Contingencies are the conditions that must be satisfied before you are fully committed to buying. In California's standard residential purchase agreement, they are also your main protection for your earnest money deposit. Understanding them is the difference between negotiating from strength and gambling with a large deposit.
The three core contingencies
- Inspection / investigation contingency: your right to inspect the property — structure, systems, pest, roof, sewer, and anything else — and to cancel or renegotiate based on what you find. Default is often 17 days but is negotiable.
- Appraisal contingency: protects you if the lender's appraisal comes in below the purchase price. Without it, you must make up any shortfall in cash.
- Loan contingency: protects you if your financing falls through despite good-faith effort. Often 21 days by default; sometimes shortened or removed in competitive offers.
How removal works
In California, contingencies generally do not expire automatically. The buyer must sign a written contingency removal form for each one. Until you do, you retain that protection — but if you pass the agreed date without removing or negotiating, the seller can serve a Notice to Perform and, after the notice period, potentially cancel and pursue your deposit.
What "waiving contingencies" really means
In multiple-offer situations, buyers are often asked to shorten or waive contingencies to compete. This can be reasonable — but only if you have done the work up front:
- Waiving inspection? Only after thoroughly reviewing the seller's disclosure package and reports, ideally with your own contractor or inspector at a pre-offer visit.
- Waiving appraisal? Only if you have the cash to cover a gap and your agent's comps support the price.
- Waiving loan contingency? Only with a fully underwritten pre-approval (not just pre-qualification) and a lender who has committed in writing.
Waiving a contingency you understand is a calculated risk. Waiving one you don't understand is how buyers lose six-figure deposits.
Other conditions to know
Sales can also be contingent on reviewing HOA documents, a preliminary title report, a sale of the buyer's current home, or specific repairs. Each should have its own timeline in the contract.
The bottom line
Contingencies are negotiable, and being competitive sometimes means giving some up. Do it deliberately, with advice, and with the due diligence done in advance — never just to "win."