contracts

inspection contingency

An inspection contingency is a clause in a purchase agreement that makes the buyer's obligation to close dependent on a satisfactory property inspection within a stated period. If the inspection reveals problems, the buyer can typically request repairs or credits, renegotiate, or cancel and recover earnest money, depending on the contract terms. Missing the deadline usually waives the contingency.

Exam tip: Deadlines matter: if the buyer does not act within the inspection period, the contingency is usually considered satisfied or waived.
Example: A contract gives the buyer 10 days to inspect; the inspector finds a failing roof, and the buyer negotiates an $8,000 credit at closing.

1. A buyer's 10-day inspection contingency expires without the buyer acting on serious issues found in the report. The buyer generally:

Answer & explanation

Answer: C. Contingencies have deadlines; once the period lapses without action, the buyer's protection on that item ends.

Related terms & state variants

contingency earnest money home inspection time is of the essence

Sources

Source verification pending. Confirm current requirements with your state regulator.

Last verified: 2026-10-23