"Inspection Contingency"

The inspection contingency in a standard New Jersey Real Estate contract gives buyers of real estate an opportunity to inspect the property they are buying before the closing.

The inspection contingency says that buyers are typically responsible to schedule the inspection within approximately 10 to 14 days after the attorney review period is concluded.

When the buyers' NJ Real Estate attorney receives the inspection report he or she reviews it with the buyer and sends a letter to the sellers' New Jersey Real Estate attorney asking for required repairs to be made or for a credit to be issued to the buyers in lieu of making repairs.

Sellers usually mention during attorney review that they are selling their home "as is."

"As is" simply means that buyers may perform their inspections but sellers reserve the right not to repair or issue a credit in lieu of repair.

If sellers maintain the position that the premises are sold "as is" after buyers have done their inspections and asked for certain repairs to be made, the buyers can then back out of the contract and have their deposit monies returned to them.

Buyers typically perform the following inspections:

Home inspection to check for structural, physical and mechanical problems in the home;

termite infestation;

environmental inspections such as existence of mold, higher than acceptable levels of radon or asbestos especially in the basement, and oil contamination on properties serviced by oil tanks or where underground or above ground oil tanks once existed but have since been abandoned.

A home inspector should be able to tell if an abandoned oil tank exists on the property by locating pipes protruding from the ground.

Homes with oil tanks or abandoned oil tanks are abundant especially amongst older homes in towns and surrounding areas of South River, Piscataway, Edison, East Brunswick, Sayreville and Old Bridge.

Buyers should be wary of oil tanks and perform all required inspections in connection to them because oil leaks pose severe environmental problems and remediation of oil tank contamination could be very costly.

Buyers should ensure prior to closing that insurance and warranties in connection with the oil tank, are available for transfer.

If the property is serviced by septic tank - which is very common in Monmouth County towns like Howell and Millstone, for example - same should also be inspected.

If the property is serviced by well water - which is also very common in Monmouth County towns like Howell and Millstone - then same must be inspected by the seller, and if necessary remediation should be performed by the Seller prior to closing.

Generally, whenever an inspection uncovers defects that require repair, a typical contract gives sellers a chance to make the necessary repairs or give buyer a credit for the repairs prior to the buyer insisting on canceling the contract.

If a buyer insists on canceling a contract after an inspection without giving the seller a chance to correct the problem, the parties should refer to the language of the contract to guide their behavior concerning this issue.

This is why the inspection contingency and how it should be governed under the contract is one of the most important issues that New Jersey lawyers practicing Real Estate must raise and address during the attorney review period.

Do you have any questions about the inspection contingency for a New Jersey Real Estate attorney?