An Inspection Contingency is a clause in a transaction agreement that allows one party—often a buyer—to conduct a thorough check of an asset before finalizing the deal. If the inspection reveals significant issues or unexpected costs, this contingency permits withdrawal or renegotiation without penalty.

Key Points:

• Condition Assessment: Professionals examine structural elements, systems, or relevant features.
• Defined Period: Inspections occur within a specific timeframe, ensuring quick resolution.
• Negotiation Lever: Poor findings might lower the purchase price or obligate the seller to remedy defects.
• Risk Mitigation: Protects against unseen flaws, giving participants confidence in the asset’s state.

This clause preserves fairness and transparency, letting each side decide whether to proceed with full knowledge, thus preventing unwanted disputes or surprise repair bills after completion.