Purchasing a home is a major investment, so you should know exactly what you’re getting into when you buy the property. In most real estate deals, there are contingency clauses that set a way for the buyer to back out if the home inspection shows problems.
Contingency clauses provide a legal way to get out of the purchase agreement without having to deal with any penalties. One of the most common contingencies involves the home inspection.
What is a home inspection contingency?
A professional property inspection is an important part of due diligence during a home purchase. The home inspection contingency gives you the right to walk away from the purchase if the inspection unearths something unexpected. In most cases, the property inspection contingency provides a specific time period in which the inspection must occur.
If the inspection reveals serious defects, the contingency allows you to:
- Request repairs or credits to cover the repairs
- Renegotiate the purchase price to reflect the actual condition of the property
- Walk away from the deal entirely and recover their earnest money
If there isn’t an inspection contingency, you may be locked into the deal even if there are major issues found after you sign the contract. Ensuring that an inspection contingency is in the contract can help you to protect your financial interests.
Because this is such a major financial investment, it’s best to work with someone who can assist you throughout the home purchase process. This includes having them review all documentation to ensure that it covers the points that will protect you.
