Buying or selling in Lamorinda means you hear a lot of jargon fast. If terms like contingency, rent‑back, ADU, or appraisal gap make your head spin, you are not alone. You want to compete confidently, avoid costly surprises, and close on time. This glossary explains the essentials in plain English, with Lamorinda-specific notes so you can make smart decisions. Let’s dive in.
Contingencies: Your safety valves
Contingencies are conditions in your contract that must be met for the sale to proceed. If a contingency is not satisfied, you may cancel and recover your earnest money per the contract. In competitive Lamorinda offers, you often see fewer or shorter contingency timelines, which raises your risk but strengthens your offer.
Common contingency types
- Inspection contingency. Gives you time to inspect the home and request repairs or credits. Timelines often range from 7 to 17 days, and they are negotiable. Many buyers also order a separate wood‑destroying organism inspection in California.
- Appraisal contingency. Lets you cancel or renegotiate if the lender’s appraisal comes in below the purchase price. This matters most when you finance the purchase.
- Loan or financing contingency. Protects you if your mortgage approval falls through. Removal timing often depends on underwriting speed, which can stretch for jumbo loans common in Lamorinda.
- Title review contingency. Gives you time to review the preliminary title report for easements, liens, or encumbrances.
- Permit verification contingency. Lets you verify permits for additions, remodels, or ADUs. This is key if you rely on rental income or additional space.
- Home‑sale contingency. Your purchase depends on selling your current home. In low‑inventory markets, sellers may not accept this, but it can be workable with strong terms.
How to choose timelines
Contingency periods are negotiable. In Lamorinda, strong offers often shorten inspection to about a week and align appraisal and loan removals around 17 to 21 days, but current norms vary. Your agent should show you recent local offers so you can balance speed with protection.
Disclosures: What sellers must share
Disclosures are legally required statements about a property’s condition, hazards, and legal status. California has robust disclosure laws to protect consumers. The California Department of Real Estate offers helpful consumer materials if you want a deeper overview of required forms and duties. See the California Department of Real Estate.
Key California disclosure documents
- Transfer Disclosure Statement (TDS). Sellers report known defects and material facts about systems, leaks, roofs, and more. This is required by California Civil Code section 1102.
- Natural Hazard Disclosure (NHD). States whether the property lies in hazard zones, such as very high fire hazard severity, flood, seismic, or earthquake fault zones. Most sellers provide a standardized report.
- Lead‑based paint disclosure. Required for homes built before 1978. Sellers must disclose known lead hazards and provide the EPA pamphlet.
- HOA resale package. If the home is in an HOA, you receive budgets, CC&Rs, meeting minutes, and assessments. California’s Davis‑Stirling Act governs many HOA obligations.
- Other disclosures. These can include known deaths on the property if applicable, environmental issues, neighborhood conditions, and known permit or legal problems.
In Lamorinda, hillside lots and older housing stock put extra focus on seismic retrofits, drainage, geologic conditions, wood‑destroying organisms, and unpermitted work. Read the TDS and NHD carefully and follow up with your agent and inspectors on any red flags.
Appraisals and the appraisal gap
An appraisal is an independent opinion of value, usually ordered by your lender to confirm the collateral for your loan. When multiple offers drive prices up, the appraisal can come in lower than the contract price.
Appraisal contingency vs appraisal gap
- Appraisal contingency. You can renegotiate or cancel if value is below the purchase price.
- Appraisal gap coverage. You agree to cover a set dollar amount of any shortfall between appraised value and contract price. This can strengthen your offer without fully waiving protection.
How a gap works, with an example
Say your contract price is $1,600,000 and the appraisal is $1,550,000. The shortfall is $50,000. If you offered an appraisal gap of $40,000, you would pay that amount in cash and could attempt to renegotiate the remaining $10,000 or use your appraisal contingency to cancel. Always confirm with your lender how a shortfall affects your loan amount and cash to close.
Key tradeoffs
- Gap coverage can win deals in multiple‑offer situations.
- Larger gaps mean higher cash exposure if value misses.
- If you waive the appraisal contingency entirely, you should have clear reserves and a plan with your lender.
Escrow, earnest money, and closing basics
Escrow is a neutral third party that holds funds and key documents until you meet contract conditions and the sale closes. In Contra Costa County, the process follows California norms and local escrow and title firms typically handle closings.
- Earnest money deposit (EMD). Your initial good‑faith deposit, often 1 to 3 percent of the purchase price. It is held in escrow and credited to your closing costs or down payment at closing.
- Close of escrow (COE). The date funds transfer and the deed records. For financed deals, you often see 30 to 45 days. Cash purchases can close faster.
- Title insurance and preliminary title report. Title insurance protects you and your lender from past title defects, while the preliminary title report shows easements, liens, and exceptions you must review. For basics, see the American Land Title Association.
Rent‑backs: When sellers stay after closing
A rent‑back, also called seller post‑possession, lets the seller remain as a tenant for a short period after closing. This can help a seller manage their move or close on a replacement home, and it can help your offer stand out.
Typical terms to negotiate
- Duration. Often a few days to 30 days, sometimes up to 60 days if negotiated and permitted by your lender.
- Rent. Daily rate or flat amount, sometimes tied to a percentage of carrying costs. Terms vary widely.
- Deposit and insurance. Define a security deposit, who pays utilities, and who carries insurance and liability during the rent‑back.
- Move‑out date and penalties. Be precise on dates and add default remedies for holdover or damage.
Use a written agreement with clear terms, often based on standard forms from the California Association of Realtors. Confirm with your lender that a post‑closing occupancy by the seller is permitted, since some loans restrict this.
Rent‑back red flags
- No security deposit
- Vague move‑out date or penalties
- No proof of insurance
- Ambiguous responsibility for utilities or maintenance
ADUs and JADUs in Lamorinda
An Accessory Dwelling Unit (ADU) is a self‑contained unit with its own kitchen and bath on the same lot as a home. A Junior ADU (JADU) is a smaller unit within the existing home, often with an efficiency kitchen. State law encourages ADUs and streamlines approvals. For a statewide overview, start with the California HCD ADU resources.
Local rules still matter. Cities set design, setbacks, parking, and utilities within state limits. Hillside lots, design review, and CC&Rs can affect feasibility in Lamorinda. Always verify permits for any existing ADU and confirm utility connections and parking.
- Lafayette: check the City of Lafayette planning
- Orinda: check the City of Orinda planning
- Moraga: check the Town of Moraga planning
Quick ADU checklist for buyers
- Ask for final permits and inspections for any ADU or JADU
- Confirm sewer, electrical capacity, and separate metering if relevant
- Review parking and access requirements with the city
- Verify whether the ADU is included in assessed value and property taxes
Other terms you will see
- As‑is. The seller does not promise repairs, but you still have the right to inspect and request credits unless the contract removes those rights. Sellers still must disclose known defects.
- Agency. California requires agency disclosures that define who represents whom. Dual agency is allowed with written consent but changes fiduciary duties.
- Pre‑approval vs pre‑qualification. Pre‑approval is stronger because a lender has reviewed your documents. Listing agents prefer pre‑approval letters in offers.
- Conforming vs jumbo loans. Many Lamorinda purchases use jumbo loans, which have different underwriting standards and timelines.
- Property taxes and Prop 13. California limits annual property tax increases and sets a new base year value at purchase. For county specifics and assessment questions, see the Contra Costa County Assessor.
Smart ways to reduce risk
- Keep at least an inspection and loan contingency unless you fully understand the risk and have reserves.
- If you want to compete without waiving appraisal, consider a capped appraisal gap and calculate your worst‑case cash.
- When you see remodels or an ADU, verify permits and final sign‑offs with the city.
- Read the title report and match any easements or encroachments to what you see on site.
- For hillside homes, add focused inspections such as sewer scope, roof, HVAC, foundation, and geotechnical where appropriate.
Your closing checklist
Sellers: documents to prepare
- Transfer Disclosure Statement (TDS)
- Natural Hazard Disclosure (NHD) report
- Lead‑based paint disclosure if built before 1978
- HOA resale package if applicable
- Preliminary title report from escrow
- Permits and receipts for recent renovations
Buyers: documents to gather
- Lender pre‑approval letter
- Proof of funds for earnest money and any appraisal gap
- General home inspection plus any supplemental reports needed
- Review of the preliminary title report and CC&Rs if in an HOA
For more on forms and consumer guidance, see the California Department of Real Estate, California Association of Realtors, and the American Land Title Association. For county planning and tax resources, visit Contra Costa County.
The Lamorinda edge: Compete and protect
Lamorinda often has low inventory and multiple offers, so you may face pressure to shorten or waive protections. You can still be competitive while protecting your bottom line. Set clear contingency timelines, use a targeted appraisal gap, get focused inspections, and structure rent‑backs with strong terms.
If you want hands‑on guidance, renovation literacy, and a calm, confident plan for your move, reach out to the Paddy Kehoe Team. We will help you price, polish, and position your home or craft a winning offer that fits your risk and budget.
FAQs
What contingencies should a Lamorinda buyer keep?
- Keep at least inspection and loan contingencies unless you fully understand the risks and have reserves; consider a capped appraisal gap rather than a full appraisal waiver.
What happens if the appraisal is low in Lamorinda?
- Your lender bases the loan on appraised value, so you can cover the shortfall in cash, renegotiate price or credits, or cancel if you kept an appraisal contingency.
How do I verify an ADU in Lamorinda is permitted?
- Request final permits and inspections from the seller, then confirm with the city’s planning department and verify utilities, parking, and any recorded conditions.
Can a seller stay after closing in Contra Costa?
- Yes, with a written rent‑back agreement that sets daily rent, deposit, move‑out date, insurance, utilities, maintenance, and default remedies, and only if your lender allows it.
Which disclosures often flag issues in Lamorinda homes?
- Look closely at the TDS and NHD for hillside stability, drainage, seismic retrofit details, termite or WDO items, sewer condition, and any unpermitted work noted by the seller or inspector.
