Ted Stumpf
Ted Stumpf, Windermere Napa Valley PropertiesPhone: (707) 246-9825
Email: te[email protected]

Understanding Home Inspection Contingency Clauses

by Ted Stumpf 05/22/2022

In real estate, a contingency is any clause in the purchase offer that gives the buyer a way to back out if certain requirements aren’t met. There are many types of contingencies used in home sales all covering different circumstances to protect the buyer’s best interest. The most common type of contingency is a home inspection contingency, which makes the buyer’s offer dependent on the results of a home inspection. Here we’ll go over the basics of this type of contingency for a better understanding of how they work and what they cover.

What Is an Inspection Contingency?

Inspections are a necessary part of every home sale. With an inspection contingency in the purchase contract, the buyer has the flexibility and right to walk away if things aren’t to their liking. If the results of a home inspection don’t meet your requirements you may negotiate repair costs or cancel the sale all together. The details of how to handle contingencies vary based on local laws.

If a home is on the market listed as “contingent” it means that there is a deal in progress but it’s depending on the outcome of the inspection (or other included contingency). The contract isn’t binding until all parties have confirmation that they have met the contingency terms.

How Do Inspection Contingencies Work?

The entire process begins with the home inspection itself. The property has a thorough visual inspection by a licensed professional chosen by the buyer or sometimes the bank or mortgage lender. A report from the inspection will determine what happens next in the home sale.

Sometimes, if the initial inspector finds something that could be a sign of more serious problems, they might recommend a second inspection by a specialist. A great example of this would be low water pressure either caused by corroded pipes or intrusive tree roots. Both potential causes would require a more specific type of inspection to determine.

Some of the other issues that might require a second opinion include electrical systems, roof condition, foundation repair, asbestos, mold and pests like termites. Finding and hiring an inspector for specific issues is something your real estate agent can help you with. Usually they can coordinate directly with the inspector and the seller without you having to get involved in the logistics.

Contingency Release

Contingency clauses always include a deadline called a release date. The home inspection process has to happen before that date or else the buyer loses their right to cancel the transaction. Sometimes you can change the release date to allow for more time if the contract has terms allowing it. Because the contingency clause is only valid for a limited amount of time, it’s crucial to act quickly on things like requesting repairs or negotiating some other alternative with the seller.

Purchase contracts are complicated and one of the many reasons it’s wise to hire a real estate agent to help. Being able to understand and navigate important clauses like contingencies in your contract might make or break a deal. The more you can prepare for the possibility of extra inspections, the easier it will be to handle everything within the required time period.

About the Author

Ted Stumpf

Ted draws energy and joy from building synergetic relationships with his Clients. Ted's nature is graciously gregarious and persevering; he's honest; and he's been dedicated to a substantial list of clientele throughout his 25 years in the hospitality business and almost two years as a REALTOR. His passion is creating a sincere, successful relationship with people.

Ted grew up in a family of Realtors in central Indiana, earned a degree in economics and philosophy from the University of Notre Dame, and jumped into all aspects of the restaurant business. His ensuing hospitality career path eventually led him into the Event Management Sales & Service role in hotels and quickly guided him to Los Angeles, San Francisco, and finally to a luxury resort in the Napa Valley, where he, his husband, and their dog have resided for almost a decade now.  

The irony is not lost on Ted that his ‘growth’ journey has culminated in“living happily ever after” in an agricultural area with a small-town feel and sense of community strikingly reminiscent of his youth…and as a REALTOR nonetheless!