As a Realtor on the LA Westside, I talk about contingencies with every buyer before we write an offer. Most people hear the word and nod along without really knowing what it means. By the time they find out, they’re already in escrow — sometimes with contingencies they should have kept, sometimes without ones they needed.
Here’s everything you need to know before you get there.
What Is a Contingency in a Real Estate Contract?
A contingency is a condition built into your purchase contract. If that condition isn’t met, you have the right to cancel the deal and get your deposit back.
Think of it as an exit ramp with your money protected. Without contingencies, you’re locked in — and if something goes sideways, your deposit is at risk.
What Are the Three Main Contingencies in California?
There are three contingencies every buyer needs to understand.
The inspection contingency gives you the right to have the property inspected and to cancel or renegotiate if you don’t like what you find. In California, the default inspection period is 17 days. What it protects you from: finding out after closing that the roof is failing, there’s active termite damage, or the foundation has issues. Without this contingency, you buy the property as-is, no matter what the inspector finds.
The loan contingency protects you if your financing falls through after you’re in contract. Even with a pre-approval letter, your loan is not guaranteed until the lender’s underwriter signs off. Rate changes, job changes, a property that doesn’t appraise — any of these can affect your financing after you have an accepted offer. In California, the default loan contingency period is 21 days. After that, you typically need to remove it in writing or you’re in breach of contract.
The appraisal contingency protects you if the home appraises for less than the purchase price. Lenders will only loan you money based on the appraised value. If you agree to pay $1.4M and it appraises at $1.3M, you either have to make up the $100,000 difference in cash, renegotiate the price with the seller, or walk away. With the appraisal contingency, you can walk and get your deposit back. Without it, you’re stuck.
Do Buyers in Los Angeles Waive Contingencies?
Here’s the honest Westside LA reality: in a competitive multiple-offer situation, sellers sometimes expect buyers to waive contingencies. It makes your offer stronger on paper. But it also means you’re taking on real risk.
Waiving the inspection contingency means you’re agreeing to buy whatever condition the home is in. Waiving the loan contingency means if your financing falls apart, you lose your deposit. Waiving the appraisal contingency means you’re committing to cover any gap between the appraised value and the price you offered.
I do not recommend waiving contingencies casually. When a seller is asking for it, there’s a strategy to doing it safely — and that strategy is different for every buyer and every property. This is exactly where having an experienced agent matters.
What Happens to Your Deposit If You Cancel?
In California, your earnest money deposit is typically 1% to 3% of the purchase price. On a $1.3M home, that’s $13,000 to $39,000.
If you cancel within an active contingency period, you get your deposit back. If you cancel after your contingencies have been removed, the seller can make a claim on your deposit.
This is why the timeline on contingencies matters as much as whether you have them. Know your deadlines.
Are Contingency Periods Negotiable in California?
Yes. The default periods in a California Residential Purchase Agreement are 17 days for inspections and 21 days for loan and appraisal. Both can be shortened or extended by agreement between buyer and seller. In competitive situations, sellers sometimes ask for shorter periods. Know what you’re agreeing to before you sign.
How Do You Protect Yourself When Making an Offer?
Never remove contingencies until you actually have what you need. Don’t remove your loan contingency until your lender has confirmed final approval. Take the full inspection period seriously, hire a good inspector, read the report, and ask questions. Understand your appraisal gap exposure before you write the offer, especially in a bidding war where you might be going over asking. And ask your agent what contingencies are standard for this specific property and market. The answer is different in Venice than it is in a less competitive zip code.
Do You Need a Realtor to Navigate Contingencies in LA?
You don’t legally need one. But contingency strategy in a competitive LA market is not something to figure out on the fly. When to keep them, when it’s safe to shorten the periods, how to structure an offer that’s competitive without exposing yourself — this is the work that happens before you ever fall in love with a listing.
I work with buyers in Venice, Santa Monica, Mar Vista, Marina del Rey, and Brentwood. If you want to understand your position before you start making offers, reach out.
Lorien Olsen · Realtor · ACME | Serhant · DRE #02222313 · 310-422-1022
