After finalizing the contract of sale and any riders thereto, the next steps in the process involve obtaining a home inspection and ascertaining what – if any – repairs the buyer will request the seller to address. A home inspection is a deep-dive into every nook and cranny of the property by a professional, licensed home inspector to itemize the potential items of concern that he or she sees. Unlike a walk-through of the property with your real estate agent, where you dream up the paint colors, furniture arrangement, and potential remodeling ideas for the space, the home inspector is the reality check, so to speak, of what the property’s condition is right now when you buy it, what issues you may want to – or have to address – sooner rather than later, and what issues could be overlooked by the untrained eye.
The most common issues that often arise during the inspection period are:
- Structural issues (such as foundation cracks, water damage, rotted wood, etc.)
- Environmental issues (such as the presence of asbestos, lead paint, hazardous building materials once before approved for use in construction)
- Mechanical/functional issues (such as water leaks from faucets/showers, improperly functioning water transfers, damaged electrical outlets)
- The presence of an oil tank on the property, specifically when it has never been tested or decommissioned
- Cosmetic and general wear & tear items (such as paint chipping, carpet stains or wear, etc.)
Typically, when a home inspection is performed, the buyer will have the opportunity to ask for certain items to be repaired by the seller, or the seller can issue a credit to the buyer in lieu of addressing those repairs. Additionally, if the contract provides for it, the parties may be permitted to cancel the contract without penalty if there is an impasse concerning the requested repairs.
After the inspection is performed, the home inspector will issue a home inspection report to the buyer. It is imperative to review this report as soon as possible upon receipt of it. With your real estate agent and your attorney, you will then evaluate which items in the report are the ones for which you would like the seller to address pre-closing. The home inspector can also serve as a resource for follow-up questions as to the items highlighted in his/her report.
Here are a couple of items to keep in mind:
- Was there a waiver of the inspection contingency? In an effort to be a more attractive buyer to a seller and to also move the transaction to closing quickly, sometimes a buyer will waive the inspection altogether, or perform an inspection for “informational purposes only.” With the former, an inspection is not performed and the property is sold as is. With the latter, an exclusion is typically made for any structural, environmental, infestation, and material defects to the property. In other words, if a serious crack in the foundation is revealed during the inspection, or rotted wood to structural beams of the property, the buyer can still request that repair, or cancel the contract if the seller refuses.
- There are other terms in the contract that may provide for other inspections aside from the typical home inspection, such as a termite inspection, a radon test, and a sweep of the property for an oil tank. Discuss the benefits of having these inspections performed with your agent and your attorney.
- Often, the contract will provide for finite time frames within which the inspection must occur, the report must be received, and the report must then be circulated to the seller’s attorney. Your attorney and real estate agent should be well-versed in these time periods, but if you are unsure about the timing of any of this, ask the questions!
We cannot reiterate enough that you, as the party to the real estate transaction, must ask all of your questions in order to fully understand the terms of the contract. This contingency and a potential waiver of it can be dicey, so it is crucial for you to fully discuss this with your attorney and real estate agent, both of whom will be able to guide you in what to expect during this phase of the contract. It is also imperative to ask your professionals to explain to you what happens if the seller refuses to make repairs or how those issues can be further negotiated in an effort to salvage the transaction. Again, this is likely the largest, most expensive transaction that you will undertake in your lifetime. Ask, ask, and ask again until you get the answers you can understand and can make you feel the most comfortable in this process.
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.
