Buying a Costa Mesa Home
What are Contingencies and Why are They Important?
Basically, contingencies allow a buyer who is buying a Costa Mesa home time to inspect the home and attempt to get a mortgage loan before being fully committed to the purchase of the home.
In California, the California Association of Realtors (CAR) purchase contract typically allows 17 days for all buyer contingencies to be removed. These contingencies usually include: physical inspection, appraisal, finance/loan, a review of title, review of seller disclosures, wood destroying pest (termite) inspection, review of conditions, covenants and restrictions (CC&R’s) and any other considerations/inspections the buyer might consider important in determining whether or not to purchase the home.
This time period can be made shorter or longer, and is typically much shorter with the purchase of an REO/foreclosure/bank owned home.
When buying a Costa Mesa home, it is important that the the buyer complete all inspections and be ready to remove contingencies in a timely manner. The buyer needs to have all of these completed in a timely manner because once contingencies are removed, then the seller may get to keep the buyer’s initial deposit if the buyer elects not to or cannot close on the purchase during the time specified in the contract.
In the purchase contract, there is a liquidated damages clause. If this is initialed, then it automatically entitles the seller to keep the buyer’s initial deposit (up to 3% of the purchase price) if the buyer removes all contingencies and then does not close escrow for any reason.
If the buyer who is buying a Costa Mesa home chooses not to remove contingencies in a timely manner because he doesn’t have loan approval for example, then the seller can choose to cancel the purchase contract.
If you have more questions about contingencies or about buying a Costa Mesa home in general, please contact Christine Donovan at 714-319-9751.
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