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Inspection: This contingency gives you the right, within a specified time frame, to have full access to the home to conduct a professional inspection. The sale of this house is contingent upon a home inspection satisfactory to Purchaser. This clause is HUGELY important. The mortgage loan contingency is one such example. Say that the contract can be immediately voided by the buyer if the home inspector turns up issues with the house. Watch out for that clause in the sales contract! Generally, if certain features of the property are in need of repair or replacement, the buyer can use the inspection contingency clause to demand the seller make any needed repairs before closing or to renegotiate the purchase price. Be extremely cautious that you do not sign a contract that requires your inspector to belong to a particular association or group (i.e. If your agent claims no such list exists then require of him or her to add “Jeff Pope” to the contract as your inspector and see how quickly things heat up. Write a clause that specifies you can have the entire house inspected, rather than just selected systems such as electrical and plumbing. b. Appraisal contingencies. Before signing a sales contract make absolutely sure your home inspector’s name (i.e. Ensure that the seller must have all areas of the house available for inspection, including the attic, to look for wiring or moisture issues. See my post on purchase and sales agreements for that discussion. Some inspectors charge a rush fee to come out that quickly, depending on their workload. As far as the actual wording goes, financing contingencies can vary from state to state. Be prepared to negotiate this point -- some sellers want the right to repair problems or define which problems can lead to a voided contract, such as plumbing or electrical issues. Jeff Pope Wood Flooring Inspections and Consultations. A home inspection contingency can be defined as a clause written into a real estate purchase agreement that provides the buyer the right to have a home inspection performed by a professional home inspector within a designated time. However, giving the buyer credit or cash back at closing is sometimes better than tackling the repair yourself. RADON INSPECTION CONTINGENCY : This Contract is contingent until 9 p.m. on the Day after the Date of Ratification ("Deadline") to allow the Buyer, at the Buyer's discretion and expense, to have the property inspected for the presence of radon by a Testing It’s not unusual for a buyer to have a contingency that allows for a formal appraised value at or above purchase price. Seller grants Purchaser and ______________ (name of home inspector) the right to enter upon the property between the hours of 7:00 a.m. and 5:00 p.m. for the purpose of doing a thorough and complete structural and mechanical inspection of the home and testing for lead paint, water, water well, septic tank and field lines, and any other tests or inspections necessary and requested by Purchaser. Negotiation Period. A radon test will normally cost a buyer between $100.00 – $200.00. Add a fast exit plan if the home inspector finds problems. is written in the contract. If you're buying real estate, you might need a mortgage to finance the deal. The old process, known as the 5-2-2, is no longer in force. Now there’s a 10-day window for the whole inspection and contingency operation, start to finish. On or before the date that is thirty (30) days after the Effective Date, TRMC shall deliver to TLO written notice of (a) TRMC’s satisfaction or waiver, in TRMC’s sole discretion, with respect to the results of the inspection contingency stated in this Section 4, or (b) the failure of this condition. Appraisal: The buyer won’t be obligated to buy the home if the appraisal value is lower than the asking price. If there isn’t much of note found, you may simply sign off on it and move on. Some contingency clauses are commonly used when making an offer. If you don't want to repair the issues, you can void the contract or allow the buyer to do so. Adding an Inspection Contingency Addendum to Purchase Agreement Generally, real estate agents recommend that such an addendum is added to the purchase agreement and that the inspection(s) is/are carried out as quickly as possible, with the ideal timeframe being within a few days after the agreement is made. If the seller, builder, or agent refuses to allow you to hire a home inspector of your choice you are in serious trouble. The Home Inspection clause is now part of most real estate sales contracts. Remove this contingency by Delivering to Seller (1) a letter from the lender Right to Inspect Inspection, fails to Deliver a copy of the Septic Inspection Report to Seller, or fails to Deliver the Inspection Addendum or Notice voiding this Contract prior to Septic Inspection Deadline, this Contingency will expire and this Contract will remain in full force and effect with no Septic Inspection Contingency. The buyer might want to have that money given to him at closing instead, so be prepared to negotiate. ASHI, NACHI, GHIA, etc.). If the buyer can’t find financing, either party can cancel the deal. The home inspection and related tests are typically completed before the purchase and sale agreement is signed and any inspection issues are dealt with in the purchase and sale agreement. In a multiple offer situation, a buyer may want to have the right to “escalate” the … In most states, home inspection contingencies are part of the purchase contract. Mortgage Contingency Along with the Inspection Contingency, this is the most important contingencies in the transaction and will be carried forward onto the Purchase and Sale Agreement. It typically gives the buyer a way to exit the contract if the home inspector finds major problems with the house, such as electrical issues or a leaking roof. a. If Seller of agent requires a copy of the home inspection report, a copy will be available only if Seller tenders payment of not less than sum of the inspector’s total fee. The time frame typically means you have that many days from the contract signing date to provide a written inspection report to the seller, which sometimes takes the inspector a couple of days to prepare. Add wording that lets you decrease the price of the house instead of paying for a repair. A home inspection contingency is handled differently across the United States, depending mostly on local customs and state laws. Always consult a real estate attorney when drafting purchase contracts and contingency clauses. Beginning her career at newspapers such as the "Marietta Daily Journal" and the "Atlanta Business Chronicle," she most recently worked in communications and management for several nonprofit organizations before purchasing a flower shop in 2006. By How Much Should You Low-Ball a Short Sale? In some cases, bigger problems are discovered once the repair begins -- such as water damage in the subfloor under warped floorboards -- that can increase the cost of the repair significantly. This clause gives the homebuyer the right to go upon the property and enter the home with a home inspector of the purchaser’s choice to carefully evaluate and inspect the house that is being sold. Should Seller and Purchaser fail to reach an agreement on repairs/replacements to be made, the contract becomes void. Another common contingency is an inspection clause. It also allows the buyer to cancel the contract (or negotiate repairs) if they are not comfortable with the inspector’s findings. Ask for the “Blacklist” of home inspectors. Read more >. In order for radon to be considered a threat in a home, there needs to be a level of 4.0 pCi/L or greater. Make sure you're not obligated to fix them, but that you have the opportunity to fix them if you want the sale to continue. Understanding the inspection contingency clause is crucial because it forms the legal and binding basis for resolving repair issues so the sale can close. Include wording that allows you to exit the contract if big-ticket items are found to be at the end of their useful life. The mainstay of any real estate contract is the appraisal contingency. A pest inspection is also recommended and is sometimes performed by a separate company. It’s in the buyer’s best interests to use this addendum to allow home inspectors, electricians, plumbers, or any other contractors to … Prepare a clause for the contingency that states you have the right to cure any issues the home inspector finds, and set a base price limit. Below is a sample home inspection clause that could be modified for your particular use. Home inspection: This gives the buyer the right to order a professional home inspection and back out of the sale if major unreported damage is found. After the agreed upon inspection period has passed, the seller must request that buyer lift their inspection contingency. Mortgage availability: This gives the buyer time to find financing for the home. If they are not, there is an inspection contingency added to the P&S. Lines 170-172 state whether the buyer will perform an inspection on the property and whether or not this Purchase Agreement is contingent on that inspection. Wood Flooring. Most states have a standard document known as the residential real estate purchase agreement (or something similar). Inspection Contingency. Appraisal Contingency. For example, if a roof repair is estimated at $750, decrease the cost of the house by that much instead of paying for the repair yourself. OR. In Florida it is highly recommended due to the possibility of termites. Sample Clause 1: The Buyer’s offer is subject to a satisfactory inspection within ten (10) days. For example, you might say the buyer is responsible to fix any problems that are estimated to cost less than $500, while you want the option to repair more expensive issues if you desire. An inspection contingency allows the buyer to cancel a real estate purchase contract based on the findings in the home inspection. If TRMC fails to timely deliver such C - 4 notice to TLO, then this condition shall be deemed not satisfied, … This … ). This is a right granted by the owner of the property. Set a reasonable inspection time frame, such as 14 days. 5. Set a standard for the home inspector. 2. Does Having a Home Inspection Help When Purchasing a Home? Once you get the inspection, you have a choice. Assume that REALTOR® Jones has listed the Smith property for $100,000. Some examples: 1. Based outside Atlanta, Ga., Shala Munroe has been writing and copy editing since 1995. The Browns submit an offer on their property for $95,000, which is accepted by the Smiths. Home inspection contingency – This clause involves the window of time the buyer has to get the property they plan to purchase professionally inspected. Jeff Pope, John Doe, Jane Doe etc.) If you've already sold the house and credited the buyer for the repair, you can't be held liable for additional problems discovered after the date of the sale. In almost all cases the buyer will choose to “Elect” an inspection and make the agreement so it “Is” contingent on that inspection. … Inspection clauses are very important as they ensure that the Buyer is obtaining a valuable asset and not a money pit full of defects and repair issues. Jeff Pope Home Inspections, Inc.® - Copyright 2009 - All rights reserved. If seller does not obtain a contingency removal, buyer’s inspection period remains in effect, “based on a remaining contingency.” See 14(B)(4). A Sample Home Inspection Contingency Clause. For instance, if a home inspector notes in their report that repairs for the home will cost more than a certain dollar amount, the buyer would be allowed to back out of their contract to buy this home. The offer is subject to the “Sample Clause 1” inspection contingency. Definition: A home inspection contingency is a clause written into a real estate contract that gives the buyer the right to have the house inspected by a professional inspector within a certain period of time. The first point of the mortgage contingency clause is to make it clear that all other clauses of the contract are no longer valid if the buyer is unable to obtain a mortgage commitment. This clause is a protection for the buyer because it allows him or her to get out of the contract without any legal consequences and without losing any money already deposited. The Home Inspection Report belongs to the person who paid for it. 3. Some sellers want a fast inspection period, such as five days from the date you sign the contract, which means you must hire an inspector quickly. A Sample Contingency Clause Contingency clauses can be customized, but the language is usually standard boilerplate, consistent with any state laws and regulations. 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