What Happens After All Contingencies Are Removed?

In a real estate transaction, contingencies are protective clauses outlining specific conditions that must be met or waived for the contract to proceed. These often include a satisfactory home inspection, the property appraising at or above the purchase price, the buyer securing necessary financing, or the sale of the buyer’s current home. They provide an escape route for either party if unforeseen circumstances arise, safeguarding their interests and earnest money deposit. Contingency removal indicates these conditions have been satisfied, or the benefiting party has formally waived their right to terminate the agreement. This action signifies the transaction is transitioning into a more committed and final stage, moving closer to property ownership transfer.

Significance of Contingency Removal

The removal of contingencies marks a significant shift in a real estate transaction, transforming a conditional agreement into a nearly unconditional commitment for both parties. It signals a heightened level of certainty that the sale will proceed to closing.

Once contingencies are removed, the buyer assumes a greater financial risk if they choose to withdraw from the purchase. The earnest money deposit, typically representing 1% to 3% of the purchase price, becomes non-refundable if they back out. For the seller, contingency removal solidifies the buyer’s intent, reducing the likelihood of the deal falling through. Should the seller default after contingencies are removed, they could face legal action from the buyer.

Buyer’s Path to Closing

After contingencies are removed, the buyer focuses on finalizing preparations for the closing appointment. This involves working closely with their lender to secure final loan approval and funding, submitting any requested documents to satisfy underwriting conditions.

Buyers must obtain a homeowner’s insurance policy for the property, ensuring coverage is active by the closing date. A binder for this policy must be provided to the lender and the escrow or title company. Buyers also arrange for utility services, such as electricity, water, gas, and internet, to be transferred into their name by the closing date.

The buyer reviews the Closing Disclosure (CD), a document detailing financial aspects of the transaction. This form must be provided at least three business days before closing, allowing time for understanding charges and credits. The buyer also prepares the necessary funds for closing, including the down payment and closing costs, ensuring these amounts are accessible via wire transfer or cashier’s check. Finally, a final walkthrough of the property is conducted shortly before closing to confirm its condition and that any agreed-upon repairs have been completed.

Seller’s Path to Closing

With contingencies removed, the seller shifts attention to preparing the property for the buyer and completing administrative tasks. This includes packing personal belongings and coordinating with movers to vacate the premises by the agreed-upon possession date. The property should be left in a clean and broom-swept condition, with personal property not included in the sale removed.

Sellers schedule the disconnection of utility services, such as electricity, water, and gas, for the day of or immediately following the closing. They confirm any repairs or conditions agreed upon during the inspection period have been addressed. Sellers also gather essential documents for the buyer, such as appliance manuals, warranties, and homeowners’ association (HOA) documents. They must cooperate with the title or escrow company to ensure a clear title is conveyed, addressing any outstanding liens or encumbrances.

The Closing Appointment

The closing appointment is the formal culmination of the real estate transaction, where ownership of the property is legally transferred. Attendees typically include the buyer, seller, their real estate agents, and a representative from the escrow or title company.

During this appointment, numerous legal and financial documents are signed by both parties. Key documents for the buyer include the promissory note and the mortgage or deed of trust. The buyer and seller also sign the final settlement statement, often known as the Closing Disclosure, which itemizes costs and credits. The seller signs the deed.

Funds are formally transferred during the closing, with the buyer’s down payment and closing costs wired to the escrow or title company, and the lender wiring loan proceeds. The escrow or title company then disperses funds to the appropriate parties. Once all documents are signed and funds are confirmed, the keys to the property are exchanged, formally transferring possession.

Post-Closing Procedures

Following the closing appointment, several administrative steps solidify the transfer of ownership. The deed is recorded with the county recorder’s office. This public record documents the change in property ownership and provides legal notice to all parties.

The buyer takes physical possession of the property, which typically occurs immediately after closing, though a later date can be negotiated. Confirming the final transfer of all utilities into the buyer’s name ensures uninterrupted service. Both the buyer and seller receive final documents in the mail, such as the recorded deed, the final settlement statement, and the title insurance policy, which should be kept in a safe place for future reference.