February 20th, 2023 at 3:40 pm
Multiple Choice Question: Are the buyer’s contingencies removed? Pick the best answer:
A. Yes.
B. Yes, if the buyer had accepted the seller’s $12,000 credit.
C. No.
D. It depends on how the forms were completed.
Answer: Answer D is the best answer! The Contingency Removal (CR) form could have been completed in at least 2 different ways with different results. In the first line of the form, the CR could have been completed in accordance with the Purchase Agreement or in accordance with the Request for Repair (RR). If the CR was completed in accordance with the Purchase Agreement, the CR looks like a stand-alone document removing all contingencies. The buyer can try to argue that the failure to check the box referencing the RR (rather than the Purchase Agreement), was an unintended honest mistake, but the seller does have what appears to be a valid claim for the deposit as liquidated damages.
Alternatively, if the CR was completed in accordance with the RR (rather than the Purchase Agreement), we would still want to see how the RR was completed to determine whether the buyer’s contingencies have been removed. If, for example, paragraph 4A(2) on page 1 of the RR was checked and nothing else was mentioned about contingencies, the RR provides 2 scenarios by which the buyer’s contingencies are removed.
In the first scenario, the buyer’s contingencies on the attached CR are removed if the seller agrees to all of the buyer’s requests. In our situation, that did not happen. The seller did not agree to the buyer’s request for a $20,000 credit. So if the forms were completed as outlined above, the buyer’s contingencies are not removed.
As for the second scenario, paragraph 4A(2) of the RR also says that the buyer’s contingencies on the attached CR are removed if the seller agrees to a portion of the buyer’s requests, and the buyer accepts the seller’s partial agreement. In our situation, that did not happen either. The seller did agree to a portion of the buyer’s request by offering a $12,000 credit, but the buyer did not accept the seller’s partial agreement. Hence, if the forms were completed as outlined above, the buyer’s contingencies are not removed.
-Thank You to Marie Marquez Balderas (Pasadena Office) for suggesting this week’s legal tip!
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