Fact Pattern: You are the buyers’ agent for a pending sales transaction using the C.A.R. Residential Purchase Agreement (RPA). All the timeframes for the buyers’ contingencies have expired. The seller’s side has served a Notice to Buyer to Perform (NBP) to remove all contingencies. The buyers want to remove their contingencies by checking 6 checkboxes for each of their 6 applicable contingencies in paragraph I.2.A. of the Contingency Removal form (CR). They do not want to check the one checkbox to remove any and all contingencies in paragraph I.2.C. of the CR. The buyers say they feel uncomfortable checking the “remove all contingencies” checkbox.

Multiple Choice Question: Can the buyers remove each contingency in paragraph I.2.A. of the CR, rather than all contingencies in paragraph I.2.C.? Pick the best answer:

A. Yes, because checking each box to remove each contingency is essentially the same thing as checking one box to remove all contingencies.
B. No, because the seller has requested the removal of all contingencies.
C. No, because the buyers are acting in bad faith.
D. Both B and C. 

Answer: Answer A is the correct answer! We do not know exactly how the seller will react to the way that the buyers intend to complete their CR. However, removing each applicable contingency in paragraph I.2.A. of the CR is substantially the same thing as removing all contingencies in paragraph I.2.C. Additionally, for contract matters, courts will generally look at “substance over form.” The buyers in this situation are removing every applicable contingency, regardless of whether they check the “removal of all contingencies” checkbox.

Answer B is wrong (so Answer D is also wrong). It’s true that the NBP allows the seller to check one checkbox to request that the buyers remove all contingencies. However, that “remove all contingencies” checkbox appears to just be included in the NBP as a matter of convenience for the seller. The RPA itself does not give the seller a contractual right to require that the buyers remove “all contingencies” all at once. In fact, paragraph 14D(1) of the RPA specifically states that the seller can serve an NBP if the buyers do not remove the “applicable contingency” in a timely manner. An “applicable contingency” is just one singular contingency, not all contingencies all at once.

As for Answer C, nothing in the above Fact Pattern supports the contention that the buyers are acting in “bad faith” or being intentionally dishonest. Their position makes sense to me. They are happy to remove each identified contingency, e.g. loan, appraisal, investigation, etc., but they are uncomfortable removing “all” contingencies, because they are not quite sure what that entails exactly. After all, the current version of the RPA does not provide a list of all the buyers’ contingencies.

Stay Tuned Next Week! The newly revised RPA that is scheduled to be released next week will include a list of all the buyers’ contingencies in paragraph 3L.

-Thank You to Jennifer Niman (Sherman Oaks Office) for suggesting this week’s legal tip!

Copyright© 2021 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 December 6, 2021. 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. Written by Stella Ling, Esq.