How to Count Contingency Days in California: A Guide for Homebuyers and Sellers
In the world of real estate transactions, contingency days play a crucial role in ensuring a smooth and fair process for both buyers and sellers. These contingency days allow parties to conduct inspections, secure financing, and perform due diligence before finalizing the deal. However, understanding how to count contingency days in California can be confusing for those unfamiliar with the intricacies of the state’s real estate laws. In this article, we will provide a step-by-step guide on how to count contingency days and address some frequently asked questions to help you navigate the process with confidence.
Step 1: Determine the Type of Contingency
Before diving into the counting process, it’s important to identify the type of contingency and its specific deadline. Common contingencies include inspection, financing, appraisal, and the sale of the buyer’s existing home. Each contingency has a different timeline, so it’s crucial to be aware of the deadlines associated with each one.
Step 2: Calculate the Start Date
The start date of the contingency period is typically the day after the offer is accepted and both parties have signed the purchase agreement. This date is crucial as it sets the foundation for counting the contingency days.
Step 3: Understand the “Calendar Days” Rule
In California, contingency days are counted in calendar days, including weekends and holidays. Unlike some other states, business days are not excluded from the counting process. This means that if a contingency period ends on a Saturday or Sunday, the deadline will still be applicable.
Step 4: Determine the Length of the Contingency Period
The length of the contingency period is usually negotiable between the buyer and seller. However, common lengths for contingencies in California range from 10 to 21 days. It is crucial to review the purchase agreement carefully to identify the agreed-upon length for each contingency.
Step 5: Count the Contingency Days
To count the contingency days accurately, start with the day following the acceptance of the offer as the first day. Then, count each calendar day, including weekends and holidays, until the specified number of days has passed. For example, if the inspection contingency is set for 17 days, and the offer is accepted on January 1, the deadline for the inspection contingency would be January 17.
Q1: Can contingency periods be extended?
A1: Yes, contingency periods can be extended, but it requires mutual agreement between the buyer and seller. Both parties must sign an addendum to the purchase agreement, clearly stating the new deadline for the contingency.
Q2: What happens if a contingency deadline is missed?
A2: If a buyer fails to meet a contingency deadline, they risk losing certain protections and could be obligated to proceed with the purchase regardless of any issues discovered during the contingency period. However, the seller may choose to grant an extension if both parties agree.
Q3: Are there any specific rules for weekends and holidays?
A3: In California, weekends and holidays are not excluded when counting contingency days. Deadlines fall on the specified calendar day, regardless of whether it is a weekend or holiday.
Q4: Can a contingency be removed before the deadline?
A4: Yes, a contingency can be removed before the deadline if the buyer is satisfied with the results of the inspection, appraisal, or any other contingencies. The buyer must provide written notice to the seller, indicating the removal of the contingency.
Q5: Can a seller accept backup offers during the contingency period?
A5: Yes, a seller can accept backup offers during the contingency period. However, if a backup offer is accepted, the original buyer must be given a specific time frame to remove all contingencies or risk losing the property to the backup buyer.
In conclusion, understanding how to count contingency days in California is crucial for both homebuyers and sellers. By following the steps outlined in this guide and being aware of the specific rules and deadlines, you can navigate the real estate transaction process with confidence. Remember to review the purchase agreement carefully, seek guidance from a real estate professional if needed, and always communicate any changes or extensions to ensure a smooth and successful transaction.