First, we had a couple of transactions that either cancelled at the last minute or were delayed because the seller did not order the City Report or HOA documents in a timely manner. Remember, those documents, along with the NHD, carry buyer contingency rights with them. Paragraph 4(B)(2) of the RPA covers City Reports, paragraph 6 covers the NHD and paragraph 7 covers the HOA. Each of those items is incorporated into the contingency section of paragraph 14, where the buyer has 5 days to cancel the transaction “if any report,…for which Seller is responsible is not Delivered within the time specified…” As a result, if representing the seller, you need to remember that by not ordering these items immediately, you may be lengthening the buyer’s contingency periods. This issue is most prevalent with the City Report and the HOA documents, since they often take a very long time to receive. So don’t wait to order them. Don’t wait until escrow is opened and have escrow do the ordering for you. Instead, order these items when you take the listing. Then, when you get an offer they will be ready to go and you will get all contingencies removed in a timely manner. This practice will better protect your seller. Given today’s market, the property will eventually sell and the reports will be needed. So there is no reason to wait. Order these items up front.

Next, as we have discussed before, we are seeing buyer’s do a lot of aggressive things in order to get their offers accepted. One of the most common things we see is the waiver of all contingencies. Buyer’s believe that if they waive their contingencies, the seller will feel more comfortable with them and will more likely pick their offer. While this is true, you need to be aware that this “waiver” may not always be effective. While I think it is possible to waive the contractually created contingencies (like HOA or title), certain cancellation rights are created by statute and I do not believe those can be waived. For example, and as you know, the Civil Code requires that the seller deliver a TDS to the buyer and provides the buyer with a 3 day right to rescind after that delivery. Even if an offer “waives” all contingencies, I still believe the buyer is entitled to the TDS and can cancel if he doesn’t like what it says. The same is true for the NHD and Lead Based Paint disclosure. So, if you represent a seller where this kind of offer comes in, please make sure they understand this issue. If they believe the deal is truly airtight, and the buyer then exercises his statutory right to rescind, the seller’s anger will surely be directed towards you.

As always, please contact your manager with any questions you may have and they will contact the Legal Department if necessary