Is 10-Day Inspection Period A ‘Free Look’?
Question: We signed a purchase contract to sell our Rio Verde home to Los Angeles buyers for $1.2 million with $50,000 earnest money. During the 10-day inspection period the buyers cancelled the purchase contract and demanded their $50,000 earnest money back. Their only reason for cancellation of the purchase contract was that they would be too far away from Scottsdale Fashion Square and the downtown Scottsdale area with restaurants, shopping, etc. We think that the buyers just found another home that they liked better than our Rio Verde home. Therefore, we don’t want to give the buyers back their $50,000 earnest money. Our listing broker, however, says that the 10-day inspection period is basically a “free look,” and that we should give the $50,000 earnest money back to the buyers, and immediately begin looking for other buyers of our Rio Verde home. If these buyers just came up with a “phony” excuse of “distance from Scottsdale shopping” for not wanting to buy our home, should we still just give the $50,000 earnest money back to the buyers?
Answer: Probably. As a practical matter, the 10-day inspection period is a “free look.” Therefore, most brokers instruct their agents not to get involved in earnest money disputes, and a possible legal battle, with a buyer who cancels for any reason during the 10-day inspection period.
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