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An ‘inspection clause’ in contract will protect buyer’s deposit

January 25, 2019
By ERIC FEICHTHALER - Real Estate Law , Cape Coral Daily Breeze

Dear Mr. Feichthaler:

I am seeking to purchase land in a rural part of Lee County, so I need to conduct research before knowing I want to go forward. The owners say they have several other buyers interested, so we want to get this under contract. Can I lock up the property without losing my deposit? They are requesting 10 percent of the purchase price as an escrow deposit.

- Carolyn A.

Dear Carolyn:

Every real estate transaction begins and ends with the contract. The terms of this contract will dictate nearly everything about the deal. Not just price and closing date, but a wide array of rights and responsibilities of the seller and buyer. The most important part of your contract will be a clause allowing you time to research the property for issues like zoning and land use, wetlands, access and many other issues. This is called an "Inspection Clause," which typically will allow the buyer to cancel anytime during the inspection period with full return of the escrow deposit. Considering there is likely a considerable amount of money at stake, you may want to hire an attorney to prepare or review the contract so it is clear what your rights are. Also, you may want to hire an engineering firm that has experience in dealing with issues in rural areas of Lee County.

With a good inspection clause, you can protect your deposit, so long as you cancel prior to the expiration of the inspection period. If you determine there are flaws in the property, you can ask the seller to reduce the price through an amendment to the contract during the inspection period, or you can move on to the next property if there are too many issues to your liking. Also, escrow deposits are typically less than 5 percent for most real estate transactions. As the buyer, you will want to make the lowest possible escrow deposit.

Eric P. Feichthaler has lived in Cape Coral for over 30 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 17 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.



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