Five contingencies cover roughly 95% of LA multifamily purchase contracts: physical inspection, financial inspection (the books), title and survey, financing, and seller-disclosure review. Each one gives the buyer a defined window to investigate a specific aspect of the building and, if they find something they don't like, to walk away from the contract with their earnest money refunded. The contingencies are the buyer's protection against discovering surprises after the contract is signed. The seller's job is to know what each contingency does, how long it runs, what triggers a buyer's right to terminate, and how to structure the contract so the contingencies close out cleanly without becoming renegotiation opportunities.
Standard LA multifamily contingency periods run 30 to 60 days, depending on the size of the transaction and the complexity of the building. Larger and more complex deals get longer periods. Smaller and cleaner deals run faster.
The buyer's right to inspect the building's physical condition. Includes structural inspection, mechanical systems (plumbing, electrical, HVAC), roofing, exterior envelope, common areas, and a sampling of unit interiors.
Standard period: 21 to 30 days from contract execution.
What happens during the period:
- The buyer engages a licensed inspector and a property condition consultant
- The buyer's team performs a building-wide physical inspection
- The buyer evaluates the inspection findings against their underwriting assumptions
- The buyer either approves the property, requests credits or price adjustments, or terminates the contract
The seller's job during this period is to provide reasonable access to the building, common areas, and unit interiors (subject to tenant rights of access under California law — typically 24 hours' written notice for unit access except in emergencies).
The most common friction point: unit access. A 30-unit building requires 30 separate tenant access notifications for full inspection. Tenants sometimes refuse access or are unavailable during the inspection window. The contract should address what happens if a defined number of units are not accessible — usually a partial-inspection structure where the buyer accepts the inspection of available units and proceeds.
The buyer's right to review the building's financial records. The deeper of the two inspection categories, and the one that most often produces renegotiation.
Standard period: 21 to 30 days from contract execution, often concurrent with physical inspection.
What the buyer reviews:
- Rent roll, current and trailing 12 months
- Profit-and-loss statements, trailing 24 months minimum
- Tax returns or tax workpapers for the building
- All leases, including amendments and notices
- Property tax bills and Mello-Roos or special assessment statements
- Insurance policies and loss-run history
- Vendor contracts (property management, landscaping, pest control, etc.)
- Utility bills, trailing 12 months
- Capital expenditure records
- All RSO registrations and rent-history documentation
- Any government correspondence (code enforcement, LADBS, LAHD, etc.)
The buyer's underwriting team translates the documentation into a stabilized NOI projection and compares it to the underwriting that supported the offer. If the actual financials don't support the offer, the buyer's options are to terminate, to negotiate a price reduction, or to negotiate other concessions (credits, holdbacks, additional reps).
The seller's job is to deliver a clean, complete, organized financial package. The buyer's diligence team operates faster and produces fewer renegotiation requests when the package is clean. Sellers who deliver disorganized financials invite the buyer to dig harder, and the buyer's dig typically produces findings that produce price concessions.
The buyer's right to review the title commitment and survey. The contingency that most often resolves cleanly without renegotiation, when the seller's title is in order.
Standard period: 10 to 20 days from delivery of title commitment.
What the buyer reviews:
- Vesting (the seller's actual title to the property)
- Recorded liens, easements, and encumbrances
- Survey exceptions and any disclosed encroachments
- CC&Rs and any recorded restrictions
- Mineral rights and other separate rights affecting the parcel
Most LA multifamily title commitments are clean. Issues that occasionally arise: unreleased prior liens that should have been released long ago, easement disputes, prescriptive rights claims by adjacent owners, or undisclosed CCR restrictions.
If a title issue surfaces, the standard remedies are seller cure (the seller resolves the issue before close) or buyer waiver (the buyer accepts the title with the disclosed issue). Persistent title issues that the seller cannot cure occasionally produce contract terminations, but this is rare.
When the buyer's offer depends on obtaining commercial financing. The buyer's right to terminate if the financing falls through despite good-faith efforts to obtain it.
Standard period: 30 to 60 days from contract execution.
What happens during the period:
- The buyer engages a lender and submits a complete loan application
- The lender performs underwriting (financial review, appraisal, environmental review, property condition)
- The lender issues a commitment letter or term sheet that the buyer accepts
The seller's exposure during this period: if the buyer's financing falls through despite reasonable efforts, the buyer can terminate and recover the earnest money. The seller has carried the property off the market for the contingency period without protection against the financing risk.
Sellers can negotiate financing-contingency protections in the contract:
- Documented evidence of the buyer's lender engagement (pre-qualification letter, application submission proof)
- Defined milestones for loan progression during the period
- Limits on the buyer's right to terminate if the buyer caused the financing problem (e.g., didn't actually apply, withdrew the application, accepted suboptimal terms)
- All-cash offers (no financing contingency) priced at a premium to financed offers
For LA multifamily in 2026, all-cash offers are common and often command a price premium reflecting the elimination of financing risk.
The buyer's right to review the seller's required disclosures. Operationally short and rarely producing termination, but legally important.
Standard period: 7 to 14 days from delivery of the disclosure package.
What the buyer reviews:
- Transfer disclosure statement and seller property questionnaire
- Natural hazard disclosure (the legally required statutory package)
- RSO registration history
- Lead-based paint disclosure for pre-1978 inventory
- Asbestos disclosure
- Mold disclosure if applicable
- Any other material defects the seller has affirmative duty to disclose
If the disclosures reveal information that materially affects the buyer's underwriting (an undisclosed material defect, a regulatory order, pending litigation), the buyer's right to terminate is triggered.
Some transactions include additional contingencies tailored to the specific deal.
Environmental contingency. For buildings with potential environmental concerns (former dry cleaner, former gas station, sites near contaminated parcels), a separate environmental review contingency allows time for a Phase 1 environmental site assessment and potential Phase 2 if Phase 1 produces concerns.
Tax-deferred exchange contingency. When the buyer or seller is performing a 1031 exchange, a contingency may address coordination with the exchange timeline.
Tenant estoppel contingency. Particularly for buildings with retail or commercial tenants, a contingency on receiving signed estoppel certificates from the tenants confirming the lease terms.
Code-violation cure contingency. When the building has open code violations, a contingency providing for cure before close or for buyer credit if not cured.
In California commercial real estate contracts, contingencies are typically removed by written notice (the buyer affirmatively waiving the contingency) rather than passively expiring. The buyer who fails to remove a contingency in writing by the deadline retains the right to terminate even after the deadline has passed.
The standard practice is for the buyer to send written contingency-removal notices for each contingency as it is satisfied. The seller's transactional counsel typically tracks the contingency removals and confirms each one is properly documented.
A contract where all five contingencies have been removed is fully "hard" — the buyer has committed to close and lost the right to terminate without paying the earnest money to the seller.
The contingency period is when most sale renegotiations happen, and the renegotiations are easier for the buyer than the seller. The seller's leverage is at its peak the day the contract is signed and decreases through the contingency period as the buyer accumulates information and the seller accumulates carrying cost.
The way to limit renegotiation exposure is to deliver complete clean information upfront. A buyer who receives a thorough disclosure package and a clean diligence room on day one is less likely to find surprises during contingency review than a buyer who has to chase the seller for documents. Surprises trigger renegotiations. The absence of surprises produces clean closings.
The other thing I tell sellers is to choose buyers carefully, not just based on price. A buyer with a track record of clean closings and a reasonable diligence approach is worth more than a slightly higher-priced buyer with a reputation for renegotiating during contingencies. The realized price often diverges from the offer price during contingency review. Buyer track record predicts that divergence.
The contingency period is built into LA multifamily transactions because the buyer is committing to a building they have not yet fully investigated. The structure is fair and standard. What varies is how the seller manages it. Sellers who manage the contingency period well close at their offer price. Sellers who manage it poorly close at the offer price minus whatever the buyer found and negotiated. The variance between those two outcomes is often larger than any other single variable in the transaction.
Request a free evaluation — including a contingency-management strategy for your sale →
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap, specializing in Los Angeles multifamily transactions.
Thinking about selling? Get a no-obligation evaluation on your building.
Request Free Evaluation →