“Waive” Hello to the Other Inspection and Repair Contingencies

In some markets, buyers are still regularly waiving the inspection contingencies in the PAR Agreement of Sale (Form ASR). But some listing agents — and sometimes even some buyer agents — may be surprised to learn that there are two (or three, if you squint) other provisions that may give buyers the ability to negotiate repairs based on inspections, and even to terminate the contract if they can’t reach a mutually acceptable agreement with the sellers. 

Mortgage Contingency — Lender-Required Repairs 

The very last subparagraph of the mortgage contingency in the residential Agreement of Sale (paragraph 8(H)(3) in the 2025 revision) contains its own self-contained contingency. Per the contract, “If the mortgage lender(s), or a property and casualty insurer providing insurance required by the mortgage lender(s), requires repairs to the Property,” the buyer will give those requirements to the seller, who has a period of time to indicate whether they will do the repairs and/or negotiate an agreement with the buyer. If the seller doesn’t perform all the repairs and no other agreement is negotiated, the buyer has the option to either do the repairs themselves before settlement or terminate the contract and have their deposit returned.  

How would the lender or insurer come to believe some sort of repair may be necessary, you may wonder? The most likely way would be if there are conditions disclosed on a Seller’s Property Disclosure Statement or a Change in Terms Addendum that draws their attention. At that point, the contract says that the seller agrees to allow inspectors on the property as may be required by an insurer or lender, regardless of whether any of the other buyer inspections are elected (paragraph 12(A)(1)). 

Note that this contingency only applies when Option 3 is selected in the Buyer Financing paragraph. If the buyer says they will not be obtaining financing (Option 1) or keeps their options open (Option 2), this additional repair contingency does not apply. 

Municipal Inspections — Occupancy Permits 

Paragraph 15(B) — Notices, Assessments and Municipal Requirements — is used when a municipality requires some sort of inspection to provide a use and occupancy permit to a buyer. Subsection (B)(1) has very similar language regarding the negotiation of repairs that may be required by the municipality. Here, the seller has a time period to indicate whether they are willing to make all the required repairs, but if they do not, the buyer can either take on the responsibility for the repairs themselves (likely with a temporary use and occupancy permit), or they can terminate the contract and have their deposit returned. Or, of course, the parties can negotiate an agreement to split the work and/or the costs, so long as they’re in compliance with the municipal requirements.  

Condominium/HOA Termination 

This is the one where you have to squint. Nothing in the contract (or the relevant laws) gives a buyer any special rights to inspect a property or demand repairs simply because the property is in an HOA or condominium. But the law does give those buyers the complete and total freedom to terminate a sales agreement at any time prior to receiving the resale documents, and for five days after receipt. Nothing in the law requires that the termination must be limited to things the buyers find in those resale documents, so a buyer can use this provision to terminate for any reason at all, which could potentially include discovering or rethinking an issue they observed with the property during a walkthrough. Many buyer agents place hotline calls trying to find creative ways to use inspection language to terminate a contract, without realizing that creativity is not necessary if their client is still within the termination timeline for an HOA or condominium. 

Bonus Answer 

There are a fair number of legal hotline calls with some variation of, “…But doesn’t the seller have to do the repairs?” Reading through all of the inspection-related contingencies, you’ll see that none of them require a seller to automatically perform any requested repairs, no matter the source of the request (buyer, lender, insurer, municipality, etc.). All these contingencies contain similar language that allows a seller to keep the deal together by agreeing to the complete list of repairs, but also allows them to refuse the repairs or negotiate an acceptable agreement with the buyer. A seller’s refusal may mean that the transaction doesn’t close, of course, but that is a matter of negotiation between the parties.