Dangerous Default Language (at least for Buyers)
[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.]
Once upon at time (OK, till 2016), Minnesota home buyers who discovered inspection issues that required negotiation with their Seller were safe.
If they proposed an Amendment reducing the sales price say, $1,500 as a result, and the Seller said “no,” the deal automatically cancelled at the end of the agreed-upon inspection period.
Now, Minnesota’s standard Inspection Addendum provides that, if the Buyer and Seller can’t resolve any post-inspection issues, the deal moves ahead . . . on its original terms!
The practical consequence?
Buyers are deemed to have waived any issues.
Stalemate = Waiver
That may be a small risk when the issues (and resultant sales discount) are small.
But, when big capital items like roofs, windows, and foundations are involved ” and the Buyer still wants the house ” there can be $5k-$10k or more at stake.
When the Seller and Buyer are at an impasse, to be safe, the Buyer needs to formally cancel the deal by the end of the inspection period to avoid waiving their issue(s).
Also acceptable: Buyer and Seller agreeing to extend the inspection timetable.
However, the same Seller who is balking at the Buyer’s inspection terms may also be less than eager to sign an Amendment allowing more time to negotiate.
P.S.: At least in my experience, the parties usually hammer out a mutually acceptable Inspection Amendment before the Buyer has to resort to canceling the deal.
Let’s just say that, at least on one recent deal, it was fortunate the deadline was midnight, not 6 p.m. . . . 🙂
**The standard Buyer’s inspection period in Minnesota is 10 calendar days.