Earnest money and clauses in California

[Michelle L Moore]

Hello all. Hopefully a quick and easy question- I have a friend selling his home in California (he actually resides out of state). His California-based Redfin agent told him that it's normal to allow a potential buyer 10 to 15 days to back out of a contract without surrendering their earnest money. His house went under contract with the clause that would permit the buyer to change their mind. About 3 days later, as expected, that buyer backed out noting that the house was dated. I thought this was a questionable practice since any buyer with the funds to do so could make several offers on several houses and just wait until they actually got the home that they wanted under contract.

Is this normal practice? Has anyone seen anything like this? 

Any guidance would be much appreciated, thank you in advance

[Bryan Zuetel]

@Michelle L Moore, there are six standard contingencies in the most common form purchase agreement used for California residential properties created by the California Association of Realtors.  As some have noted, yes, there is a contingency for the physical inspection of the property, but that contingency and cancellation must be exercised in good faith and cannot be exercised simply because one decides that the home is too dated.  In other words, you cannot rightfully exercise a contingency and cancel a contract for a visually obvious/open reason, such as thinking that the property now appears too dated.  However, if one discovered during a physical inspection that the home utilized dated electrical system like knob and tube wiring, one could cancel the contract.

The seller can negotiate a no-contingency purchase agreement, which could potentially enable the seller to keep the earnest money deposit if the buyer cancelled the escrow.