How to Remove an Inspection Contingency in a Utah FSBO Sale

When you're selling your home in Utah as a for-sale-by-owner, understanding contingencies is critical to navigating the transaction. One of the most important decisions you'll make is whether to remove—or allow a buyer to remove—the inspection contingency. This contingency gives buyers the right to have a professional inspector examine the property and back out of the deal if significant issues are discovered. Here's what every Utah FSBO seller needs to know about removing inspection contingencies.

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What Is an Inspection Contingency in Utah FSBO?

The inspection contingency is a provision in Utah REPC contracts that allows buyers to conduct a professional home inspection within a specific timeframe—typically 7-10 days in Utah FSBO transactions. If the inspector finds problems, the buyer can request repairs, ask for a price reduction, or walk away from the deal entirely without losing their earnest money.

In Utah's competitive real estate market, especially in areas like Salt Lake City, Park City, and Provo, many buyers and sellers negotiate the inspection contingency as part of the counter-offer process. Removing it entirely is a significant step that can make your Utah FSBO home more attractive to certain buyers—but it carries real risks.

Why Buyers Want to Remove Inspection Contingencies

In Utah, waiving the inspection contingency serves multiple purposes:

• Stronger Offer: A buyer can make their offer more competitive by removing contingencies. Utah sellers often prefer offers without contingencies because they're more certain to close.
• Speed: Skipping the inspection phase accelerates the closing timeline in Utah transactions.
• Certainty: Sellers appreciate the reduced uncertainty when contingencies are waived.

However, if you're the seller removing the contingency, you're making a very different decision—one that's uncommon and potentially problematic.

The Risk of Selling As-Is in Utah FSBO

If you, as a Utah FSBO seller, remove the inspection contingency from your side of the transaction, you're essentially saying: "I will not allow buyers to have a professional inspection, or I won't back out if problems are found."

This is risky because:

1. Utah Seller Disclosure Laws: Utah law requires FSBO sellers to provide written disclosure of known defects. If you're aware of problems (foundation issues, roof leaks, electrical problems), you must disclose them under Utah Code § 57-1-20. Removing inspection contingencies does NOT exempt you from this obligation.

2. Liability Exposure: If you withhold known defects and then waive inspections, you could face legal action from buyers after closing. Utah courts take deception seriously in real estate transactions.

3. Reduced Buyer Pool: Most Utah buyers with financing won't proceed without an inspection. Their lenders often require it. So removing this contingency significantly narrows your market.

When Removing Inspection Contingency Makes Sense

There are limited situations where this makes sense:

• Sellers with recently completed repairs: If you've recently renovated your Utah home and have documentation, some buyers might agree to waive inspections.
• Newly built or near-new construction: Some Utah FSBO homes built within the last few years may attract buyers confident the property is sound.
• All-cash buyers: Some cash buyers in Utah prefer to waive contingencies to close faster and avoid inspection delays.

Even in these cases, it's worth noting that the buyer typically waives the contingency, not the seller.

The Proper Path in Utah FSBO Transactions

Instead of removing the inspection contingency outright, consider this approach:

1. Disclose Everything Honestly: Under Utah law, you must provide a complete written disclosure (Residential Property Condition Disclosure Statement) listing all known defects, water damage, structural issues, and past repairs.

2. Price Accordingly: If you know of problems, price your Utah FSBO home accordingly. A home with disclosed issues but realistic pricing typically sells faster than one with contingencies removed.

3. Let Buyers Choose: Allow buyers to waive their own inspection contingency if they choose. Some cash buyers or investors will. But don't remove it from the REPC contract itself—that's their decision, not yours.

4. Document Your Compliance: Keep copies of all disclosures filed with the title company and any communications with potential buyers. Utah title companies maintain these records as part of the closing process.

The Utah REPC and Inspection Contingency Language

Utah's standard Real Estate Purchase Contract (REPC) includes specific language about inspections. Section 2.3 addresses the inspection contingency timeline. Most Utah FSBO transactions allow 7-10 days for inspections. Attempting to remove this section entirely can create title issues and may be flagged by the buyer's lender.

Instead, if a buyer wants to waive inspections, the language should clearly state: "Buyer waives the inspection contingency" with explicit language that the buyer accepts the property "as-is."

What Happens at Closing if an Issue Appears

If an inspection contingency is properly in place and an inspector finds problems, the typical process in Utah FSBO transactions is:

1. Buyer delivers written notice of inspection findings.
2. Seller chooses to repair, reduce the price, or let the deal proceed as-is.
3. If the parties can't agree, the buyer can typically withdraw without losing earnest money—unless they've waived the contingency.

If an inspection contingency has been removed, the buyer loses this protection. They can't back out based on inspection findings; they're obligated to close.

Protecting Yourself as a Utah FSBO Seller

Your best protection isn't removing inspection contingencies—it's being transparent:

• Complete honesty about your home's condition
• Full disclosure of all known issues under Utah law
• Reasonable pricing that reflects the home's true condition
• Professional documentation of any recent repairs or updates

Many Utah FSBO sellers successfully sell without waiving inspections by simply being upfront about their property's condition and pricing it accordingly. Buyers appreciate honesty, and it reduces post-closing disputes.

Consulting a Utah Real Estate Attorney

For many FSBO sellers in Utah, working with a real estate attorney during the inspection contingency negotiation is wise. An attorney can help you understand your disclosure obligations, review any requested contingency modifications, and ensure the final REPC language protects your interests while complying with Utah law.

The cost of a 15-minute legal consultation is trivial compared to the risk of a post-closing lawsuit over undisclosed defects.

Ready to get started? Tyler offers a free 15-minute consultation — schedule yours at utahfsbohelp.com/contact.