By James L. Goldsmith, Esquire
In the abstract, every Realtor recommends a home inspection. In realty, they’re often waived, and sometimes with reason. Perhaps a home inspection was recently performed and the potential buyer has the benefit of the report. Or, the house was clearly well-maintained, the buyer is a contractor, the sale price was low, etc. For me, however, there is only one reason to waive a home inspection: the seller will refuse the offer if it includes a home inspection contingency. And even then, the buyer better have good reasons for going forward and be willing to put-up with whatever problems are subsequently discovered.
A recent Hotline call has fortified my view. The caller was a buyer agent whose purchaser had waived the home/property inspection, but had elected the water service contingency. On his way to collect a sample of the water, the man from the water testing company observed a large crack in a block wall at grade level. He brought this to the attention of the buyer agent and suggested that this appeared to be huge structural issue that should be examined. Because the buyer had elected no other contingency, the seller refused to give access for a structural examination and claimed that he would not return the buyer’s substantial deposit if the buyer backed out on that basis. The seller further claimed to have been unaware of this crack and said he had never experienced a structural problem with the property and that his disclosure statement was therefore accurate. What were the buyer’s options?
I suppose the buyer could have asked his water tester to issue a report stating just about anything with regard to the water and perhaps even mentioning his sighting of this crack. The report if “unsatisfactory to buyer” allows the buyer to terminate the agreement. See 13(B), Inspection Contingency, PAR ASR. Of course, it is silly to assume that a water tester will make a report regarding a foundation issue and I suppose a court of law could find that termination may only be based on the buyer’s reasonable objection to a condition cited in a report issued by a person with appropriate expertise on the matter.
Looking at this transaction with the benefit of hindsight, I wish the buyer had elected the home/property inspection contingency even if the buyer did not intend to have the inspection. Then, when the foundation issue was identified, the buyer could seek the home inspection because it was allowed under the terms of the agreement.
Frequently, one inspector visiting the property will identify a potential problem within another’s expertise. Electing the home inspection may be the answer the buyer needs in these circumstances. Remember, not every buyer simply wants to have an inspection in order to back out of a deal! Most really want to know the condition of the property. If one inspector identifies a problem area, the buyer may have the opportunity to have another inspector in with the appropriate expertise to issue an opinion.
So, why not always elect a home inspection and keep it in your back pocket if the need arises? Better yet, have the inspection in the first place! Remember, get inspections early in the contingency period so that you have sufficient time for a follow-up if an issue is identified. The ASR allows multiple inspections within the areas elected, and not infrequently, a follow-up inspection is advisable.
Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2013
All Rights Reserved
Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.