Can a buyer recover the deposit after the inspection period expires if a major defect is discovered before closing?

Only if the defect was known to the seller and not disclosed, triggering the Johnson v. Davis duty. Once the inspection period expires under the As-Is contract, the buyer's general inspection-termination right is gone — but the seller's separate duty to disclose known material latent defects survives independently and can support rescission or damages claims regardless of the As-Is clause.

Does the As-Is clause waive the seller's duty to disclose known defects?

No. The As-Is clause waives implied warranties and seller repair obligations. It does not waive the common-law duty under Johnson v. Davis to disclose known material defects that are not readily observable. The As-Is clause and the disclosure duty operate on different planes.

What happens if the buyer's initial escrow deposit is delivered late?

Paragraph 1(b) makes timely deposit a buyer obligation. Late deposit gives the seller the right to declare default and terminate. The broker holding (or expecting to hold) the deposit faces separate trust-fund obligations under Rule 61J2-14 — the broker's regulatory clock for deposit receipt and accounting runs independently of the contractual buyer-side obligation.

Is the financing contingency severable from the inspection period?

Yes. The two contingencies run independently. A buyer can terminate during the inspection period even if financing is still pending; conversely, a buyer who waives or passes through the inspection period can still terminate later under the financing contingency, subject to the good-faith standard.

What does "good faith" mean for the financing contingency?

The buyer must apply for financing timely, provide accurate information on the application, cooperate with the lender's information requests, and not unreasonably refuse a loan offer materially matching the application. The standard is fact-specific — courts examine the totality of circumstances rather than applying mechanical rules.

Can the parties shorten the 15-day default inspection period?

Yes. The 15-day figure is the form's default but the inspection period is a blank the parties complete. In competitive markets, buyers frequently offer shorter periods (5 to 10 days) to make offers more attractive to sellers. The shortened period is just as enforceable as a longer one — but compresses the buyer's window for inspections, financing pre-application, and decision-making.

Florida Real Estate Contracts: The FAR/BAR As-Is Form and How It Works

TL;DR

Florida residential real estate transactions run on one contract more than any other: the FAR/BAR Residential Contract for Sale and Purchase, jointly drafted by Florida Realtors and the Florida Bar. The "As-Is" variant has become the dominant form in most Florida markets, replacing repair-negotiation mechanics with a buyer's unconditional right to terminate within a defined inspection period. Understanding the As-Is contract's inspection-period mechanics, financing contingency standards, escrow rules, statutory disclosure integration, and default provisions is foundational for the Florida real estate exam — and these contractual rules sit on top of, not in place of, Florida's separate statutory disclosure regime requiring careful integration with the seller's duties under §689.25, §689.302, and Johnson v. Davis.

The two FAR/BAR contract families

Florida Realtors and the Florida Bar jointly maintain two parallel residential contract families. The FAR/BAR Standard Contract is the traditional form, structured around the seller's duty to repair certain defects discovered during inspection, with negotiated dollar limits for general repairs, wood-destroying-organism treatment, roof repairs, and other categories. The FAR/BAR As-Is Contract sells the property "as is" with no seller repair obligation, in exchange for the buyer's right to terminate within a defined inspection period for any reason or no reason at all.

The As-Is contract is now the dominant residential form in most Florida markets. Sellers prefer it because it eliminates the repair-negotiation friction that creates closing-day surprises; buyers accept it because the unconditional inspection-period termination right gives them a clean walk-away during the inspection window. Both forms are updated periodically by the joint Florida Realtors / Florida Bar committee, and the current revision date should always be verified before contract preparation. Form selection is itself a negotiation point — listing agents may insist on the As-Is form even where the Standard form would otherwise be neutral.

The inspection period — default 15 days, but negotiable

The central mechanic of the As-Is contract is the inspection period in paragraph 12. The form provides a default of 15 days from the effective date, but the inspection period is a blank that the parties fill in — it can be shorter, longer, or set to a specific date. In competitive markets, buyers may offer shortened periods (5 to 10 days) to make their offers more attractive; in unusual transactions involving extensive due diligence, parties may negotiate periods of 30 days or more. The 15-day figure is the default, not a mandatory minimum.

Whatever period is agreed upon, the mechanics are the same. During the inspection period, the buyer may have inspections conducted at the buyer's expense and may terminate the contract for any reason — including no reason at all — by delivering timely written notice. If the buyer timely terminates, the escrow deposit is refunded in full.

Critical procedural requirements govern the termination right. Written notice of termination must be delivered within the inspection period — verbal notice is not effective, and the notice should be sent through means that create a clear delivery record. If the buyer does not timely terminate, the inspection-period right is waived and the buyer is bound to close subject only to other surviving contingencies such as financing and clear title. The inspection period runs independently of the financing contingency, so a buyer can terminate on Day 15 of the inspection period even if loan approval remains weeks away.

The financing contingency and "good faith"

Paragraph 8 contains the financing contingency. The buyer specifies a loan-approval period — typically 30 to 45 days from the effective date — during which the buyer must apply for financing within five days of contract execution and use "good faith and diligent effort" to obtain loan approval.

If the buyer cannot obtain loan approval by the deadline despite good-faith efforts, the buyer may terminate the contract and recover the escrow deposit. The good-faith standard is where most disputes arise. A buyer who applies on Day 4, accurately discloses income and debts, accepts a reasonable loan offer matching the application, and is denied for legitimate underwriting reasons has clearly used good faith. A buyer who delays applying until Day 20, misrepresents income, or rejects a loan that materially matches the application has plausibly forfeited the good-faith protection — exposing the deposit to forfeiture as liquidated damages.

The financing contingency is independent of the inspection period. A buyer can preserve termination rights under both contingencies simultaneously, but cannot use the financing contingency in bad faith to escape a contract the buyer no longer wants for reasons unrelated to financing. Lenders are increasingly aware of buyer behavior patterns that suggest manufactured loan-denial, and may decline to support buyer-side termination claims that lack documentary basis.

Earnest money and escrow mechanics

The FAR/BAR contract's escrow provisions interlock with Florida's separate broker trust-fund regulatory regime — see our guide to Florida escrow and trust account rules for the broker-side compliance framework under Rule 61J2-14, F.A.C.

Paragraph 1(b) governs the initial earnest money deposit. The deposit is typically due within three business days after the effective date, delivered to the escrow agent identified in the contract. An additional deposit (if any) is due on a later date specified by the parties. The escrow agent is most commonly the listing broker, but the parties can designate a title company, attorney, or other neutral party.

When conflicting demands arise over escrow release — for example, the buyer asserts a right to refund under the inspection contingency while the seller asserts buyer default — the broker holding the deposit must notify FREC in writing within 15 business days of the last demand and institute a settlement procedure within 30 business days of the last demand under Rule 61J2-14. Available procedures include mediation, arbitration, litigation, or requesting an Escrow Disbursement Order from the Florida Real Estate Commission. Only the broker (not a sales associate or attorney) can request an EDO, and EDOs are available only when the underlying dispute is a "good faith doubt" rather than a clear contractual issue. Trust-account audits by DBPR are unannounced, and the most common violations are late deposit, commingling, and failure to institute a settlement procedure within the 30-business-day window.

Statutory disclosures inside the contract

The FAR/BAR As-Is contract integrates Florida's statutory disclosure requirements, but the contract does not replace the seller's underlying statutory duties. The major integration points include flood, property tax, community association, lead-based paint, and coastal erosion disclosures.

Effective October 1, 2024, sellers of residential property must disclose specified flood-related facts including past flood damage, flood insurance claims, and FEMA assistance received under Fla. Stat. §689.302. The contract integrates this disclosure as a required attachment, and the seller's signature on the disclosure form is a contractual term.

Property tax disclosure under Fla. Stat. §689.261 requires the contract to notify the buyer that the buyer's property taxes after closing may differ from the seller's prior-year taxes because of homestead and Save Our Homes cap effects. HOA and condominium disclosures under Fla. Stat. §720.401 (HOAs) and §718.503 (condominiums) require specified pre-purchase disclosures with statutory rescission rights — three business days for new condominiums; comparable rights for cooperatives and certain HOA transactions. Federal Residential Lead-Based Paint Hazard Reduction Act regulations (24 CFR Part 35) require disclosure for pre-1978 homes, and Fla. Stat. §161.57 requires coastal erosion disclosure for property partly seaward of the coastal construction control line.

The seller's common-law duty under Johnson v. Davis, 480 So. 2d 625 (Fla. 1985), to disclose known material defects not readily observable to the buyer exists independently of these statutory disclosures and survives the As-Is clause. The As-Is provision waives implied warranties and the seller's repair obligations — it does not waive the duty to affirmatively disclose known latent defects.

Default and remedies

Paragraph 15 governs default. The remedy structure differs by which party defaults. If the buyer defaults, the seller may retain the escrow deposit as liquidated damages or seek specific performance, but not both — the election is mutually exclusive, and once the seller accepts the deposit as liquidated damages, the right to specific performance is gone. If the seller defaults, the buyer may elect to receive return of the escrow deposit and pursue damages, or seek specific performance to compel the conveyance, depending on the contract language and facts.

The liquidated-damages election is a meaningful contractual right. In a rising market, a seller in default may have strong reason to want the buyer to take deposit-as-damages rather than seek specific performance at a contract price now below market. The buyer's election decision often turns on the spread between contract price and current market value — if the property has appreciated substantially during the pendency of the transaction, specific performance preserves the bargain; if it has depreciated, deposit recovery may be the better outcome.

Time is of the essence

Paragraph 18 contains a "time is of the essence" provision applicable to every deadline in the contract. Every date — closing date, inspection deadline, financing deadline, deposit due dates — is strictly enforced. There is no automatic grace period. A buyer who delivers inspection-period termination notice on Day 16 of a 15-day inspection period has lost the right; a seller who fails to deliver clear title by the closing date has defaulted. Time-is-of-essence enforcement is a frequent source of exam questions because the doctrine is counterintuitive to laypeople accustomed to "reasonable extension" thinking in other contexts. Florida real estate contracts mean every date as written.

Frequently Asked Questions

Can a buyer recover the deposit after the inspection period expires if a major defect is discovered before closing?: Only if the defect was known to the seller and not disclosed, triggering the Johnson v. Davis duty. Once the inspection period expires under the As-Is contract, the buyer's general inspection-termination right is gone — but the seller's separate duty to disclose known material latent defects survives independently and can support rescission or damages claims regardless of the As-Is clause.
Does the As-Is clause waive the seller's duty to disclose known defects?: No. The As-Is clause waives implied warranties and seller repair obligations. It does not waive the common-law duty under Johnson v. Davis to disclose known material defects that are not readily observable. The As-Is clause and the disclosure duty operate on different planes.
What happens if the buyer's initial escrow deposit is delivered late?: Paragraph 1(b) makes timely deposit a buyer obligation. Late deposit gives the seller the right to declare default and terminate. The broker holding (or expecting to hold) the deposit faces separate trust-fund obligations under Rule 61J2-14 — the broker's regulatory clock for deposit receipt and accounting runs independently of the contractual buyer-side obligation.
Is the financing contingency severable from the inspection period?: Yes. The two contingencies run independently. A buyer can terminate during the inspection period even if financing is still pending; conversely, a buyer who waives or passes through the inspection period can still terminate later under the financing contingency, subject to the good-faith standard.
What does "good faith" mean for the financing contingency?: The buyer must apply for financing timely, provide accurate information on the application, cooperate with the lender's information requests, and not unreasonably refuse a loan offer materially matching the application. The standard is fact-specific — courts examine the totality of circumstances rather than applying mechanical rules.
Can the parties shorten the 15-day default inspection period?: Yes. The 15-day figure is the form's default but the inspection period is a blank the parties complete. In competitive markets, buyers frequently offer shorter periods (5 to 10 days) to make offers more attractive to sellers. The shortened period is just as enforceable as a longer one — but compresses the buyer's window for inspections, financing pre-application, and decision-making.

Bottom Line

The FAR/BAR As-Is contract gives buyers an unconditional right to terminate during the inspection period in exchange for taking the property as-is at closing — but the As-Is clause does not strip the seller of the Johnson v. Davis duty to disclose known material latent defects or the obligation to comply with statutory disclosures under §689.25, §689.302, §720.401, and §718.503. Time-is-of-the-essence provisions make every deadline strict, and the liquidated-damages election structure governs the parties' remedies on default. For broader Chapter 475 licensee obligations that overlay these contract mechanics, see our guide to Florida sales associate license requirements. For the full exam blueprint and the other Florida-specific topics you'll need to know, see our Florida real estate exam complete guide.

Source: Fla. Stat. §689.25 — Failure to Disclose Homicide, Suicide, Deaths, or HIV/AIDS · Fla. Stat. §689.302 — Flood Disclosure · Florida Realtors — Law & Ethics Library