An inspection contingency is a contract clause that gives buyers the right to commission a professional home inspection within a set timeframe. Based on the inspector’s report, buyers can negotiate repairs, request credits, adjust the purchase price or cancel the deal without forfeiting their earnest-money deposit. This clause protects buyers from hidden defects and unexpected expenses post-closing.
An inspection contingency typically outlines three critical timeframes:
• Inspection Period: Days allotted (often 7–10) for the buyer to perform inspections.
• Cure Period: Time given to the seller to address agreed-upon defects.
• Contingency Removal Date: Deadline by which the buyer must formally waive or remove the contingency to proceed with the sale.
You’ll find the inspection contingency in most residential purchase agreements or as an attached addendum. Terms vary by state and contract form, so always read your agreement carefully.
Without an inspection contingency, buyers risk losing their full earnest-money deposit if they back out for inspection-related issues. This clause ensures a buyer can cancel and reclaim funds when significant problems surface.
Inspection findings give buyers leverage to ask sellers to fix defects or offer a price reduction. Sellers often agree to repairs on major systems—roofing, plumbing or electrical—to keep the deal on track.
Major defects—foundation cracks, termite damage or mold—can lead to tens of thousands in repairs. An inspection contingency lets buyers identify and address these surprises before closing.
Once the seller accepts your offer, the inspection period countdown begins. Typical timelines range from 7 to 17 days (state-specific). Use calendar reminders to track deadlines and avoid automatic contingency removal.
A thorough inspection often involves multiple specialists:
• General Inspector: Overall structure, foundation and appliances.
• Pest Inspector: Termite or wood-destroying organism inspection.
• Roof Inspector: Shingles, flashing and gutters.
• HVAC Inspector: Heating, ventilation and air-conditioning systems.
After receiving inspection reports, compile a concise list of objections or requests. Submit this in writing to the seller before the inspection period deadline.
Sellers can agree to all requests, propose a counteroffer (partial repairs or credits) or refuse. Buyers then decide to accept, negotiate further or cancel under the contingency.
Removing the contingency means you’re satisfied or have reached agreement on repairs and intend to close. Waiving it means you forfeit rights to back out for inspection issues, often used to make offers more competitive but carries higher risk.
The inspection period deadline is crucial. Count only business days if specified, and confirm any holidays. Missing it may automatically remove your contingency.
Notice of defects must be in writing—usually via an addendum or email—before the inspection period expires. Clearly list each item with supporting documentation.
Once notified, sellers often have 3–7 days to respond or make repairs. Exact cure periods vary by contract and state law.
The final removal date marks the last day to elect repairs, credits or cancellation. After this date, the sale proceeds, and the buyer loses inspection-related exit rights.
An appraisal contingency protects buyers if a home appraises below the loan amount; the inspection contingency focuses on physical condition rather than value.
A financing contingency allows buyers to exit if they can’t secure a mortgage. The inspection contingency is independent of loan approval.
Title contingencies ensure clear ownership, while other clauses cover survey issues or lender requirements. Each contingency serves a unique protective function.
Approach negotiations with realistic repair estimates. Sellers may prefer offering credits at closing rather than coordinating contractors.
If more time is needed for specialty inspections or seller responses, request an extension before your deadline. Sellers may agree if you remain committed.
Waiving can make your offer stand out in a hot market, but you assume full responsibility for all defects discovered later.
Rely on your real estate agent or attorney to craft clear requests, interpret reports and ensure all notices comply with the purchase agreement.
Inspection periods typically run 7–10 days but vary by state. Extensions are negotiable prior to the original deadline.
If repairs are refused, buyers can walk away and reclaim their earnest-money deposit or negotiate a price credit.
Most contracts require a written addendum or email listing defects clearly. Include inspection reports and photos for support.
For older homes or known issues, specialized inspectors (pest, roof, HVAC) can uncover problems a general inspector might miss.
Yes—if done within the inspection contingency period and per the contract’s notice requirements, you’ll receive a refund of your earnest-money deposit.
The Smiths submit an offer with a 10-day inspection contingency and a $5,000 earnest-money deposit.
Contract accepted on May 1; inspection period runs through May 11.
General and roof inspections reveal missing shingles and outdated electrical panels posing fire risks.
The Smiths request full roof repair and panel replacement; seller counters with $3,000 credit toward repairs instead of doing work.
The Smiths accept the credit, remove the inspection contingency on Day 9 and proceed to closing.
• Act quickly within deadlines
• Evaluate seller’s willingness to repair vs. credit
• Document all findings and negotiations
Choose inspectors with proper credentials and strong reputations to ensure a thorough evaluation.
Clear documentation strengthens your position during repair negotiations.
Missing deadlines can strip you of contingency protections. Set multiple alerts to stay on track.
Verbal agreements aren’t enforceable. Always record requests and responses in writing according to the purchase agreement.
An inspection contingency offers a formal “out” or path to renegotiate when hidden defects surface, safeguarding your investment and earnest-money deposit.
Educate yourself on deadlines, hire trusted inspectors and coordinate closely with your agent or attorney for a smooth process.
Leveraging your inspection contingency wisely can turn a stressful purchase into a confident investment—protecting your future home and your wallet.
