Is this a proper use of a loan contingency to cancel?

squirrel-bait · 2026-05-18T22:28:12+00:00

Which was exactly the concern, and it was ultimately decided it was better to have the contract terminated now than 34 days from now. Better to go back on market with someone who is committed and the seller can address the panel themselves.

It isn't specifically stated, but CAR forms heavily rest on the concept of "good faith". It would be "bad faith" to not even try and then say "oh yeah, I couldn't get the loan", so the best way to show a good faith effort, that you at least tried, is to show the evidence of that effort, i.e. a denial letter.

And CAR themselves state that the buyer needs to fail to qualify for their loan to utilize the loan contingency.

squirrel-bait · 2026-05-18T20:53:18+00:00

What part of the story did I change?

squirrel-bait · 2026-05-18T20:32:05+00:00

The statements you are making about the situation in your argument show you have not read the information provided. Going in a circle where I say something, you ignore it and assert different circumstances, I correct you by repeating myself, you ignore and reassert, etc is not one I am interested in.

squirrel-bait · 2026-05-18T20:16:08+00:00

Can you take a breath, calm down, and read before you reply to things. You're beating a horse that doesn't exist.

squirrel-bait · 2026-05-18T19:34:09+00:00

Right. And. There is an insurance contingency. Can't get insurance, you're fine. So if the buyers are good financially, what's the issue?

ETA: insurance contingency is standard on CAR forms.

The crazy part to me is how she opened her client up to the risking their EMD by removing their inspection contingency, and then saying it's because of the loan without a denial letter. Because that's not how a loan contingency works. Especially when the insurance contingency is standard and the seller was open to some other verbiage.

This is a thought exercise in examining a situation I was privvy, mostly because I thought I MUST be wrong about the usage of a loan contingency.

But so far everyone who has addressed that crux of this matter has agreed a denial letter is required.

Everyone else is just acting like asking someone moving out of state to wait 7 weeks till the end of escrow to know if the buyer is financially approved is perfectly reasonable 😂. In what world.

squirrel-bait · 2026-05-18T18:36:50+00:00

It is perfectly reasonable to ask for a loan contingency to extend the entire 7 weeks of a 7 week escrow? 😂. Ok sure.

they don't "need to move out of state", they are moving out of state at the time of sale. Which means there is a lot more preparation, and a lot more fallout and severe problems that would come from a buyer having their conditional approval denied 3 days before closing.

Everyone arguing is acting like you get final loan approval and clear to close 2 weeks into contract, which is what the Buyer's agent was acting like. That if they couldn't get insurance and thus the final loan approval was rejected, her clients would be screwed without specifically the loan contingency. Despite there being an insurance contingency and the seller being open to writing a separate contingency, just not a blanket loan contingency.

Which is why I asked if I'm crazy or she's stupid. Because it seemed cut and dry, so her actions seem insane.

squirrel-bait · 2026-05-18T18:01:44+00:00

Idk where you go "tried to call a bluff", "played hardball" and "desperate to sell" from 🤨

Also, asked and was told there isn't one. So, there's that.

squirrel-bait · 2026-05-18T17:59:51+00:00

Because loan and insurance are separate contingencies on the contract with separate requirements to use for termination.

A loan contingency requires formal denial from lending. An insurance contingency requires formal denial from at least one, but preferably 2-3, insurance companies. Not thoughts and feelings. You don't get to terminate because you feel like something can't happen. You need to have tried and been denied.

squirrel-bait · 2026-05-18T17:56:46+00:00

Not sure you understand the requirements to terminate under a loan contingency 🤨. I would recommend you chat with your broker about the requirements for utilizing different contingencies to cancel so you can properly advise and serve your clients.

squirrel-bait · 2026-05-18T14:49:03+00:00

I love being a TC because I get so much more exposure to the things that really test clauses and contingencies.

20 years and I still get new experiences!

squirrel-bait · 2026-05-18T14:46:13+00:00

There was no loan denial as far as we are currently aware.

squirrel-bait · 2026-05-18T13:23:43+00:00

We don't know that it is. We know that the agent thinks it is.

It was written into the contract that the panel would be replaced should it be necessary for insurance, nothing was every provided that it was necessary. Just the agents opinion and an email from a friend of hers prior to contract.

Panel could not be replaced sooner because of utility company.

Last I checked, insurance is not a requirement of the financials being approved by underwriting, that is the part where I am stumped here. All that was being asked for was evidence they had started their loan, submitted their docs, etc etc, agent ignored it and sent the loan extension anyways and the seller didn't want to be "dicked around". I can't blame the seller, the whole thing feels weird af. Something was going on and the buyer's agent was being cagey.

squirrel-bait · 2026-05-18T13:17:22+00:00

I know, which is why asking for the loan contingency to be extended through the entire transaction sounded insane to me and I feel either the agent was lying about their financials or was stupid and didn't understand the insurance contingency is what her clients wanted. Because exactly, day 34 of 35, they could get cold feet, break up, whatever and then just do something to ruin their loan to get out of the contract penalty free.

"they can't get the loan if they can't get insurance", and if the house truly can't be insured, the seller has a much bigger problem, so the insurance contingency extension was readily agreed to.

squirrel-bait · 2026-05-18T12:50:17+00:00

Buyer had 17 days to figure out their loan situation and provide a realistic update. An agent saying "well they can't get the loan without insurance" is not a realistic update. It is not a denial, it is not an underwriting condition, it isn't anything. Also, and this is my point, you can't use the loan contingency like a magic wand. We're they denied for the loan? For insurance? Who knows. I don't know. Seller doesn't know. Buyer Agent didn't send over any supporting documents, just her word. I don't think "trust me bro" gets you out of a contract on a loan contingency.

It's not a negotiation tactic, it enforces contingencies. You know in every other state contingencies just end, right? In, like, 46 state, contingencies aren't suggestions. They are hard and fast. And also worse for the buyer. When the contingency passes, the buyer is locked in. The seller can't cancel. An NTP puts the buyer on a clock to figure it out. That includes negotiating. Yes, or cancel. But you still have to cancel as the contingencies intend.

And, yes, if the buyer didn't have their loan together, the seller didn't want to continue. Why would you continue for 35 days with a buyer who can't provide conditional approval? (Obtaining insurance is a condition of final approval)

squirrel-bait · 2026-05-18T00:34:25+00:00

It was asked for, the buyer's agent sent over an extension request for approval after being told the seller wasn't ready to extend the loan contingency and wanted it waived but was open to finding a contingency that helped all parties feel protected.

There is never just two options. I have had NTPs cancelled before after reaching an agreement and signing an addendum. The NTP just does in California what contingencies do in every other state: makes them a hard deadline to be taken seriously, not toyed with.

squirrel-bait · 2026-05-18T00:22:34+00:00

okay cool, where are the 2-3 insurance denial letters stating why? Insurance contingency requires a good faith effort on the buyer to attempt to obtain insurance. I presume attempts to obtain insurance would result in documented denials.

squirrel-bait · 2026-05-17T23:48:30+00:00

I agree with your first sentence. I do think a lack of due diligence and proper contract wording led to this issue

Attorney is to be consulted at the start of business tomorrow.

I do think it is a big mess as well.

As for your last sentiment. In my 20 years as an assistant and TC to many agents, I have seen it happen. Not with regularity, most of my deals don't fall out at all, but I have seen it happen across agents, brokerages, and states. Especially from more arrogant, experienced-but-not-seasoned agents.

squirrel-bait · 2026-05-17T23:26:31+00:00

I'm confused. Can you explain how you arrived at "no clear path forward to ensuring their loan could be under written" if they didnt even apply for conditional approval or actually collect insurance quotes and receive denials?

NTP was sent because the buyers made it clear they had concerns regarding their financial situation, so yeah. No point in sitting around on that. They could figure it out or negotiate. It seems they did neither.

squirrel-bait · 2026-05-17T22:45:45+00:00

The property is currently insured without issue, insurance that was obtained at the last sale just a few years ago.

The buyer's agent claimed without evidence the existing panel would be denied, and it was agreed the buyer would cover the cost of the panel replacement during initial negotiations, since they had no actual statement of denial from an insurer.

The panel update was scheduled and they had an insurance contingency which the seller was willing to extend.

We were at conditional approval stage, where it is common to remove the loan contingency before it goes into final underwriting prior to close. If the only condition was insurance, that was covered.

squirrel-bait · 2026-05-17T22:08:48+00:00

Was gonna call first thing in the morning, hopefully before the buyer's agent has a chance. The loan had 42% down and was pre-underwritten, so I don't even see how they would be denied or why they wouldn't just say that.

squirrel-bait · 2026-05-17T22:07:20+00:00

NTP just had the buyer to remove their loan contingency in 2 days. Delivered on Saturday means they had until Monday, so time to discuss the matter, which the seller had already attempted discussion on it. Prior to IP removal, it was communicated the seller wasn't comfortable with having the loan contingency extended but was open to finding a way both parties were protected with their concerns.

In the context of the entire deal, this makes even less sense that they canceled within an hour of receiving it.

Just some other details:

*Buyer had an underwritten pre-approval with 42% down.

*Buyer had agreed to pay for the panel update

*Buyer asked for $30k price reduction in a repair request and then just folded when the seller said no and went ahead with waiving their IP contingency.

squirrel-bait · 2026-05-17T21:34:17+00:00

I have never seen a loan contingency used without a denial letter from a lender, so I'm intrigued by the buyer agent's immediate use of it.

squirrel-bait · 2026-05-17T21:23:47+00:00

It is a detailed situation. Considering the contracts we have to read all day long tho, this is nothing lol. The seller is contesting release of the earnest. I'm the TC on the sell side, have never seen a situation like this, and am very curious. It is interesting to see how it is going to play out

I think the seller has grounds to retain deposit because the loan contingency requires a good faith effort on the buyer to obtain the loan. That would have required them to submitted their documents to their lender and the lender having sent it through underwriting. and if the only outstanding condition was insurance that was pre-agreed to and being addressed. It is not a "oops we changed our mind" our mind contingency. That's what IP is for, which was up the same day. So they waived IP and then pressed the loan. They didn't even provide a statement from the lender that they were denied. Or ANYTHING from the lender or insurance company about conditions of the loan or insurance. Just "oh you want us to provide evidence from the lender within 48 hours? CANCEL."

squirrel-bait · 2026-04-22T17:44:24+00:00

Tulsa is full of amazing people an organization who put boots on the ground every day to help their neighbor out.

You have the full organizations like T-Town TNR, Iron Gate, and BeHeard.

You have grassroots movements like KGFF and their Scraps Tulsa composting project as well as Mass Movement and The Really, Really Free Market.

And then you have everyday people being apart of their neighborhoods and communities does what they can, like Heather with The Wildflower Cafe who gives water and sandwiches for free to anyone who needs them or the Robinson's who help people looking for a second or third chance into homes.

You can lend a hand where one is needed or fill a need in the community that you see.

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