The New RI Home Inspection Contingency Law

As of 1/1/13 home buyers in RI now have a 10 day due diligence period to conduct their inspections.


Recenty, Mark Thayer and Peter Regan of Sayer Regan & Thayer, LLP  gave a talk for the Newport County Board of Realtors (NCBR) on the new Rhode Island home inspection contingency law that went into effect January 1, 2013.  As with the earlier presentations at the Rhode Island Association of Realtors (RIAR), there were numerous questions and opinions on the new law were varied.    To start with, let’s take a look at the new law:  

§ 5-20.8-4  Buyer's rights to inspection. [Effective January 1, 2013.]. –

(a) Every contract for the purchase and sale of real estate shall provide that a potential purchaser or potential purchasers shall be permitted a ten (10) day period, exclusive of Saturdays, Sundays and holidays, to conduct inspections of the property and any structures thereon before the purchaser(s) becomes obligated under the contract to purchase. The parties have the right to mutually agree upon a different period of time; provided, a potential purchaser may waive this right to inspection in writing.    

(b) Failure to include the provision required in subsection (a) of this section in the purchase and sale agreement for real estate does not create any defect in title.    

(c) Failure to include in the purchase and sale agreement the provision required in subsection (a) of this section shall entitle the purchaser to void the purchase and sale agreement by providing notice, in writing, to the seller prior to the transfer of the title at a closing.   

     As an initial observation, you might be asking yourself: "what constitutes a holiday?"   This is a good question, and there really is no concrete answer.  Surely federal and state holidays would fall within the definition, but religious holidays and holidays that fall on weekends, but which are celebrated on weekdays, can complicate things.  The best approach here is to err on the side of caution and include anything remotely resembling a holiday in your 10 day calculation.  

     One recurring comment at both the NCBR and RIAR events was that this new law seems to allow a buyer carte blanche to get out of the deal.  While this may seem to be the case, as the buyer has no obligation to explain why they want out of the deal, it is not entirely accurate.  In Rhode Island there exists an underlying covenant of good faith and fair dealing in all contacts.  Therefore if a buyer simply wants to get out of a deal to buy a different house down the street, and uses this as a way out, that would not be good faith and the buyer could be liable for breach.  Therefore any buyers wishing to get out a deal should be aware of this implied covenant and that a bad faith termination could subject them to liability.  

     Here is a detailed breakdown of the old law and the new law:  

Old law –until December 31, 2012 New law –starting on January 1, 2013: No specific inspection period. A buyer has a period of 10 business days to complete inspections, wait for test results, negotiate repairs or concessions with the seller, etc.     Required 7 day period if inspection report delayed because inspector couldn't complete inspection. No longer required by law.     Required maximum of 7 days for seller to review buyer's inspection report. No longer required by law.     Buyer could terminate only by proving that a qualified inspector had discovered a materially deficient condition not disclosed by the seller. No longer required by law.     Required buyer to provide inspection report to seller when terminating. No longer required by law.         Buyer has right to deposit and void sale for undisclosed material deficiency discovered after execution of sale based on undisclosed material deficiency after P & S but before the closing. No longer required by this law, but Buyer still has common law right to deposit and void sale for undisclosed material deficiency if buyer can show fraud, misrepresentation, etc.


     As you can see, the new law aimed at simplifying the whole process, and curtailing the endless debates and litigation over the old law's "materially deficient condition" language.   No one is claiming that the new law is perfect.  However, the aim of it was to give a definitive 10 day period (or other period if mutually agreed upon) and to work to eliminate ambiguous language from the contracts.  Only time will tell how this will go in practice.     

    Should you have any questions, please feel free to contact myself, Mark Thayer, or Peter Regan at 401-849-3040 or AThayer@srt-law.com.


The materials on this website are for general information purposes only, and do not constitute legal advice.  Viewing the materials contained on this site, or on any linked site, does not create an attorney-client relationship.  Sayer Regan & Thayer, LLP assumes no responsibility for materials posted on any linked site.  If you chose to contact us, or to inquire concerning legal services or legal advice, please be advised that such inquiry does not create an attorney-client relationship.  An attorney-client relationship may only be established by separate agreement.  You should not send any confidential or time-sensitive information to us unless authorized by one of our attorneys.  Information sent before an attorney-client relationship is established may be determined not to be confidential.

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