Answer: Yes. The most straightforward definition of a “non-contingent offer” is an offer to purchase with no contingencies allowing the buyer to cancel and keep the deposit, such as loan, appraisal, inspection, and other contingencies. As explained in the Legal Tip from last week, a buyer can submit a non-contingent offer by checking the box in paragraph 14C of the RPA, and attaching a Contingency Removal form removing all contingencies. It’s a very risky thing for a buyer to do, but it’s legal.

Of course, that’s not the definition of a “non-contingent offer” that agents are curious about. What they usually want to know is whether a sale can be structured in such a way to prohibit a buyer from cancelling for any reason, unless the buyer also forfeits the good-faith deposit. To structure something like that, a seller must generally jump over at least 3 major hurdles.

First, certain disclosure laws give a buyer the right to cancel upon receipt of the disclosure. However, a buyer does not have that cancellation right for a TDS, NHD, and related disclosures, if given to the buyer before the buyer writes an offer. Hence, a listing agent could, for example, upload those disclosures into the MLS, and require the buyer to review those disclosures before writing an offer.

Second, most buyers want to conduct inspections and review the inspection reports before closing escrow. A seller could, at least theoretically, disallow a buyer’s inspections, or require the buyer to do them before the seller accepts the buyer’s offer. Or a seller could order and obtain inspection reports from reputable inspectors to upload into the MLS along with the disclosures. The current demand for housing in Southern California may not be strong enough for buyers to go along with any of these ideas.

Third, on occasion, new discoveries of material facts may arise during escrow. Whether something like that will give a buyer the right to cancel is usually a complicated legal analysis determined on a case-by-case basis, depending on the exact facts and circumstances. For example, a registered sex offender could move in next door, or a seller removing an area rug could discover water damage and mold underneath. In those 2 specific situations, a buyer should be able to cancel under paragraphs 10A(6) and (7) of the RPA, which essentially tracks the language in the TDS law. To counter out those provisions would be foolhardy in my opinion, because the law specifically states that a waiver of the TDS requirements is void as against public policy.

Yet, the transaction could be TDS-exempt. In that situation, we would, as the listing agent, leave it up to the seller to decide whether to counter those provisions out. We must, however, inform the seller in writing (and get an acknowledgment of receipt) that countering those provisions out may give rise to legal consequences, and that we strongly recommend that the seller consults with the seller’s own attorney before proceeding.

Copyright© 2020 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 August 10, 2020. 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.