This has nothing to do with an inspection. When a “subject to” clause is added to a purchase and sales agreement, it is just as binding as any other portion. If I buy a house, “subject to my wife’s approval”, she must sign off within the stated time and if she does not approve or fails to sign in the alloted time, the deal is dead. This is very common especially when a signator is out of state and won’t return for a week or so. It is a legal out and is not tied to an inspection in any way.
Now, if Todd were to buy this home “subject to the approval of his uncle within 10 days”, and the buyer accepts the terms, it is a done deal once the approval is signed off. If for some reason his uncle were to say, I don’t like the terms or the house or the neighborhood, he could withhold approval and the deal dies. A reason does not have to be given for approval or disapproval.
If Todd were to decide he needed to back out of the deal because of items he found while he was going over the house, he would just inform his uncle that there are concerns and his uncle could say, I don’t approve. The deal dies.
Very common especially when parents are supplying a downpayment and they want to look at the house first.