San Francisco loan contingencies and justifications

[Vivek S.]

Hi,

Lets say I have a loan contingency for a house on contract, do I need to give a justification to back out of the contract based on it? I.e. I get a loan but some terms are not to my liking, can I back out without losing my deposit?

Essentially, do I have to justify the reason why I would like to back out to get my 3% good faith money back? Or can I just say that I haven't gotten a loan to my liking?

Thanks,

[Adam Kroll]

Welcome to BP Vivek!  In Colorado, you have grounds to terminate the contract to buy and sell real estate if you don't like shade of the paper the loan is written on.  The exact verbiage in the CREC CBS1-6-15 is:

"...this Contract is conditional upon Buyer determining, in Buyer’s sole subjective discretion, whether the New Loan is satisfactory to Buyer..."

I am not sure what the rules are in San Fransisco for the sale of real estate, but I imagine it is similar.  If you sell, your do not get many "outs" in a contract, but you do as a buyer.