Buying a home in California is exciting—but it can also feel overwhelming. One part of the process that often confuses buyers is contingency removal. Specifically, what happens if you remove your contingencies…and later want (or need) to cancel the contract?
Let’s break it down so you can feel confident and informed.
What Are Contingencies, Anyway?
Contingencies are protections built into your purchase contract. Common ones include:
- Inspection contingency (gives you time to check out the property’s condition)
- Appraisal contingency (protects you if the home doesn’t appraise at the purchase price)
- Loan contingency (gives you time to secure financing)
These give you an “out” if something significant comes up during escrow.
What Happens When You Remove Contingencies?
When you remove contingencies, you’re telling the seller:
👉 “I’m satisfied. I’m moving forward with the deal.”
At this point, your earnest money deposit (usually 1-3% of the purchase price) is at risk if you later change your mind.
If you try to cancel after contingencies are removed:
🚩 The seller may be entitled to keep your deposit under the liquidated damages clause (if agreed upon).
🚩 You could face legal disputes if the seller claims financial harm from your cancellation.
Why This Matters
It’s tempting to rush into removing contingencies to make your offer stronger or speed things up—but it’s a big decision. Once you remove those protections, backing out isn’t as simple as walking away.
Smart Tips Before Removing Contingencies
✅ Ask questions. Make sure you understand inspection reports, the appraisal, and your loan status.
✅ Don’t feel pressured. You have the right to take the time you need (within your agreed-upon timeline).
✅ Work with your agent. A good real estate professional will help you navigate this decision wisely.
Removing contingencies means you’re committing. Before you do, be certain you’re ready. Protect yourself by understanding what’s at stake—because your deposit, and more, could be on the line.
If you have questions about contingencies or the California purchase contract, talk to your real estate agent.
If you’re considering a move or investment and require a trusted Real Estate Broker, we’re here to assist you. Contact us via email at TEAM@McDanielCallahan.com, complete the form below, or give us a call at 925-838-4300. We are ready to provide expert guidance and support for all your real estate needs. Terry McDaniel DRE License #00941526
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