Flag Link Fri Feb 13, 2009
The contingency will not "automatically" disappear, however, you or your agent will have to give the seller a "notice to perform", which will put them on notice that they have x amount of time before you elect to cancel the escrow. However, since you want to stay in the transaction I would recommend that you formally extend the contingency date through escrow (escrow will draw an amendment). This will eliminate any confusion and protect everyone. You should address everything in writing...good luck

Jeff and Cheryl Fox

Properties Plus
818-995-9108 Office
800-917-8080 Toll Free
818-207-2013 Cell
Email: mail@jeffandcherylfox.com
Webstie: http://www.jeffandcherylfox.com

16133 Ventura Blvd. 7th Floor
Encino, CA 91436
0 votes Thank Flag Link Fri Feb 13, 2009
Lee, thanks for responding. I don't see the response that you are referring to. Does it take a while to show up?

Rhea
0 votes Thank Flag Link Fri Feb 13, 2009
Rhea,

I'm going to suggest that you read my answer to your earlier question, as that inquiry gives a more complete picture of what's hapenning.
0 votes Thank Flag Link Fri Feb 13, 2009
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