In the complex world of real estate transactions, disputes between buyers and sellers are not uncommon, particularly when it comes to the status of a property—whether it is “contingent” or “pending.” Understanding the nuances of these terms and the common issues that arise can help both parties navigate potential conflicts more effectively.
Understanding Real Estate Contingent vs Pending
To begin with, it’s essential to differentiate between a “contingent” and a “pending” status in a real estate transaction.
Contingent: A property listed as contingent means that an offer has been accepted by the seller, but the sale is dependent on certain conditions, or contingencies, being met. These contingencies can include a variety of factors, such as the most common one – the buyer selling their current property.
Pending: When a property is marked as pending, it indicates that this is a traditional sale that has gone into escrow. There still may be certain buyer contingencies in place, but those contingencies are contained within the subject sale not based on a third party contingency like selling another property.
Common Property Disputes Between Buyers and Sellers
In a normal sale the transition from where buyer removes their contingencies to closing is where many disputes arise. Here are some of the most common issues that can occur:
1. Failure to Meet Contingencies
One of the most frequent sources of conflict is the failure to meet the agreed-upon contingencies. For instance, if the buyer is unable to secure financing within the specified timeframe, the seller may have the right to back out of the deal. Conversely, if the buyer discovers significant issues during the home inspection and the seller refuses to address them or lower the price, the buyer may choose to walk away.
Resolution: Clear communication and detailed contracts are critical in avoiding disputes related to contingencies. Both parties should ensure that contingencies are realistic and clearly outlined in the purchase agreement. In cases where a contingency cannot be met, negotiation is often necessary to reach a compromise, such as extending deadlines or adjusting the sale price.
Another common issue is disagreements over the condition of the property. This typically arises during the inspection period when buyers may find defects or issues that they believe should be repaired by the seller. The seller may either agree to make the repairs, offer a credit, or refuse to address the issues, leading to potential conflict.
Resolution: To mitigate these disputes, buyers should conduct thorough inspections and clearly communicate their expectations regarding repairs. Sellers should be upfront about any known issues and be prepared to negotiate. In some cases, involving a third-party mediator or relying on the expertise of the real estate agents can help resolve these conflicts.
3. Appraisal Discrepancies
Appraisal discrepancies can also lead to property disputes, especially in a contingent status. If the property appraises for less than the agreed-upon sale price, the buyer’s lender may not approve the full loan amount, putting the transaction at risk. The buyer may request a reduction in the sale price, which the seller might not be willing to accommodate.
Resolution: In such scenarios, the buyer and seller need to negotiate a solution. Options include the buyer making a larger down payment to cover the difference, the seller lowering the price, or both parties meeting somewhere in the middle. If an agreement cannot be reached, the deal may fall through, but open communication and flexibility can often prevent this outcome.
Title issues are another area where disputes commonly arise. If a title search reveals liens, encumbrances, or other issues, the buyer may hesitate to proceed with the sale. Resolving title problems can be time-consuming and costly, leading to frustration on both sides.
Resolution: Title insurance and a thorough title search before finalizing the contract can prevent most title-related disputes. If issues are discovered, the seller should work promptly to resolve them, potentially delaying the closing date if necessary. Buyers should ensure they have the option to walk away if significant title problems cannot be resolved.
5. Unexpected Delays in Closing
Even when a property moves from contingent to pending, unexpected delays in closing can still occur, leading to disputes. These delays can be caused by financing issues, unresolved contingencies, or logistical problems. Such delays can be frustrating, especially if one party is on a tight timeline.
Resolution: To avoid disputes over delays, both buyers and sellers should build flexibility into their timelines and communicate any potential delays as soon as they arise. Including contingency clauses in the contract that address potential delays can also provide a roadmap for how to proceed if the closing date needs to be pushed back.
6. Navigating Property Disputes in California
California has specific laws and practices that can influence how these disputes are resolved. In California, many real estate transactions use the California Association of Realtors (CAR) forms, which provide standardized contracts that help clarify the obligations of both buyers and sellers. Understanding these contracts is crucial in managing disputes effectively.
Mediation: California real estate contracts typically include a mediation clause. If a dispute arises that cannot be resolved through direct negotiation, then the parties must engage in mediation before filing a lawsuit in order to preserve their right to seek to recovery prevailing party attorneys’ fees in the event the prevail in the lawsuit.
Contingency Periods: California real estate contracts often specify default periods for contingencies, such as 17 days for inspections or financing. Buyers and sellers should adhere to these timelines to avoid disputes. If more time is needed, an extension should be requested in writing and agreed upon by both parties.
Disclosure Requirements: California has stringent disclosure requirements, including the Transfer Disclosure Statement (TDS), which mandates sellers to disclose known defects and issues with the property. Failure to provide full disclosure can lead to legal disputes. Buyers should review disclosures carefully and seek additional inspections if needed.
Facing a Contingent vs Pending Real Estate Dispute
Navigating the complexities of real estate transactions in Los Angeles, especially when dealing with contingent and pending statuses, requires expert guidance. At Schorr Law, our experienced Los Angeles Real Estate Attorneys are here to help you manage these challenges, prevent disputes, and protect your interests. Whether you’re a buyer or a seller, our team can provide the legal expertise you need to ensure a smooth transaction.
If you’re facing a real estate dispute or need assistance with your transaction, don’t hesitate to contact Schorr Law. We’re committed to helping you achieve the best possible outcome in your real estate dealings. Reach out to us today to schedule a consultation and learn how we can assist you. Call us at (310) 954-1877 or send us a message here.
