Multiple Choice Question: If the expiration of a buyer’s 17-day inspection contingency period falls on a Saturday, and we assume there’s no legal holiday involved, can we just consider the expiration to be the following Monday? Pick the best answer:

A. Yes.
B. No.
C. It depends on whether the seller has provided all the seller’s disclosures and reports.
D. It depends on whether we are the buyer’s agent or listing agent. 

Answer: As background, the C.A.R. Residential Purchase Agreement (RPA) defines the word “Days” as calendar days, except that, the “last day to perform an act required by the agreement” cannot fall on a Saturday, Sunday, or legal holiday (see paragraph 30F). For a 17-day contingency period that ends on Saturday (and assuming no legal holidays are involved), the true expiration date is really Saturday, not Monday. The reason is because that particular Saturday is a calendar day, but not the “last day to perform an act required by the agreement.” In fact, the contract specifically states that, after the initial 17 days, the buyer’s contingency period shall simply continue until the buyer removes it or cancels the agreement based on that contingency (see paragraph 14B(4)).

Once a seller serves a Notice to Buyer to Perform (NBP) to remove the inspection contingency, the buyer must do so within 2 days. It is precisely the service of the NBP that gives rise to the possibility of a “last day for the buyer to perform an act required by the agreement.” Only upon service of the NBP does the last day for the buyer to remove the inspection contingency exclude Saturdays, Sundays, and legal holidays.

Hence, answer D is the best answer. Whether we can consider an inspection contingency period ending on Saturday, June 23, as essentially expiring on the following Monday, June 25 (not a legal holiday), depends on whether we are the buyer’s agent or listing agent. For a buyer’s agent, the answer is “yes.” Under no circumstance will the buyer be forced to remove the inspection contingency until Monday, June 25. However, for a listing agent, the answer is “no” because the listing agent’s concern is when to serve the NBP. If the expiration of the inspection contingency is Saturday, June 23, the seller can serve a NBP up to 2 days beforehand or as early as Thursday, June 21 (see paragraph 14E). If the listing agent and seller were to erroneously consider the true expiration date to be Monday, June 25, they will wait until Saturday, June 23, to serve the NBP. Yet, upon serving the NBP on Thursday, June 21 (rather than waiting until Saturday, June 23), as the seller is allowed to do, the buyer may voluntarily remove the inspection contingency right away (e.g. on Thursday or Friday). It doesn’t matter that the buyer is not required to remove the inspection contingency until Monday, June 25. Not all buyers will wait until the very last possible day to remove their contingency.

Answer C is incorrect. The reports/disclosure contingency is independent of the inspection contingency. It is true that the RPA does not make this distinction abundantly clear, but it’s clear in the C.A.R. NBP and Contingency Removal forms.

-Thank you to Matt McIntyre (Pasadena Office) for suggesting this week’s legal tip.

Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of June 18, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.