New Inspection Contingency Timetable for Minnesota Home Buyers, Sellers
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
The answer to the question, “when does 5+2+1 = 10?,” is, “when you’re switching from business days to calendar days.”
So, prior to August, the standard Minnesota Inspection Contingency — governing how long home buyers had to complete their due diligence — was defined as business days, not calendar days.
Switching to calendar days avoids rampant confusion over whether Black Friday (after Thanksgiving), Good Friday, and any day between the 4th of July/New Year’s/Christmas and a weekend are “officially” a holiday or not.
5+2+1 “Ten Days. Period.”
Of course, the more sweeping change ushered in by the new rule change was to collapse what had formerly been three separate inspection intervals into one.
Gone: the three discrete, contract-defined time periods to: 1) perform the Buyer’s inspection; 2) follow up with a written list of issues to negotiate with the Seller; and 3) reach resolution with the Seller (typically, through an Amendment to the Purchase Agreement).
Now, there’s simply one interval to complete everything (the industry standard almost instantly became 10 days).
From Pro-Buyer Tilt to Pro-Seller
The most subtle but perhaps significant change in the new Inspection Contingency is what happens when the Buyer and Seller can’t resolve inspection issues within the prescribed time period.
Before, the deal automatically cancelled.
Now, the deal automatically advances . . . according to the Purchase Agreement’s original terms.
As a result, a Buyer who raises inspection issues that the Seller rejects — and who isn’t willing to simply waive them — must take care to timely cancel the deal.
Call it, “the No (automatic) Escape” clause.
P.S.: the previous 5-2-1 standard — lengthened from the even older 3-1-1 — became increasingly complicated and untenable as the number of overlapping Buyer tests (radon, main sewer, HVAC safety check, etc.) proliferated in recent years.
See also, “Home Purchase Agreement Loopholes and ‘Gotcha’s’, Circa 2016″; “Can the Inspection Timetable Be Extended? Yes, But . . . “; and “Proliferating Home Inspection Tests.”
