What is a Home Inspection Contingency?

About.com details what a home inspection contingency is, and why it has become so important in the world of real estate for buyers and their agents.

Home inspection contingencies are handled differently across America, depending on local custom and state laws. In most states, a home inspection contingency is part of the purchase contract. This means a home buyer can cancel the sale or try to negotiate repairs based on the results of a home inspection. In other states, generally on the East Coast, home inspections are conducted before entering into a contract to purchase.

If you don't believe that a home inspection contingency is a big deal, listen to this. A seller in Minneapolis once agreed to a very attractive sales price for his home — many thousands of dollars below market value — because I presented a purchase contract without a home inspection contingency. These types of contingencies are a major factor in many real estate transactions.

Now, in California, a buyer has a little over 2 weeks to conduct a home inspection. Standard contract verbiage gives California buyers 17 days. That period of time can be shortened or increased during offer negotiations.

Types of Home Inspection Contingencies to Satisfy

A general home inspection involves many components, which are primarily structural and visual, meaning whatever the home inspector can actually see. However, most home inspectors are not licensed nor qualified to discuss areas of concern that may extend beyond the home inspector's ability or training.

For example, if the home's water pressure is low, the home inspector will note the low pressure on the home inspection and suggest that buyer hire a licensed plumber for further investigation. There could be tree roots growing into the plumbing system or the plumbing pipes could be corroded, none of which a home inspector can tell by looking at it. If the home inspector suggests further inspections in the report, you may want to call a specialist for advice. Some of those types of home inspections could be any of the following:

  • Pests and Termites
  • Chimney
  • Electrical
  • Heating and Air Conditioning
  • Lead-Based Paint
  • Easements and Encroachments
  • Foundation and Basement
  • Roof Inspection
  • Sewer or Septic System
  • Soil Stability
  • Trees and Vegetation
  • Water Systems and Plumbing
  • Mold
  • Radon / Methane Gas
  • Asbestos
  • Formaldehyde
  • Permits and Zoning
  • Home Inspection Contingency Expiration Date

To determine the date that your home inspection contingency needs to be released, you should read your purchase contract. If it possible that once your period has expired, your earnest money deposit may be at risk if you try to cancel the contract based on a defect disclosed in your home inspection. It is also possible that your contingency period does not automatically expire unless you take a specific action such as signing a contingency release.

This is why it is imperative to conduct your home inspection as soon as you possibly can. If the home inspector recommends that you call an HVAC specialist to do further investigation of the furnace, for example, some heating contractors might not be immediately available to you. You don't want your contingency period to expire before you have an opportunity to complete all of your inspections.