Two of the most important contingencies that we almost always see in residential sales contracts are the inspection contingency and the termite clause. And even though they deal with two entirely different areas, they are related in that they both represent an inspection of the property.

First, let's understand the inspection contingency. It is my opinion that, after you place a house under contract for purchase, you should be allowed a limited number of days to inspect the house to your heart's content. And if you decide during that time period that you don't like what you see, you should be able to simply withdraw from the contract and get your earnest money back.

Fortunately, the current contract form used by Georgia's Realtors allows you to do just that, but it's easy to get lost in the options.

Your first option is called "Property Sold with Right to Request Repairs." This option assumes that you will have an inspector look at the property, and if that inspector finds any defects in the house, you have a right to request that they be repaired.

Unfortunately, the term "defect" is narrowly defined and is limited to significant health risks, code violations, and non-working systems. So if your inspector found the heating and cooling system to be currently in working order, but very near the end of its useful life, you could not attempt to re-negotiate or withdraw from the agreement.

Likewise, if you found out that you were allergic to pet hair in the carpets and sneezed any time you spent more than 12 hours in the house, that condition might or might not be considered a "significant" health risk.

In my opinion, the buyer has a right to know full details about any home's physical condition before he should be locked in to a purchase.

The good news is that the GAR contract does provide that option, and it's called "Property Sold with Right to Terminate."

Under this contingency, sometimes called the "free look" provision, the buyer requests a certain number of days, usually seven to ten, to do any inspections or testing he wishes. During that time period, the buyer can try to renegotiate any portion of the agreement, including price, based on what he finds in the inspections.

If all else fails under the "free look" contingency, then the buyer has the right to terminate the agreement and get a full refund of his earnest money. This termination must take place prior to the expiration of the inspection period. This is the option I recommend most home buyers select, because it gives then the most freedom to decide what is right for them.

I wish to publically applaud the Georgia Association of Realtors for including this "free look" option in the Inspection Contingency of its purchase form. I can not imagine any buyer knowingly selecting the first option when they know that the "free look" is available, but that is up to each individual buyer.

The final option, in which the buyer agrees to purchase the property in "AS IS" condition, should never be selected unless the buyer has already performed a full inspection or is already satisfied with what he is getting.

Our final important contingency is the termite inspection, and it is one that every southern homeowner needs to understand. That's because our warm and humid climate is perfect for this tiny wood-eating insect.

According to Bayer Environmental Science, termites cause more than $5 billion in damage to U.S. homes each year. They live in colonies in the ground, and can travel as far as 250 feet away from the colony, eating through plaster, plastic, and even asphalt to get to a wood food source.

They work 24 hours a day, and are silent as they eat through the wood parts of your home. They can enter your home through expansion joints, brick veneer, and even a small crack in a slab foundation.

Because your mortgage company knows that termites can cause such a serious amount of damage to their collateral, lenders have all decided to require an inspection of your home-to-be by a state-licensed pest control operator as a condition to granting your loan.

Contrary to popular belief, termite inspections are not required by law. Instead, they are a condition of loan approval by every conventional lender.

One problem with a termite inspection is that it is purely a visual inspection of accessible areas of your home's basement or crawl space. Since termites live in the ground, it makes sense that we should be able to detect them as they travel back and forth in their narrow mud tubes. And in most cases, the operator can find and kill the termites if they exist.

However, sometimes the termites exploit tiny cracks that are completely inaccessible to the operator, so even a "clear" termite letter is no guarantee of freedom from these pests.

Know that under the GAR sales agreement, the seller is responsible for making sure that there is no infestation and no structural damage from past infestations. The buyer will receive a letter at closing stating as much and giving the buyer at least a 60 day guarantee against infestation after closing.

Beyond this letter, my advice is to have an annual visual inspection by an experienced pest control operator, and tell them you are only interested in seeing living termites. There is usually no reason to pay for a treatment just because you find evidence of a past infestation.