The somewhat-stagnant marketplace should get interesting in the second half of the year. Buyers will sense an opportunity to make aggressive offers, and they might waive all contingencies to help offset their lower price.
Can they still cancel the deal later?
Q. If a buyer removes all contingencies at the onset of a transaction, of course frowned upon, and we ask them to sign the acting against the advice of broker letter; does the buyer still have five days to cancel if they don’t like the disclosures?
A. The answer would depend on whether or not the statutory disclosures were provided to the buyer in advance of the contract being formed. Contingencies and disclosures are two different things. One does not necessarily relate to the other.
If a buyer elects to take the risk of entering into a transaction “contingent free” and against our advice, but has not yet received the statutory disclosures, the 5-day right of rescission (if delivered by mail or email – 3 days if delivered in person) would apply.
In that case, the buyer would indeed have time after receipt to terminate the agreement, even if the offer was contingent free.
Think of it this way: (i) contingencies are contractual rights and/or obligations (ii) statutory disclosures are those that allow for an unfettered right to rescind (meaning unwind) the agreement within the requisite time period.
On the other hand, if the listing agent provided the statutorily prescribed disclosure documents in advance of the offer being formed; the right of rescission would not apply because the buyer would have already received the completed documents. If the statutory disclosures are amended after the contract is formed, the right to rescind is reinstated.
Whenever a buyer is contemplating submitting a non-contingent offer; provide and review the C.A.R. Non-Contingent Offer Advisory (“NCOA”) with the Buyer no later than the time the offer is signed.
We had it happen this week where the seller amended their disclosures. It gave the buyer a chance to cancel even though he had released all contingencies.
It didn’t come to that, but it could have.
We are pushing to provide all seller disclosures and a home inspection report to any potential buyers before they offer. It’s how it’s done in Northern California and it really should be SOP here too.