When buying or selling a home in California, contract contingencies play a critical role in protecting both parties. These clauses are built into the purchase agreement and can determine whether the transaction moves forward smoothly—or falls apart entirely. Understanding how contingencies work can help you avoid costly mistakes and unexpected risks.

What Are Contract Contingencies?

A contingency is a condition that must be met before a real estate deal becomes legally binding. If a contingency isn’t satisfied, the buyer or seller may have the right to cancel the contract without penalty. These clauses provide an “exit strategy” for unexpected developments during escrow.

Common Real Estate Contingencies in California

1. Inspection Contingency
   This allows the buyer to inspect the property for defects such as plumbing issues, foundation problems, or mold. If the inspection reveals serious issues, the buyer can renegotiate the price or walk away.
2. Financing Contingency
   The financing or loan contingency gives the buyer time to secure a mortgage. If the lender denies the loan, the buyer can withdraw from the contract without losing their deposit.
3. Appraisal Contingency
   Lenders often require an appraisal to confirm the property’s value. If the appraisal comes in lower than the purchase price, the buyer may cancel the deal or request a price reduction.
4. Title Contingency
   This ensures the property has a clear title—free from liens, disputes, or ownership conflicts. Any issues found in the title report must be resolved before closing.
5. Sale of Current Home Contingency
   In some cases, a buyer includes a contingency that allows the purchase to proceed only after their current home sells. This can prevent financial strain but may make the offer less competitive.

Why Contingencies Matter

Contingencies protect your interests and your finances. They allow you to conduct due diligence and ensure the property and deal meet your expectations. However, sellers may view too many contingencies as a risk, so striking a balance between protection and competitiveness is key.

Work with an Experienced California Real Estate Attorney

Every real estate transaction is unique. Having a knowledgeable attorney review your contract can ensure that contingencies are clearly worded and enforceable.

At Law Office of Ball & Yorke, we help Ventura clients navigate California real estate contracts, negotiate favorable terms, and protect their investments.