Arizona’s purchase contract defines the inspection period in section 6 which is entitled Due Diligence. It’s the first line of the section, line 185, and it reads, “Buyer’s inspection period shall be ten (10) days or ________ days after Contract Acceptance.” If left unchanged, it defaults to 10 days, but just like any other line in the contract, the number of days can be negotiated.
There are 3 blocks of time defined in the Due Diligence time-frame. The first time-line is the inspection period as we outlined above. During the inspection, the buyer is given ample opportunity to conduct just about any type of inspection desired at buyer’s expense. They are then given the opportunity to give notice to the seller of potential problems. That notice is called the Buyer’s Inspection Notice and Seller’s Response (BINSR), pronounced bin-zer.
Delivery of the BINSR to the seller kicks off the 2nd block of time in the Due Diligence time-frame, and effectively ends the buyer’s inspection period. The BINSR offers the buyer 3 options:
- Option 1: Proceed without corrections, “we like it, the little problems aren’t that big of a deal…onward!”
- Option 2: Disapprove and ask for repairs to be completed.
- Option 3: Cancel the contract and receive the earnest deposit.
If option 1 is selected, the entire Due Diligence time-frame ends. There is no 2nd block of time. If option 3 is selected, not only does the Due Diligence time-frame end, but the contract is now canceled, so no other terms and conditions matter.
When option 2 is exercised by the buyer, it gives the seller 5 days to respond. If after that 5 day period, the seller does not respond, they are essentially saying that they refuse to address any of the issues. If that happens, the ball is now in the buyer’s court, and they have a 5-day opportunity to act based on the seller’s response or lack thereof. They could, a) proceed with the contract regardless of what the seller’s response was, or b) cancel the contract.
There a many things that can happen at the end of the inspection period, but it needs be made clear that the inspection period is only the first of three phases of Due Diligence and is considered “ended” when either the buyer delivers the Buyer’s Inspection Notice to the seller, -or- the inspection period as defined in the purchase contract expires.