The PRDS and C.A.R. contracts are set up to allow a buyer to investigate the property and request repairs during the inspection contingency period.
This typically happens when the buyer discovers a list of defects identified in an inspection report and asks the seller to make repair before the close of escrow. The seller has no obligation to make these repairs except if the repairs are required by state or local law.
Procedure for Request for Repair during Contingency Period
After the buyer has conducted investigation of the property pursuant to an inspection contingency, the buyer can either 1) cancel the contract based on the information discovered in the investigation; 2) remove the contingency; or 3) request that the seller make repair or provide a credit in lieu of repair.
The buyer may utilize the Request for Repair Form (C.A.R. RR) to request that the seller make repairs or take other actions. The seller has no obligation to agree to the buyer’s request but may either a) accept all the buyer’s request under certain conditions; b) reject the request; or c) counter the buyer’s request by providing a Seller Response and Buyer Reply to Request for Repair Form (C.A.R RRRR).
If the seller agrees to all buyer’s request for repair, then the buyer must agree to i) the removal of the physical inspection contingency, ii) at the seller’s option, the removal of contingencies identified in an attached Contingency Removal form (C.A.R CR) provided by the seller, and iii) the release of seller and broker from any liability arising out of the disclosed condition of the Property. Also, note that in the event that the seller attached a CR form to the RR form requesting removal of all identified contingencies, the buyer now must also sign the CR form along with the RR Form, otherwise the request for repair is not finalized and the seller is not bound by the repair request.
If the seller agrees to some repairs but rejects others, then he/she may use the RRRR form to negotiate. The parties can modify and counter repair request on the RRRR form and finalize any repair obligation of the seller.
Requesting Repair after Contingency Period and Cancellation Right
Most CA homes are sold “As-Is.” The seller is not contractually obligated to grant the buyer’s request for repair before or after the buyer removes all contingencies – even if the buyer dislikes certain conditions of the home. However, the buyer generally needs to have a contingency to back out of the contract without jeopardizing the deposit. So buyers typically use their contingency as leverage to negotiate a repair. “Give me a repair or a credit for this or I am out.” Assuming contingencies are already removed, and the seller has not breached the contract in some way, the buyer likely will not be able to cancel the contract without forfeiting part of the deposit, or all of the deposit, as liquidated damages.