Suitability vs. Inspection Contingencies—What’s the Difference?

Q:  Can you explain the difference between the Suitability Contingency and the Inspection Contingency in the OREF residential sale agreements?  Can you only choose one, or can you choose both?  What is the main purpose of the suitability contingency? 

A:  The Suitability Contingency allows a buyer to evaluate whether a property meets their specific needs, rather than relying on the Inspection Contingency as a catch-all for concerns unrelated to the physical condition of the property. 

There are many factors outside the scope of a property inspection—such as zoning, insurance availability or costs, or other buyer-specific considerations—that may lead a buyer to determine the property is not suitable for their intended use. The Suitability Contingency gives the buyer an opportunity to investigate these matters and, if necessary, terminate the transaction based on the results of that investigation. 

By contrast, the Inspection Contingency specifically requires the buyer to have the property inspected by a professional and allows the buyer to terminate the transaction based on the results of that inspection. 

A buyer may choose to include both contingencies, only one of them, or neither as part of their offer.  

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