Inspection Response Strategies

These strategies focus on timing, disclosure control, and the strict nature of the waiver provisions in Form 35. The inspection contingency operates as a precise procedural sequence. Unlike other contingencies that may require active termination, this workflow contains multiple points where your client can unintentionally waive their rights through simple errors.

The “Waiver by Delivery” Rule

Sharing inspection photos or report pages to justify repair requests is a frequent liability trap. Form 35 establishes the “Waiver by Delivery” rule: providing any portion of the inspection report to the seller without prior written consent deems the contingency waived.

For example,

if you email a photo of a cracked foundation to the listing agent to prove a defect without the seller’s prior written request, you waive your client’s right to disapprove the inspection. The seller can then force the buyer to close without repairs. Never share report data unless the seller explicitly requests it in writing or you are triggering the Additional Inspections clause.

Triggering Additional Inspections

To extend the inspection timeline through the Additional Inspections provision, you must strictly follow the contract. You cannot simply request more time; you must prove the need.

The form mandates that the buyer provide the inspector’s recommendation and notice that the buyer will seek additional inspections. If you submit the notice (Form 35R) without attaching the specific page of the report recommending the specialist, the extension is invalid. The inspection period will expire, and if no other notice is given, the contingency is waived.

The “Silence is Waiver” Provision

Negotiations follow a rigid timeline, specifically during the Buyer’s Reply period. When the seller rejects the buyer’s initial request or proposes an alternative, the buyer must respond within the negotiated timeframe.

Buyer inaction within this window produces an automatic result. The contract states that silence during the reply period results in a waiver of the inspection condition. Consequently, the seller is not obligated to make any repairs, and the buyer accepts the property as-is. You must track this deadline aggressively.

Duty to Present

The fast pace of these response windows involves your statutory duty to present all written communications specifically in a timely manner. Courts have affirmed that a broker’s failure to transmit written notices, such as an inspection response, can constitute a breach of statutory obligations. A delay of even a few hours can consume the client’s response time and potentially harm their position.

Specialized Protocols: Wells and Septic

Standard forms do not cover all systems. For private wells, use the Well Addendum (Form 22R) and its response form (Form 22RN). Unlike the subjective satisfaction standard of Form 35, Form 22R relies on objective metrics: water quality (biological and chemical) and quantity (flow rate). Issues here often involve county health compliance rather than simple repairs.

Inspection contingencies address property condition. The Buyer Brokerage Services Agreement (BBSA) addresses your compensation. Under current agency law, this document is the statutory prerequisite for receiving any fee. Without an executed agreement, you lack the legal foundation to claim compensation. Relying on implied contracts creates unnecessary risk compared to the certainty of a compliant written agreement.

The Mandatory Framework (Form 41)

You must execute a written services agreement with the buyer “before, or as soon as reasonably practical after” commencing brokerage services. Industry best practice interprets this as before showing homes, not at the offer stage. Delaying execution until you draft an offer creates legal ambiguity.

Form 41 establishes three critical financial guardrails:

The Buyer’s Obligation: The specific compensation amount the buyer owes you, creating direct financial liability.
The Compensation Cap: Your ceiling. You cannot receive more than this amount. If a seller offers a bonus higher than your BBSA stipulates, you cannot retain the surplus. It must be credited to the buyer or remain with the seller.
The Term: The agreement defaults to 60 days unless you negotiate otherwise. It does not automatically default to exclusive agency; you must select your option. If the agreement expires while showing homes, you are working without a valid contract.

Integrating Compensation into the Offer (Form 21)

You must translate Form 41 obligations into the Purchase and Sale Agreement (PSA). The PSA (Form 21) includes Specific Term 17, which splits compensation disclosure into two fields:

17(a) Seller’s Offer: A disclosure field where you record exactly what the listing firm or seller offered. This fulfills your statutory duty to disclose compensation terms.
17(b) Amount to be Paid by Seller: The negotiated term. Seller offered 2.5% but your BBSA is 2.0%? Enter 2.0%. Seller offered 0% but your buyer needs coverage? Enter your required fee here.

If you leave 17(b) blank, the seller owes nothing. The buyer remains liable for your fee under Form 41 unless 17(b) successfully shifts that burden.

Managing Surplus via Form 41C

When the seller’s offer exceeds your agreed compensation in Form 41, you must use the Addendum for Buyer Credit (Form 41C) to credit the difference to your client. The “cap” principle prevents you from accepting the excess. Form 41C instructs the closing agent to apply the difference as a credit toward the buyer’s closing costs or price reduction. This ensures strict adherence to your agency agreement while preserving the seller’s offer for your client.

Disbursement Instructions (Forms 40 & 40A)

The PSA creates the obligation. The Commission Disbursement Form provides mechanical instruction to escrow agents.

Form 40 (Seller Funded): Use when the seller pays your compensation as agreed in the PSA. It directs the listing firm or seller to pay your firm directly.
Form 40A (Buyer Funded): Use when the buyer pays your fee directly. This applies if the seller declined to pay, or for any portion the seller did not cover.

Accurate execution ensures the compensation terms you negotiated are funded at closing. With compensation documentation secured, we next examine the new forms and industry updates effective in 2025.

(CORE) Current Issues in Washington Residential Real Estate 2026-2027

Course Description

Course Preview

Forms Review and Updates

Brokerage Services Agreements (BSAs)

Referral Transparency

Managing Evidence of Funds (Form 22EF)

Information Verification vs. Inspection

Inspection Addenda and Procedures

The Inspection Contingency Structure

Specialized Addenda

Inspector Referrals and Anti-Collusion

Navigating the Response Timeline (Form 35R)

Inspection Response Strategies

The “Waiver by Delivery” Rule

Triggering Additional Inspections

The “Silence is Waiver” Provision

Duty to Present

Specialized Protocols: Wells and Septic

The Mandatory Framework (Form 41)

Integrating Compensation into the Offer (Form 21)

Managing Surplus via Form 41C

Disbursement Instructions (Forms 40 & 40A)

Instructor

Don Gorman

Details

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