A closer look at the structural contingency

The structural contingency is one of the three contingencies in the contract to purchase real estate in the Capital Region. It enables buyers to hire a certified inspector to evaluate the home they intend to buy, with the objective of looking for substantial defects (any single item worth $2000 or more to repair). Both buyers and sellers often have questions about this part of the process and here are a few of the most common ones.

Is it a good idea to waive an inspection so my offer is more appealing to the seller? We will never recommend that course of action. Unless our buyer client is a contractor or the house is new construction, we do not think it's wise to waive the inspection. Now, when we represent the seller, we are fans of offers with no inspection contingency.

A house is listed "as is". Does that mean I can't have an inspection? No, you still have the option to utilize the structural contingency and hire an inspector. In a competitive situation, the seller will likely prefer offers that waive an inspection. The seller is using that term to indicate they aren't willing to provide credits for issues that might be present. When we represent a buyer our position is that you should at least ask for a credit and see how the owner responds.

The inspector uncovered a bunch of small issues that add up to the $2000 structural threshold. Can I renegotiate? No, the threshold is not for an accumulation of small items, it is for single items that could cost $2000 or more to repair. That said, if you are our buyer client and there are some small issues you would like the seller to address, we are happy to ask them to do so as a courtesy.

The inspector uncovered one or more substantial defects. What happens next? You have three options - 1. cancel the contract, 2. ask for a credit, 3 ask the seller to repair the issue. We will help you determine what the best course of action is for your specific situation.

The inspector did not uncover any substantial defects but I am not sure I want to move forward on the sale. Can I get out of the contract? You can't use the structural contingency as a way to cancel a contract unless there is at least one substantial defect noted. If you no longer want to buy the house, we advise you to talk to your real estate attorney about your legal options.

I want to ask the seller to fix the issues that were discovered by the inspector but I am worried they will cancel the contract. What should I do? The seller does not have the ability to cancel the contract because you ask them to fix an issue. They can decline your request and then you have to decide whether to move forward, but the decision to cancel a contract during the structural contingency is solely the buyer's decision.

I am the seller of a home and the buyers had an inspection and have asked for a credit to repair the issues that were uncovered. What happens if I don't give them the credit? If you don't want to give a great credit they are requesting, you have options. You can counter their offer with a partial credit or you can offer to have the repair completed prior to closing (assuming you have a contractor who can fix it more affordably). It is almost always in your best interest to work with the current buyer. If the deal falls apart you will need to disclose the issues that were uncovered to future buyers and you will also likely need to address the issues or reduce the price to compensate for them.

The structural contingency is an important part of the contract to purchase real estate and we want both our seller and buyer clients to have a firm grasp on the details. Do you have a question that we didn't address above? Let us know!

Photo credit: IStock.com/Amorn Suriyan