ABA Family Legal Guide

Buying and Selling a Home

The Steps of Buying and Selling a Home

Making an Offer: The Purchase Contract

What does an inspection contingency provide?

The right to inspect is a very important safeguard for the buyer. There are several types of contingencies used, either as part of the printed offer or added as a rider. Most often the form falls within one of two categories. One form gives the buyer the right to have the property inspected by a professional home inspector of the buyer's choice and at the buyer's expense. If the inspector finds defects, the buyer has the right to cancel the contract within a specified time. This type of contingency raises some of the same issues as an unrestricted lawyer-approval contingency, since inspectors will almost always find some problems with the property. Thus, it can give buyers a few extra days to decide whether they want to follow through with the purchase, although it should not be used primarily for that purpose.

The second type of inspection contingency also gives the buyer the right to have an inspection done, but then gives the seller time to either repair any problems uncovered by the inspection or agree to reduce the selling price contained in the contract by the cost of repairs. If a seller opts to do nothing, he or she must inform the buyer. Unless the parties can come to terms based on the buyer's inspection report, the buyer can cancel the contract and seek return of any earnest money previously paid.

Other forms of inspection contingencies exist, usually incorporating some or all components of the two forms described above. Some people prefer the simplest form of contingency with the hope that simplicity generates fewer back-and-forth discussions between the parties. Others may prefer a more tailored version based on some concern of the buyer about the property being sold. Generally, if the seller wants to sell, the parties can make a deal, even if there is a serious problem.