Real Estate Glossary

What Is an Inspection Contingency?

This is a clause commonly added to real estate contracts as a way out for the buyer if the property isn't in optimal conditions. The property must be inspected by the buyer or a professional to ensure everything is in the best possible condition before making the transaction.

If this clause isn't met, the buyer can negotiate certain upgrades or repairs that must be done to the property or drop the sale altogether and pursue other offers.

This is entirely safe, as contracts aren't binding until all clauses are met. The process is relatively easy, as the buyer has around two weeks to perform the inspection.

If said inspection is done by a professional, they are going to write down everything they see in the property as well as any recommendations for future upgrades or repairs that need to be done.

Nonetheless, they could also indicate that further review is needed, as some more technical aspects may need specialized professionals that can indicate whether the conditions are optimal or not.

Keep in mind that you must do this inspection before the date of the contingency release. Otherwise, you could lose your earnest money if you try to break the contract.