What is a contingency removal in California escrow?
A contingency removal is the formal process where a buyer removes specific conditions (contingencies) outlined in the purchase agreement, signaling they’re ready to move forward toward closing escrow.
When you’re navigating the escrow process in California, understanding contingency removal is essential. It’s a pivotal step that determines whether a real estate transaction continues toward closing or faces delays. At 805escrow, we specialize in guiding Realtors and agents through this important stage with clarity and confidence.
Understanding Contingencies in Escrow
In California real estate, contingencies are contractual conditions that must be met before a transaction can close. These contingencies protect both buyers and sellers by ensuring that each party fulfills their obligations. For example, a buyer might include a financing contingency, which allows them to cancel the contract if they cannot secure a loan.
Common contingencies include financing, appraisal, inspection, and sale of the buyer’s current property. Each must be addressed and formally removed within agreed timelines, or the seller may have the right to cancel the deal.
Why Contingency Removal Matters
Contingency removal is not just paperwork, it’s a signal of commitment. Once contingencies are removed, the buyer’s deposit becomes at risk if they later back out. Because of this, escrow companies like 805escrow play an essential role in coordinating the communication between parties, ensuring all documents are properly executed and deadlines are met.
For listing agents, this step represents security and progress. It shows the buyer’s readiness to close, which can help both sides plan for the final stages of the transaction.
The Timeline for Contingency Removal in California
In most California residential purchase agreements, the standard contingency period is 17 days. However, this can vary depending on negotiations between buyer and seller. During this time, buyers conduct inspections, confirm financing, and ensure the property appraises at or above the purchase price.
After completing these steps, buyers must submit a written contingency removal form. This form is a legal acknowledgment that the buyer waives the right to cancel the agreement based on the specified conditions.
Types of Contingencies in California Real Estate
Here are the most common contingencies you’ll encounter in escrow:
| Contingency Type | Purpose |
| Inspection Contingency | Allows the buyer to inspect the property for defects or issues. |
| Appraisal Contingency | Ensures the home’s appraised value meets or exceeds the agreed purchase price. |
| Financing Contingency | Gives the buyer time to secure a mortgage loan. |
| Sale of Current Home | Protects the buyer if they need to sell their existing property first. |
What Happens After Contingency Removal?
Once all contingencies are removed, the buyer is legally bound to proceed with the purchase. If they back out after this point, their earnest money deposit may be forfeited. As a result, both agents and escrow officers should verify that all contingencies are cleared before moving forward.
The escrow company coordinates with all parties to prepare for closing, ensuring funds, title documents, and recording details are finalized smoothly.
Expert Tips from 805escrow
Here’s how you can stay ahead during the contingency removal phase:
- Track your contingency deadlines carefully using your transaction calendar.
- Communicate with your escrow officer early if extensions are needed.
- Ensure all disclosures and reports are reviewed before signing the removal form.
- Encourage your clients to consult with their agent or attorney before removing contingencies.
Partner with 805escrow for a Smooth Transaction
Choosing the right escrow company makes a significant difference. 805escrow combines expertise, transparency, and local knowledge to guide realtors, agents and their clients through every step of the transaction. We ensure all paperwork, funds, and compliance details align with California’s real estate regulations.
👉 Contact 805escrow today to learn more about how our escrow services can support your next closing.