Can a buyer terminate a purchase agreement if the home does not pass inspection?

The ability for a buyer to terminate a purchase agreement based on a home inspection hinges on the inclusion of an inspection contingency clause within the agreement. This clause is a common provision that allows the buyer to have the property professionally inspected within a specified timeframe. If the inspection reveals significant issues or defects, the buyer typically has the right to either negotiate repairs with the seller, request a reduction in price, or terminate the contract entirely without penalty.

When an inspection contingency is in place, it serves as a protective measure for buyers, ensuring that they are not obligated to proceed with the sale if the property does not meet their expectations or has undisclosed problems. This flexibility is crucial as it mitigates the risk for buyers and allows them to make more informed decisions.

In contrast, options suggesting that the agreement is binding once signed or that termination requires contacting the seller directly do not consider the legal provisions typically included in real estate contracts. Additionally, options that impose financial penalties for termination don’t align with how inspection contingencies generally operate, as such contingencies are designed to provide an exit route without incurring penalties if certain conditions aren't met.