What is the Function of a Home Inspection Contingency Clause?
By Ellen Russell
Photo: © Ernest Prim - iStockphoto
 Once you have found the home you want to buy, the next step is to make an offer. As part of the purchase offer, you have the option of entering a home inspection contingency clause. A home inspection is an optional clause on an offer, but one worth serious consideration.
A home inspection contingency clause states that you have the right to withdraw from the sale if, upon completion of a home inspection, serious repairs are needed. It is important to note that a home inspection is not a home showing. A home inspection is usually done, and in many states may be required to be done, by a certified home inspector, at the purchaser's expense. A thorough home inspection looks at every detail of a home or piece of real estate, from foundation condition, to proper plumbing, wiring, roof condition, and much more. Besides letting you know what kind of repair situation you may be getting yourself into, the home inspection contingency clause affords you a good level of financial protection both during the purchase period and for a time beyond the completed sale.
Who should do a home inspection?
A certified home inspector is the most qualified person to complete a home inspection. |
Although you may know a lot about home repair or have a friend or family member that is knowledgeable in construction and home maintenance, there is one significant reason to have a certified home inspector inspect your real estate investment: insurance. A certified, insured inspector certifies the results of the inspection. If, during a contract-specified time period, a critical flaw in your home was overlooked and the inspector is determined to have been negligent, the home inspector's insurance will be responsible for the cost of repairs.
What if the inspection uncovers defects?
During a home inspection, if a previously undisclosed problem is found, a home inspection contingency clause allows you three courses of action. First, you have the right to withdraw from the contract; you do not have to complete the purchase of the home or real estate and all monies deposited are returned to you.
If you are still interested in buying the property, you have two options. You can request that the sellers complete necessary repairs at their own cost before closing. If the repairs are not completed, again, the contract can be considered void and you are not responsible.
The last option available to you when your home inspection reveals trouble is to renegotiate the purchase price. You and your agent can offer to complete the purchase of the home at a new, lower price; you will be responsible for the repairs and agree to buy the property "as is." |
