Contract Terms That Sound Standard but Are Not

The contract terms that sound standard but are not are the short, familiar-looking phrases that shift risk or money to the seller: "buyer and/or assigns", an inspection period "in buyer's sole discretion", "seller pays all closing costs", a buyer's right to record a memorandum of the agreement, and a remedies clause that caps what you can recover at a small deposit. None of them is illegal on its own. Each one changes what you net, or whether you close at all, and none is required just because it appears on a printed form.

This article is part of the cash buyer vetting section and expands the "contract terms that change the net" table in how to vet a California cash home buyer. It describes common clauses; what your contract means is a question for a California real estate attorney.

Why "standard" is the wrong test

There is no single standard cash purchase contract. Many investors use their own forms, and a form drafted by the buyer is written to protect the buyer. A clause that appears in every contract a buyer sends is standard for that buyer, not for you. The useful test is narrower: for each clause, what can the buyer do because of it, and what does it cost you if the buyer does it?

Worked examples: clauses that change the net

Figures are dashes because yours come from your house. The point is the direction each clause moves the number.

Clause as writtenSounds likeWhat it actually doesNet as signedNet if the clause is used

"Buyer and/or assigns"

Boilerplate

Lets the buyer sell the contract to someone else, often for a fee taken from the spread

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Inspection "in buyer's sole discretion"

Normal due diligence

Lets the buyer cancel for any reason and come back with a lower price

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"Seller to pay all closing costs"

The no-fees promise

Moves the buyer's escrow, title and recording charges to your side of the settlement statement

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"Seller pays all transfer taxes"

Customary

Can include a city transfer tax on top of the county's, depending on the city

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"Seller's sole remedy is retention of the deposit"

Fair to both sides

Caps what you can recover if the buyer defaults at whatever the deposit is

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"Buyer may extend closing at its option"

Flexibility

Leaves your closing date open-ended while the house is off the market

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The assignment row is the business model called wholesaling; wholesaling explained for sellers covers how it works and what it does to your price. The inspection row is how most retrades start, and price cuts after inspection walks through the sequence.

Clauses that are about the buyer's exit, not your sale

Several clauses read as neutral housekeeping but exist to give the buyer a way out or a way to resell.

• "Price subject to approval by buyer's partners or investors." This is not a firm offer. Until the approval is given, you have a contract the other side can decline to perform.
• "Buyer may show the property to partners, lenders and contractors." Access beyond an inspection, especially for people who are not inspectors, often means the contract is being marketed to another buyer.
• "Seller shall not market the property or accept backup offers." Exclusivity is reasonable for a short, fixed period. Paired with a long inspection period and an extension at the buyer's option, it keeps you off the market with nothing binding the buyer.
• "Deposit due upon removal of contingencies." The deposit arrives only after the buyer has decided to proceed, so nothing is at stake while the buyer decides. Earnest money: how much and who holds it covers when a deposit should reach escrow and who should hold it.

A recorded memorandum can outlast the deal

Some buyer forms let the buyer record a short "memorandum of agreement" with the county recorder. It puts the world on notice that a contract exists, which protects a buyer who plans to assign. It also sits on your title. If the buyer later cancels or simply goes quiet, a title company may not insure a sale to the next buyer until that memorandum is released.

The buyer can sign a release. If the buyer will not, California law lets a person ask a court to cancel a written instrument that is void or voidable and that may cause serious injury if left outstanding (Civil Code section 3412). That is a lawsuit, with an attorney, and it takes time a seller with a deadline may not have. The simplest protection is a contract with no recording right at all.

The remedies clause and the deposit

A liquidated damages clause, which sets your damages at the deposit if the buyer fails to complete the purchase, is invalid unless each party separately signs or initials it, and in a printed contract it must appear in at least 10-point bold type or in contrasting red bold print of at least 8 points (Civil Code section 1677). Where the buyer intends to live in a house of one to four units, a clause is valid unless the buyer shows it is unreasonable when the amount actually paid is 3 percent of the purchase price or less, and above that it is invalid unless the seller shows it is reasonable (section 1675); for other buyers, including most investors, section 1676 ties validity to section 1677 and the general reasonableness test.

The practical reading: "sole remedy is the deposit" is only as strong as the deposit. A small, late, refundable deposit and a sole-remedy clause together mean a buyer can leave at almost no cost.

Terms that should never appear

California's Department of Real Estate tells consumers never to sign a real estate agreement they do not understand or one that contains blank spaces, never to sign a power of attorney giving rights to their property to someone they do not know and trust, and never to pay or wire cash in connection with a real estate transaction. In seller terms, stop if a contract asks you to sign a deed before escrow is open, leaves the price or closing date blank, or sends the deposit anywhere other than a neutral escrow holder.

If a notice of default has been recorded

When an owner-occupied house of one to four units has a recorded notice of default, a buyer who is not going to live there is generally an "equity purchaser" under California's home equity sales contract law (Civil Code section 1695.1). That law requires the contract to contain the entire agreement, the buyer's name, business address and phone number, the total consideration, the date possession transfers, a notice of cancellation and a boldface warning in the wording the statute sets out (section 1695.3). A contract missing those parts is a reason to stop and call an attorney or a HUD-approved housing counselor before anything else. The behind on payments page describes how the two numbers are mapped against a trustee sale date.

Why the Pomona transfer-tax line matters

"Seller pays all transfer taxes" reads the same in every city, but it costs different amounts. The Los Angeles County Registrar-Recorder lists Pomona as one of five cities in the county with a special city documentary transfer tax rate, charged on top of the county tax. A buyer's net sheet for a Pomona house that shows only the county tax is short a line. Ask any buyer to show both taxes on the estimate, and ask escrow to confirm them.

How to read any cash contract in one pass

1. Who is the buyer named on the contract, and is "and/or assigns" after the name?
2. How much is the deposit, when does it reach escrow, and when does it stop being refundable?
3. How long is any inspection period, what lets the buyer cancel during it, and who can extend it?
4. Which costs, fees and transfer taxes are assigned to you?
5. Can the buyer record anything against the house?
6. What happens if the buyer does not close, and is the liquidated damages clause initialed by both of you?
7. Are any blanks, approvals or "subject to" conditions left open?

When listing nets more

A listing agreement and a financed buyer's purchase contract carry their own terms, so no path comes without fine print. But when the house is market-ready, the market for it is active and you have time for showings, competing buyers and a contract form that both sides' agents negotiate usually leave a seller with more than any cash contract. The written recommendation says so when that is the case.

What this looks like in practice

These are the kinds of files that come in, described without names or figures.

• A seller holding a two-page buyer form with "and/or assigns", a recording right and a deposit due only after contingencies are removed.
• An heir whose net sheet from a buyer left out the city transfer tax on a Pomona house.
• An owner who wanted to know whether a "sole remedy" clause meant anything with a deposit that had not yet arrived.

Get the terms read next to a second number

A second opinion on a cash offer lays one walkthrough and two written numbers next to the contract you hold: a second as-is cash offer from a pool of thousands of local buyers and investors, and an open-market read, which is a preliminary estimate, not an appraisal, each with comps, line-item deductions and the net, plus a note on any clause worth asking an attorney about. There is no cost and no obligation to get the two numbers and the written report.

Sources

• California Civil Code section 1675 (liquidated damages when the buyer intends to occupy), copy read on california.public.law, accessed November 6, 2026
• California Civil Code section 1676 (liquidated damages in other real property purchase contracts), copy read on california.public.law, accessed November 6, 2026
• California Civil Code section 1677 (liquidated damages clause must be separately signed or initialed; type size), copy read on california.public.law, accessed November 6, 2026
• California Civil Code section 3412 (cancellation of instruments), copy read on california.public.law, accessed November 6, 2026
• California Civil Code section 1695.1 (equity purchaser and residence in foreclosure defined), copy read on california.public.law, accessed November 6, 2026
• California Civil Code section 1695.3 (required contents of an equity purchase contract), copy read on california.public.law, accessed November 6, 2026
• California Department of Real Estate, DRE Urges California Seniors Watch for Targeted Real Estate and Property Scams (February 19, 2026): dre.ca.gov (accessed November 6, 2026)
• Los Angeles County Registrar-Recorder, Documentary Transfer Tax general information (cities with a city tax): lavote.gov (accessed November 6, 2026)

Mr. Cali Offers is not a law firm, and comments on another buyer's contract are general observations, not legal advice about that contract. Cash offers come from independent buyers and investors who buy for their own account and may resell for profit; a cash offer is generally below what the open market would bring. Any value shown is a preliminary estimate, not an appraisal. Nothing here is legal, tax or financial advice.