You've accepted an offer on your home. It's a time to celebrate. But is your home sale a done deal?
Not quite. Your buyers could still pull out of the contract with few, if any, ramifications.
According to an article published by the Florida Association of Realtors, their legal hotline fields plenty of calls from confused and outraged sellers whose buyers walked out on their deal without good reason. And most of those sellers quickly learn that the buyers had the right to cancel the sales contract.
In paragraph 12 of the typical AS IS sales contract used in most Florida home sales transactions, it says “buyer shall have X (if left blank, then 15) days after Effective Date ‘Inspection Period’ within which to have such inspections of the Property performed as buyer shall desire during the Inspection Period.” The paragraph also says, "“if buyer determines, in buyer’s sole discretion, that the Property is not acceptable to buyer, buyer may terminate this contract by delivering written notice of such election to seller prior to expiration of the Inspection Period.”
So, yeah. You probably already knew your buyer was allowed time to get an inspection on the property. And you may have even understood that if the inspection found a glaring problem, the buyer could walk away. But what about if the inspection did NOT find problems. Or, what if the buyers didn't even have an inspection done at all?
If you look closely at the wording in the contract, there are statements like "as a buyer shall desire." So there you have it. If the buyer DESIRES an inspection, great. If not, that's the buyer's choice. And, during the specified inspection period, regardless of whether an inspection was ever done, the buyer can cancel the deal at his or her "sole discretion."
Nowhere in that language does it say that there has to be an inspection with a negative finding in order for a buyer to cancel the contract. The only hard requirement is the time frame during which those decisions would have to be made.
Let's say your buyer noticed during their showing that there was a little rust on the sliding glass door of your home. They make an offer for the home anyway, and you accept. But after a couple days, they've had time to think about that rust spot on the door and now they no longer feel good about the agreement that was made and signed. As long as it's still within the inspection period, they can cancel the contract. No inspection. No explanation. Just buyers using their sole discretion.
The Florida Association of Realtors said this in a recent article on the topic, "Sellers must recognize that buyers’ right to cancel under the FR/Bar AS IS Contract inspection provision has nothing to do with whether or not sellers agree with buyers or if it 'makes sense' to sellers. It’s entirely up to buyers."
For sellers who just can't stomach the days of uncertainty the standard As-Is contract can cause, there is a way around it.
There are actually three standard contracts used in a home sale, and only one of them contains this protective language for the buyer.
The other two contracts allow for the seller to agree to make or pay for certain repairs, up to a limit, based on the findings of an inspection report. But, if you don't want to be forced to spend unexpected additional money on repairs before the closing, these contracts may not be the best option for you.
And no, writing in a $0 repair limit on one of those contracts would not lock your buyer in, the legal hotline says. In fact, it would just increase the likelihood of your contract being cancelled if the inspection found ANY items in need of repair. Then, you'd be back to square one again, marketing the home and looking for new buyers.