“Is the BINSR the Time to ‘Renegotiate’ the Price?” and Other Frequently Asked Questions

Although the form has been around for several years, we have received multiple inquiries on the Legal Hotline addressing the use of the Residential Buyer’s Inspection Notice and Seller’s Response (BINSR).  The purpose of the BINSR is two-fold.  First, the buyers acknowledge that they have done all desired inspections, verified important information, and make certain acknowledgements with respect to the inspection and the information available.  The second purpose is for the parties to negotiate the repair of items disapproved during the inspection.

Below are some frequently asked questions that summarize the issues that we have addressed on the hotline recently:

Is the BINSR the time to “renegotiate” the price?

No.The BINSR is not designed to be used as tool to renegotiate the purchase price.  The BINSR is designed to give the seller an opportunity to fix or correct items disapproved during the inspection process.  In the real world, the parties often use the BINSR as a mechanism to negotiate purchase price.  Bear in mind, however, that is not the proper use of the form.

Do the parties have to sign the BINSR?

Yes. The BINSR is in effect an addendum to the contract.  Accordingly, based on the statute of frauds, the BINSR must be signed by all parties to be enforceable.  Additionally, based on community property principals, if a husband and wife are involved, both spouses need to sign the BINSR.

Must a licensed contractor be utilized to make the requested repairs?

A contractor’s license is required by statute for work that exceeds $1,000 in value.  Thus, to the extent that the requested repairs exceed $1,000, the seller should hire a licensed contractor to make those repairs.

If the buyer forgets to request that an item be repaired, may he reissue another BINSR?

The BINSR specifically says on the first page that the “Buyer is not entitled to change or modify Buyer’s election after this notice is delivered to Seller.”  Therefore, it is critical that the buyer identify all items to be repaired in the BINSR the first time.

Does the buyer need to ask that warranted items be repaired as part of the BINSR?

Yes. The seller warrants in section 5(a) of the contract that all heating, cooling, mechanical, plumbing and electrical systems will be in working condition at the close of escrow. Lines 255 – 256 of the contract state “Buyer shall provide Seller with notice of any non-working warranted item(s) of which Buyer becomes aware during the Inspection Period or the Seller warranty for that item(s) shall be waived.” In the event that a warranted item is not working, buyer should therefore notify the seller by way of the BINSR which provides a section on the second page whereby the buyer can advise the seller of the specific non-working warranted item(s). .

Can a buyer waive the inspection and BINSR process?

Under virtually all circumstances, the buyer should not waive an inspection.  However, if the buyer disregards the advice given by the agent and set forth in multiple AAR transaction forms, a buyer may waive an inspection.  Assuming that the buyer elects to waive the inspection, the signature line on page 2 of the BINSR should be signed by the buyer.  The agent should keep a copy of the BINSR waiving the inspections for safe keeping in case a claim subsequently arises.


Wednesday, September 19 | 8:30am – 4:15pm
Chaparral Suites | Scottsdale

The BINSR is just one part of a transaction that can cause headaches. At the Industry Partners Conference, REALTORS®, escrow officers and mortgage lenders gather at interactive roundtables to discuss case studies and walk through a variety of transaction challenges. This year’s conference will also cover issues such as financial options for today’s consumers, how to recognize and avoid new fraud schemes, and how to satisfy the needs of today’s investors.

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