Ask Phyllis!

Contingency Removal

Dear Phyllis,

My fiancé and I recently closed on our first home. Our Realtor® instructed us that it is customary to make a deposit for escrow to hold of 3% of the agreed price.  We did so and felt that everything was going well initially. Our loan was approved but the lender needed some more paperwork and we didn’t want to waive the contingency until we had the final approval. The seller and their agent were pushing us to waive our contingency, even though they knew we didn’t have full loan approval.  Just three days after this contingency was supposed to be waived, the seller and their agent sent us a Notice to Perform. We were quite surprised when our agent explained that the seller could cancel escrow in 48 hours. We hounded our lender and she was able to get the final conditions pushed through and we did sign off on all of the contingencies.  My question is really just about the procedures.  I think the seller and their agent were very harsh. Can you chime in.  Doug

Dear Doug,

Congratulations on your first home! Real estate contracts are constantly changing. The Residential Purchase Agreement now requires buyers to remove contingencies in writing.  Once a contingency has been removed, your earnest money deposit held in escrow is at risk. This is why the Listing agent wanted you to remove your contingency in writing. The agent was simply looking out for her client’s best interests.  This is the listing agent’s job.

Perhaps the listing agent and your Realtor® could have worked better together to understand your reluctance. A compromise might have been reached.  Maybe your lender could have communicated better with the listing agent regarding timing etc. 

Sorry, this process was so stressful to you and your fiancé.  I wish you both much happiness in your new home.

  Phyllis Harb