The current Home Inspection and Radon Testing Contingency Addendum is divided into two sections: 1. Home Inspection and 2. Radon Testing. For the purposes of this post, we are only going to look at the Home Inspection. We will look at the Radon Testing Addendum in a separate post.
The first section, Home Inspection, is further divided into 3 sections: A. Inspection Period B. Negotiation Period and C. Purchaser’s Election..
In Section A. Inspection Period, the parties to the contract must reach a mutually agreeable timeframe for the home inspection itself. Once the contract is ratified, then the clock starts ticking on the Inspection Period. Let’s say the Buyer has a 7 day inspection period; that simply means that after a contract is ratified, the Buyer has 7 days in which to have a professional home inspection completed.
How do you count the 7 days? Well, let’s say the contract is ratified on Wednesday afternoon; the end of the FIRST day is Thursday at 9 pm. That means by 9 pm on the following Wednesday, the Buyer must take some action, whether it be delivering an addendum listing specific existing deficiencies and proposed remedies or a notice voiding contract. In either case, an entire copy of the inspection report must accompany the addendum or notice.
*Should the Purchaser fail to obtain an inspection, provide a copy of the report to Seller or fail to provide an inspection addendum or notice voiding the contract PRIOR to the home inspection deadline, the contingency expires and the contract remains in full force.
The significant difference in this addendum is in what is called the Negotiation Period.
Now, when negotiating a contract, Buyers and Sellers must agree upon a pre-defined negotiation period, which follows the Purchaser’s delivery of the Inspection Addendum. During that period of time, the Buyer or Seller may make, modify, rescind or alter as many offers and counter offers as it takes to reach mutually acceptable terms. At the end of the negotation period, if the parties have not come to an agreement, then the Buyer has the option to void the Contract by delivering notice to the Seller. Of course, there is a time period for that notice, as well. If the two parties fail to reach an agreement and the Buyer fails to deliver notice to the seller voiding the contract, then the home inspection contingency is removed and the contract remains in full force.
How is this going to work out? Well, as always, negotiations depend on every one involved keeping level heads and negotiating with good faith. At the end of the day, both parties want the same thing: the Seller wants to sell the house and the Buyer wants to buy the house. Agents need to stay on top of things and keep a close eye on the timelines, of course, insuring nothing drops through the cracks so that both parties can happily end up at the settlement table. After all, that’s what everyone involved is working toward.