I write educational posts, and even posted my entire homebuying book at r/NewbHomebuyer if you want to check it out.

I'm taking this from a higher activity sub and giving my opinion here. This is what the user posted:

As a buyer, can I refuse to remove loan contingency?

I'm in California, buying a home using VA Loan.

Seller agree to do termite treatment as a requirement for VA Loan section1. However seller will not let the termite work to be completed unless I release loan contingency. the loan contingency expires soon within the next few days.

I want to buy the house but I don't want to put my earnest deposit at risk. I'm concerns that if I release contingency. God forbid, for whatever reasons, the termite work got delayed, or not done. then VA can't fund my loan. I'd lose the deposit.

what happens when the loan contingency expired? what happened if I don't sign the contingency removal?

From the seller's point of view, they don't want to do the work 'for nothing.'

I'm not saying the work is for nothing, because termites should be treated regardless. But the sellers might think that they can sell it to someone else without doing the work.

VA loans enforce termite inspections, where it's a little more loose on other loan programs.

So in their mind, if they pay something, they want some assurances that they will be either compensated by your earnest money, or compensated with the completion of the sale.

You might consider releasing some of your earnest money, not all of it, as nonrefundable if they do the termite inspection.

If they refuse to do the termite inspection, then it won't pass a VA loan, you can get a denial letter, walk away and likely recover your earnest money deposit.

Sam

I write educational posts, and even posted my entire homebuying book at r/NewbHomebuyer if you want to check it out.

Originally shared by u/SamTMortgageBroker in r/NewbHomebuyer — view the original thread.