Contingencies in SF Offers: What Waiving Each One Risks

A contingency is a condition that lets you cancel the contract and get your deposit back. Waiving one does not make the risk disappear; it moves the risk from the seller to you and puts your deposit, up to 3% of the price under California law, behind your promise to close. In San Francisco, where sellers disclose everything up front and competitive offers are often non-contingent, the question is never "contingent or not" but which risks you have already retired and which you are being paid enough to carry.

The contingencies in an SF contract

San Francisco offers are usually written on the local SFAR purchase agreement, with the statewide C.A.R. form as the alternative. Both carry the same family of contingencies:

California also gives you a statutory right to cancel within three days (five if mailed) after receiving the Transfer Disclosure Statement or Natural Hazard Disclosure, but when the package arrives before your offer that clock has already run. Insurance is not a separate contingency on either form; on the C.A.R. form it falls under the general investigation contingency, which a non-contingent offer waives. In C.A.R.'s 2024 survey 13% of agents had an escrow fall out because the buyer could not get coverage, so get an indicative quote before you write, as homeowners insurance explains.

How contingency periods work and what your deposit really risks

Each contingency has a period in days from acceptance. Under the C.A.R. form contingencies are removed actively: you sign a contingency removal form, and until you do, the protection stays even after the period ends, though the seller can issue a notice to perform and then cancel. The statewide form defaults to 17 days when the blanks are empty; SF offers fill in the blanks, and competitive ones fill them with small numbers or zero. As of 2026-10-24, confirm the removal mechanics and defaults in the current version of the form your agent uses.

Once every contingency is removed, your deposit is the seller's remedy if you do not close. Civil Code section 1675 treats liquidated damages of up to 3% of the price as valid on a one-to-four-unit home the buyer intends to occupy, presumes any larger amount unreasonable, and section 1677 requires the clause to be separately initialed. The SF custom of a 3% deposit comes straight from that cap. On a $1.6 million condo the money at risk is $48,000; on a $2.5 million house it is $75,000.

Inspection contingency: when waiving is reasonable

SF custom front-loads inspection. Sellers typically commission a general inspection and a pest report, order the 3R report that lists the legal units and permit history, and put all of it in the package before the first open house. That is why winning offers so often carry no inspection contingency: the inspecting was supposed to happen already.

Waiving is reasonable when three things are true. You have read every report in the package and compared the 3R to what you saw. The reports are recent, from a recognizable local firm, and cover the risky systems for that building type: sewer lateral, foundation, roof, electrical. And you have either walked the property with your own inspector before offer day or paid one for a desk review of the seller's reports. Bay Area consumer advocates who looked at buyers skipping inspections found the savings small and the downside large; the buyers who regret waiving are the ones who waived without reading.

It is not reasonable on a thin package, a pre-1920 house with a brick foundation, a building with signs of an unwarranted unit, or any home where a specialist question is open. There, keep a short contingency or pay for the pre-offer inspection described below.

Appraisal contingency and the gap you can fund

The appraisal contingency lets you cancel if the lender's appraiser values the home below the price. Waiving it means you will close at the contract price regardless, and because the lender lends on the lower of price and value, any shortfall is cash. Before you waive, do two things: confirm with the comps tool and your agent that closed sales support your price, not just momentum, and work out the exact cash a 5% and a 10% shortfall would take at your loan-to-value. If that cash is not in a statement, do not waive; offer a capped appraisal gap instead. Appraisal gaps has the arithmetic and the clause language.

Loan contingency: fully underwritten approval first

The loan contingency protects you if the financing fails. The precondition for waiving it is a fully underwritten approval: an underwriter, not a loan officer, has signed off on your income, assets and credit, and only property conditions remain. Local advice to SF buyers, including the Chronicle's, draws the same line between an underwritten approval and a basic letter.

Even then, the property can fail. A condo building can turn out to be ineligible under Fannie Mae's project review for low reserves, delinquencies or litigation; a low appraisal can shrink the loan; a job change can unwind the approval. Ask your lender, in writing, which conditions are open and whether anything about this property worries them. If the answer includes "subject to project approval," keep the loan contingency.

HOA document and title contingencies on condos

Civil Code section 4525 requires the seller of a condo to provide the governing documents, budget, reserve summary, assessments, litigation disclosure and related items. In SF they usually arrive in the disclosure package, and most offers acknowledge them, so the real review happens in the week before offer day. Read the reserve study, a year of minutes and the master insurance declarations, and if you cannot finish, keep a short HOA document contingency; HOA documents tells you what to look for. Title works the same way: the prelim is in the package, and a short title contingency costs little if you have a real question about an easement or lien.

Shortening vs waiving

Sellers in SF routinely accept three-to-five-day inspection windows and seven-to-ten-day loan and appraisal windows from otherwise strong buyers, especially on condos and on any listing that is not a crowded auction. What you can learn in a short window is limited but real: a general inspector and a sewer scope can both be through the house in two days if you booked them before you wrote, which is the point of inspectors and specialists. An appraisal rarely completes inside a week, so a short appraisal contingency is mostly symbolic; a capped gap clause is more honest.

What to shop for right now

• Pre-offer inspection (savings: medium). If you plan to waive or shorten the inspection contingency, your own general inspection, roughly $500 to $850 in the Bay Area as of 2026-10-24, and a sewer scope at about $250 to $500, are the cheapest insurance in the process. Fees vary, so get two quotes; a lateral replacement has been estimated at $4,000 to $11,000 elsewhere in the Bay Area.

A decision table by property type and cash position

Build your own version of this with your lender and agent before your first offer.