Not much, but let’s see how we got here.
Following the end of attorney review, a buyer will schedule a physical inspection of the house. A professional home inspector, paid by the buyer, will check everything from the base of the foundation to the tip of the chimney, additionally looking for wood-destroying insects, mold, asbestos and the presence of radon gas. His findings will be reported in writing to the buyer, and the buyer will prepare, with the assistance of his attorney, a list of deficiencies found.
It is important to note that a buyer cannot simply cancel because of his dissatisfaction with the results of the home inspection. Contracts are clear that the buyer must present a demand for repairs to the seller, and give the seller the opportunity to address those issues. Similarly, a buyer may not demand a reduction in price to compensate for deficiencies. The seller always has the option to make repairs- or to refuse to do so. If the seller refuses, then the buyer may cancel. The seller may also offer monetary compensation, but the buyer is not required to accept any amount. The contract is very clear- the buyer inspects and demands repairs, and the seller either agrees to make repairs, or doesn’t. If the seller refuses, and the parties cannot agree upon any price credit or reduction, the buyer can cancel and will receive a full refund of his deposit.
Now let’s get back to that roof. To put this into perspective, we need to understand the reason for home inspections. Clearly, not every buyer has the education or experience to evaluate the physical condition of a house. I could look at a hole in side of a building for six hours and never be able to tell you whether it’s termites, carpenter ants- or just a hole. I could look at an electrical panel for another six hours and never be able to tell you if it’s wired properly. A qualified home inspector, however, can make these determinations. So the purpose of having an inspection is to reveal defects that the average layman is unable to discover on his own.
Some attorneys take the position that if problems were clearly evident at the time of offer, such as rising cracks in the driveway or crumbling entry stairs, those issues should not constitute bases of a valid inspection demands. After all, you don’t need a home inspector’s license to see these problems. While I don’t necessarily agree with the theory, a buyer can avoid conflict over such items by simply discussing these issues with his attorney during attorney review, and having language included in the contract to either make such items valid inspection issues, or to bind the seller to making those repairs before an inspection is performed.
So question that arises is “what is a defect under the terms of the contract?”
Most attorneys will include language in their review letters that exclude “defects alleged based upon the age of the particular element being inspected.” What that means is that if a roof is structurally sound, is not leaking, and all of the shingles are in place and intact, it shouldn’t matter how old the roof is – the buyer should not have the right to demand replacement. The theory behind this is that, again, the purpose of a home inspection is to detect deficiencies – things that are wrong, broken or not functioning as intended – at the time of inspection. While a home inspector is experienced in his field, he can’t really tell you when a roof will fail. Indeed, while it may seem old, if it was built well, it could last another twenty years. Virtually every home inspection report that I have reviewed in the past twenty years states that “something” is past its useful life- the roof, the furnace, the hot water heater, the dishwasher. Inspectors include these statements clearly because they don’t want to be liable for failing to inform a buyer about something that the buyer could deem material. But just because a buyer may deem it “material” does not mean that it is material under the terms of the contract.
Remember that when purchasing an existing home, the expectation is that everything should be working as intended, not be in the best condition possible. If a buyer is looking for “best condition possible” it might be better to purchase new construction. So if something hasn’t failed by the time of inspections, it really is not a valid basis for a demand for repairs or cancellation.
Next Blog: Radon – “I’m not buying a house filled with poisonous gas!”