Rights of buyers and sellers during the inspection period in Oregon

Negotiation

If you are a home buyer, missing the inspection deadline will bring a severe consequence including not receiving any repair credits, being stuck with home’s poor conditions or losing out on your earnest money.  Every real estate contract states how many days a buyer has under the contract to perform inspection due diligence.  The language in the agreement dealing with this inspection may vary from state to state but in Oregon, below is the language in our current standard real estate agreement form everyone uses as of 2018.

Buyer shall have 10 (if not filled in otherwise) business days, after the date Buyer and Seller have signed and accepted this Agreement (hereinafter “the Inspection Period”), in which to complete all inspections and negotiations with Seller regarding any matters disclosed in any inspection report… Unless a written agreement has already been reached with Seller regarding Buyer’s requested repairs, at any time during the Inspection Period, Buyer may notify Seller, in writing, of Buyer’s unconditional disapproval of the Property based on any inspection report(s), in which case, all earnest money deposits shall be promptly refunded, and this transaction shall be terminated. If Buyer fails to provide Seller with written unconditional disapproval of any inspection report(s) by 5:00 P.M. of the final day of the Inspection Period, Buyer shall be deemed to have accepted the condition of the Property. Note that if, prior to expiration of the Inspection Period, written agreement is reached with Seller regarding Buyer’s requested repairs, the Inspection Period shall automatically terminate, unless the parties agree otherwise in writing.

10 Business Days for Inspection Period

In Oregon, we have 10 business days of inspection period for the buyer to not only complete the inspection but to “complete” negotiations with the seller based on items on any inspection report.  The last deadline is 5:00pm on the last day of inspection period to complete the inspection and negotiation.  This means that a buyer must hire an inspector earlier and allow at least a few days from the last day of inspection so the buyer can receive the full inspection report.  If you are buying a house in a moderate to high radon zone such as NE Portland and many parts of SE Portland, you may want to order a radon testing, which takes 48 hours to get the reading back (EPA required time).  That means if you have an inspection scheduled on day 8, you will likely not receive your reading prior to 5pm on day 10.  You do not want to complete negotiation on day 10 and the radon reading comes back on day 11 as really high.  You as a buyer just lost out an important inspection matter.

Does the 10 business count the date of acceptance?

No.  The language in the agreement is clear.  It provides, “Buyer shall have 10 (if not filled in otherwise) business days, after the date Buyer and Seller have signed and accepted this Agreement (hereinafter “the Inspection Period”), in which to complete all inspections…”  Note that it says 10 business “after the date” Buyer and Seller have “signed and accepted” this Agreement.  That means you have 10 business days after the date of acceptance.  Therefore, you don’t count the day of acceptance.  In a transaction, real estate agents from both sides need to make sure they are on the same page with all the important dates for deadlines.

What if the seller did not respond my request by 5:00pm on the last day of inspection period?

This is a great question.  The contract says the buyer must “complete” the negotiation by 5pm on the last day of inspection period.  So what if the buyer made a “written” request to the seller asking for credits or repairs prior to 5pm on the last day but the seller has not responded prior to 5pm?  Technically, the negotiation is not complete by 5pm due to the seller’s failure to respond.  Does this mean that the buyer will lose out on the right and the buyer is deemed to have accepted the condition of the property?  No, the seller’s failure to respond by 5pm on the last day does not mean the buyer will have deemed to have accepted the condition.  It would result in an unjust result if that was the case.  What if the buyer sent the “written disapproval” on day 7 or 8 and the seller still does not respond by 5pm on day 10?  In fact, the lower portion of the paragraph above containing the language from the contract says that the buyer has until 5pm to provide a “written disapproval” of any inspection reports.  That means so long as you have sent in your request for inspection repair or credit request by 5pm, you’re fine.  Your request whether it’s an email communication or an addendum for the seller to sign, should meet the “writing” requirement for your disapproval.

What if the buyer failed to present the inspection addendum by 5:00pm on the last day?

If the buyer for some reason failed to email the inspection addendum by 5pm on the last day, hopefully, the buyer has sent in an email disapproving an inspection report and a request for the seller to credit or repair for the buyer to continue with the transaction.  The writing requirement will be met either way if the matter was brought in court.

Can the seller refuse to provide any repairs or credits if the buyer missed the deadline?

So let’s assume that the buyer’s agent failed to any writing of disapproval by 5pm.  Let’s say the agent emailed the listing agent at 6pm on the last day asking for a repair credit.  What’s the ramification in this particular situation?  First, the buyer definitely missed the deadline.  Therefore, the buyer is deemed to have accepted the conditions of the property.  The seller refuses to provide any repair credits to the buyer.  The buyer is upset and terminates the transaction.  Can the seller keep the earnest money?  Yes.  The buyer lost the safe exit strategy by failing to meet the deadline.  If your buyer’s agent missed the deadline, that’s a malpractice and you may be able to sue the agent for the financial loss as a result of his or her error.  Do not hire an otherwise charming but unorganized agent who lacks attention to details.

Can the seller keep the earnest money if the buyer failed to meet the deadline and terminated the deal?

Yes. As discussed above, the buyer is deemed to have accepted the conditions of the property and can no longer terminate the transaction based on his or her disapproval of an inspection report and receive the earnest money back.  Never miss the deadline.

After the buyer and seller signed a repair addendum, can the buyer ask for more credit?

No.  The agreement also says, “Note that if, prior to expiration of the Inspection Period, written agreement is reached with Seller regarding Buyer’s requested repairs, the Inspection Period shall automatically terminate, unless the parties agree otherwise in writing.”  So without a separate written agreement that says otherwise, once you and the seller signed the repair addendum, that terminates the inspection period.

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Peter Park

I'm a realtor with attorney experience representing buyers and sellers throughout the Portland metro area.
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