A buyer can only void a contract if a home inspection reveals serious/legitimate issues
The typical home inspection contingency allows a buyer to either negotiate home inspection items or void the contract and have his escrow deposit returned within a negotiated time frame (usually 7 to 14 days). Absolutely no reason has to be given for voiding the contract: none, nada, zip. Is that fair to buyer and seller? Absolutely. Ultimately, only the buyer’s opinion of the property matters. Imagine what would happen if the buyer had to provide a “legitimate” reason to void the contract. A buyer’s and seller’s definition of “legitimate” would rarely line-up. Since the buyer is the one taking possession, his opinion is the only one that matters. Is this a way for a buyer to back out of a contract for no reason? Yes, it is. It does happen, but not that often.
A buyer has only one opportunity to inspect a home
Typically a buyer will have only one inspection from a licensed home inspector, but a buyer could have several at his discretion provided they are completed within the agreed-to time limit. The best strategy is to have the primary home inspection completed as early as possible. If that inspector discovers evidence that requires more specialized inspections (e.g., evidence of potential structural issues, mold, etc), then a buyer has time for follow-up inspections. I’ve also had a general contractor come through a home to review specific issues to help estimate the cost of repairs.
A seller isn’t required to fix anything from an inspection — everything is negotiable
This was false in the past, but now, this is true: standard contract language says that a seller isn’t required to fix anything.
A seller must resolve any issues discovered at final walk-through before settlement
This one depends on the item. The seller is required to deliver the home in the same condition as of the Contract Date. As a common example, a buyer may only notice that hardwood flooring is much darker under area rugs removed by the seller after he has moved out. The seller is not required to remediate since the flooring hadn’t changed since the contract was written (hint – always look under rugs before you present your contract!). If the furnace or clothes dryer isn’t working properly at walkthrough, and it did work during the inspection, then the seller must address these items.
A seller is responsible for existing issues discovered after settlement
In most cases – no. When a buyer takes possession of a property, there is no warranty provided by the seller. After settlement, the home — and all of its issues — are the buyer’s responsibility. A buyer can buy a home warranty from a third party for around $400 to help protect them from problems with systems, appliances and plumbing; but a buyer rarely can go back to seller to repair defects that were present in the home before the purchase. This re-iterates the importance of a rigorous home inspection before possession transfers.
Here’s the exception. What if the seller knew about material issues with the home that an inspector couldn’t readily observe and didn’t disclose to the buyer? This is a latent defect, and the seller is required to disclose all known latent defects to the buyer. Pin hole leaks in the plumbing or a basement that leaks water in certain circumstances are good examples. The difficulty for the buyer is to prove that the seller knew about these problems and did not inform the buyer. If the buyer can prove the seller had this knowledge (from speaking to neighbors, previous owners, etc.), then they would need to get lawyers involved and then work this through the legal system.
Set your expectations properly before your contract is ratified
A sales contract specifies all responsibilities for the buyer and seller for a particular sale, so these guidelines will not apply to all contracts. The key lesson here: understand the contract language when you are negotiating a sale. Don’t zip through the paperwork and assume that you know who’s responsible for what. If you are a seller and you know that certain appliances or systems have issues, either fix them, or make sure they are sold “as-is” in your property inclusions. The bottom line: don’t wait until after your contract is ratified to think about how you will handle issues that are inevitably revealed by a home inspection.
Having experienced, expert guidance to ratify a contract and get it to closing is imperative for a smooth sales process. Contact us when you need representation to buy or sell a home in Montgomery County, Maryland.