I had an inspection on a hud home today. If I did not like the results, will I get my money back that I placed for the bid if I do not want the house?

Asked by cassie.houston, 38965 Thu Jul 11, 2013

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James Tan, Agent, elk grove, CA
Fri Jul 12, 2013

Are you an owner occupant buyer or an investor ?
For an owner occupant there is a 15 days contract cancellation contingency.
I am in elk grove, CA, and this is based on the HUD PEMCO contract which is available on their website http://www.hudpemco.com

This is the clause copied from the contract:
Owner Occupant Purchaser(s) may request that the Sales Contract be canceled if, within 15 days of HUD’s acceptance, the property is inspected by a professional home inspector, who discovers a structural, roof, system defect, or non-compliance with local codes, zoning, or building equirements that were not previously disclosed and HUD elects not to correct, or if within such 15 day period, the property is inspected for the presence of radon by a professional radon inspector to an extent unsatisfactory to the Buyer.

A copy of the property inspection report, or radon test report, as applicable, must be attached to the cancellation request. The cancellation contingency is limited to structural, roof, defective components within the mechanical and operating systems (which include the electrical, plumbing, sewage, heating and air conditioning systems only) or noncompliance with local codes, zoning, or building requirements. Kitchen appliances, window air conditioner units, light fixtures, receptacles and switch covers are not included in the operating systems. Equipment age or energy efficiency ratings are not included in the cancellation contingency.

The earnest money deposit will be returned to owner occupant purchasers ONLY if HUD concurs with the home inspection report finding(s).
1 vote
Eddie Martini, Agent, Auburn, WA
Mon Jul 15, 2013
You may need to document why you are canceling but as long as it is within the set time frame (Usually 10-15days for HUD properties) allowed for inspection of property and further establishment of your loan both of which are contingencies to your contract you should be able to cancel without penalty.

0 votes
Teri Andrews…, Agent, Auburn, CA
Fri Jul 12, 2013
You and your agent need to review the HUD contract to determine if your deposit is refundable, a HUD purchase contract is different, with different terms/timelines applying to owner occupant offers vs investor offers. If your agent has questions, usually the HUD team can help with questions.
0 votes
Sue Archer R…, Agent, Palm Harbor, FL
Thu Jul 11, 2013
Vote number 4 that your realtor should be assisting you in understanding the contract that you signed related to the purchase of a HUD home.

I can tell you that in most cases an earnest money deposit is refundable if you cancel based on certain contingencies as defined in your contract. You may have paid for certain inspections and those fees are not recoverable but depending on how your contract reads, your earnest money deposit may be refundable.

Go back and read your contract, and ask your realtor to help you. If not your realtor, talk to their broker, or talk to an attorney.
0 votes
Jim Walker, Agent, Carmichael, CA
Thu Jul 11, 2013
I will give you a generalized answer. This is NOT specific to you. Most contracts have an inspection contingency clause that is operative for a set number of days to protect the buyers earnest money in case inspection findings reveal that the house is unsuitable to the buyers needs.

But I am not going to guess about your contract in particular.

You hired an agent to place the bid for you. If your agent can't answer that question. tell the agent to have his broker answer that question ASAP.
0 votes
Matthew Bart…, Agent, Glendora, CA
Thu Jul 11, 2013
Hi Cassie,

Your Realtor will be the best person to have this discussion with since they're familiar with your purchase agreement. Good luck to you in your search for a new home!

Warmest Regards,


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