Late Seller Disclosure, Inspection Deadline, and Earnest Money
On Monday, April 1, buyer Omar submits a written offer on a 1952 Portland bungalow for $525,000. Seller Lena counters at $540,000; Omar accepts Tuesday, April 2. Lena delivers the Oregon Seller's Property Disclosure Statement on Monday, April 8, disclosing a 2019 basement water intrusion repaired with a French drain but no permit. Omar's inspector finds active moisture and estimates $18,000 to repair. The contract has a 10-day inspection contingency from mutual acceptance, a financing contingency, and no 'as-is' clause. Omar wants to cancel and recover his $5,000 earnest money. Closing is May 15.
1. Compute the inspection-contingency deadline and explain Omar's options if he acts by that date.
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Mutual acceptance was Tuesday, April 2. Counting calendar days from the day after acceptance, the 10-day inspection period ends Friday, April 12.
If Omar delivers written termination or a written repair request by the deadline, he preserves his rights under the inspection contingency. Because there is no 'as-is' clause, he can:
- Terminate and request return of the $5,000 earnest money, or
- Ask Lena to repair, credit, or reduce the price, and negotiate from the inspection findings.
If Omar does nothing by April 12, he may waive the inspection contingency and lose the cleanest contractual path to recover the earnest money.
2. Does the late seller disclosure give Omar a separate right to revoke, and how does that interact with the inspection deadline?
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Oregon's seller property disclosure statute gives a buyer a conditional right to revoke the offer by written notice within five business days after receiving a disclosure statement that was delivered after the offer was made. Lena delivered the statement Monday, April 8, so the five-business-day period would run through Monday, April 15 (April 9, 10, 11, 12, and 15).
That right is separate from, but overlaps with, the inspection contingency. Omar should not rely on the later disclosure deadline to excuse missing the April 12 inspection deadline. The safer practice is to send written notice before both deadlines, citing both the inspection findings and the late disclosure, and to keep proof of delivery.
3. What should Omar's agent advise about the earnest money and the seller's likely position?
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The agent should advise Omar to terminate in writing before the applicable deadline and expressly request return of the $5,000 earnest money. A timely termination under the inspection contingency normally gives the buyer a contractual basis to recover the deposit; missing the deadline weakens that position and may let the seller argue the buyer defaulted.
The agent should also flag the unpermitted French drain as a material issue: it affects repair cost, insurability, and possibly disclosure. Omar should not simply demand the $18,000 repair without a written response from Lena. If Lena refuses to repair or credit, Omar can still terminate within the contingency period rather than closing with an unresolved moisture problem.