You have to read the contract VERY carefully. Banks use their own purchase agreement written with only their interests in mind. They have systematically removed buyerâ€™s rights that are contained in a normal C.A.R. purchased agreement. The buyerâ€™s agent you used should have known this and advised you of such.
In a normal contract, contingencies have to be removed in writing. In some REO contracts, they are removed automatically as soon as the contingency time periods lapse or expire. That may be the situation in your case.
Typically, for an REO purchase agreement, if you wish to cancel a transaction, you have to cancel the contract IN WRITING with a Release Of Contract form PRIOR to the contingency time periods expiring. Failure to do so may mean you are locked in to the transaction or, should you wish to cancel, you forfeit your deposit.
By the way, $50,000 deposit for an REO is very high â€“ normally, they require 1% and, in some cases, a maximum of 3%. Are you talking about the deposit or down payment?
Discuss this with your buyerâ€™s agent and if you donâ€™t get a satisfactory resolution, talk to their broker. You may need to get a real estate attorney involved as well.