Contingencies frustrate buyers, sellers

There are many frustrating aspects associated with buying or selling a home today. One is that contract contingencies -- such as inspections, financing or the sale of another property -- often aren't removed on time. It's not uncommon for closings to be delayed, usually due to the buyer's lender.

Your purchase contract should include a provision to deal with deadlines that are not met on time. For example, in the home purchase contract used by many Realtors in California, sellers can give buyers a 24-hour notice to perform. If the buyers don't meet this deadline, the sellers can cancel the contract. This notice can't be delivered earlier than 24 hours before the contingency is due.

You might want to issue a 24-hour notice, or some similar remedy included in your contract, if you're in contract with buyers who don't remove their inspection contingency on time and have made no effort to line up inspectors, especially if the buyers' agent thinks her clients are flaky. If your contact doesn't provide for a simple remedy for missed deadlines, consult with a knowledgeable real estate attorney.

In most cases where buyers can't remove contingencies on time but they're serious about moving forward, there's just a glitch that needs to be addressed. A seller wouldn't want to jeopardize the deal by invoking a demand to perform if there's a good chance the delay is just that.

Recently buyers who were applying for a jumbo mortgage hit a roadblock when the house didn't appraise for the purchase price. The loan and appraisal contingencies were due 14 days from acceptance -- a near impossible time frame in the current lending environment.

The buyers were committed to buying the house, and the sellers were committed to selling to these buyers. The buyers requested an extension of time for the loan and appraisal contingencies; the sellers agreed.

HOUSE HUNTING TIP: At the first indication there could be a delay in a contingency removal or closing, your agent should let the other agent know so that it doesn't come as a surprise. Your agent should be as specific as possible about the situation, without violating your privacy rights. If it turns out that there will be a delay, make a written request for an extension so that there is no question about whether or not the contract is intact. ...CONTINUED

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