A contingency is a condition written into the purchase agreement that must be satisfied — or formally waived — before the sale can close. This is the buyer's due-diligence window: inspecting the property, securing loan approval, and confirming the appraisal supports the purchase price. Each contingency has its own removal deadline, and missing one without an extension can put the buyer's earnest money deposit at risk. An as-is sale strips out most condition-based contingencies up front, while liquidated damages clauses define what happens to the deposit if the deal falls apart after contingencies are removed. This is the shortest category in the glossary, but arguably the highest-stakes one — it's where most escrows fail if they're going to fail at all.
- Active Contingency Removal
- The process under the California RPA where the buyer must affirmatively sign and deliver a contingency removal form to remove each contingency. Contingencies do not automatically expire in California.
- Appraisal Contingency
- A provision in the purchase agreement making the sale contingent upon the property appraising at or above the purchase price. Protects the buyer from being obligated to purchase a property that does not appraise.
- As-Is Sale
- A transaction where the seller is unwilling to make repairs or provide credits for property condition issues. The buyer still has the right to inspect and cancel during the contingency period but accepts the property in its current condition if they proceed.
- Cancellation
- The termination of a purchase agreement by mutual consent or by one party exercising a contractual right. Proper cancellation procedures must be followed to ensure the earnest money deposit is returned to the buyer.
- Contingency Period
- The time period during which a buyer has the right to investigate the property and transaction and to cancel based on contingency findings. Contingency periods are specified in the purchase agreement.
- Inspection Contingency
- A provision in the purchase agreement giving the buyer the right to conduct physical inspections of the property and to request repairs, credits, or cancellation based on the findings. Under the December 2024 RPA the default inspection period is 17 days.
- Liquidated Damages
- A provision in the California RPA limiting the seller's remedy to the earnest money deposit if the buyer defaults after removing all contingencies. Must be initialed by both parties to be enforceable.
- Loan Contingency
- A provision making the purchase contingent upon the buyer obtaining financing on specified terms. If the buyer cannot obtain the specified financing they may cancel the contract and recover their earnest money deposit.
- Notice to Perform (NTP)
- A written notice from one party to the other requiring them to perform a contractual obligation within a specified time period, typically 2 days under the California RPA. Failure to perform after an NTP can be grounds for cancellation.
- Passive Contingency Removal
- A contingency removal method where the contingency is deemed removed after a specified period unless the buyer takes action to cancel. Not the default method under the California RPA which requires active removal.
- Repair Request
- A formal written request from the buyer to the seller asking for specific repairs, replacements, or credits based on inspection findings. Submitted on a Request for Repair form under the California RPA.
- Seller Disclosure
- The seller's legal obligation to disclose known material facts about the property that might affect its value or desirability. In California sellers must complete a Transfer Disclosure Statement and Seller Property Questionnaire.
- Seller Property Questionnaire (SPQ)
- A California Association of REALTORS® form that supplements the TDS by asking the seller more detailed questions about the property condition, history, and any known defects.
- Title Contingency
- A provision allowing the buyer to review and approve the preliminary title report and cancel if title issues are unacceptable. The buyer typically has a specified number of days to review the prelim after receipt.
- Transfer Disclosure Statement (TDS)
- A California-required form completed by the seller disclosing the known condition of the property. The buyer has three days after receipt to review and cancel if unsatisfied.