Buying a home is one of the biggest investments most people will make in their lifetime. When you’re dealing with such a major financial decision, it’s important to have as much information as possible before signing on the dotted line. This is where home inspections come in.
Home Inspections provide critical insight into the current condition of a property. They can help ensure you don’t unwittingly take on undisclosed problems or safety issues. However, home inspections also have certain legal implications. Knowing your rights and responsibilities as a buyer or seller can help you make the most out of the process.
In this comprehensive guide, we’ll explore some of the key legal aspects of home inspections. We’ll look at questions like:
- What are the typical obligations for buyers and sellers when it comes to home inspections?
- Who is responsible for ordering and paying for the inspection?
- What should you do if an inspection uncovers serious problems?
- When can an inspection lead to contract termination or renegotiation?
- What are the possibilities for legal recourse if an inspection is faulty or inaccurate?
- How long should inspection reports be retained for future reference?
By understanding these and other legal issues surrounding home inspections, you can feel more confident navigating your real estate transaction. Let’s dive in!
Responsibilities of the Buyer
As a home buyer, you have certain obligations when it comes to inspections—whether or not they are expressly stated in your purchase contract. Here are some of the most notable:
Ordering the Inspection
While the seller may voluntarily choose to have an inspection done upfront, the buyer typically takes on the responsibility of ordering one. You want to be sure to get an independent evaluation, rather than rely solely on any inspection reports the seller provides.
You’ll want to pick a professional home inspector who meets local licensing requirements. They should also carry errors and omissions insurance as well as general liability insurance. Checking references can help you find someone who is thoroughly experienced with inspecting homes in your particular area.
Paying for the Inspection
In most cases, as the party ordering the home inspection, the buyer also assumes the cost. Home inspection fees can range from around $300 to $500 depending on the size of the property, scope of the inspection, and level of detail provided in the inspection report.
Be sure to ask upfront what is included for the quoted price. There may be additional expenses if the home has multiple heating/cooling zones, multiple hot water heaters, or additional living spaces like a guest house.
Attending the Inspection
You’ll want to plan on attending the home inspection in person. This gives you the chance to observe the process first-hand. You can gain a better ongoing understanding of the home’s condition by seeing the areas and issues being assessed.
Attending also allows you to ask any clarifying questions on the spot. If any concerns arise, you can discuss them with the inspector immediately rather than waiting for the full report. They can provide context for their findings and point out areas that may require extra vigilance down the road.
Reviewing the Report Thoroughly
Be sure to read the full home inspection report closely once it is provided. While inspectors will typically review major findings onsite verbally, the report offers much more comprehensive detail. This written record will prove invaluable both for closing and well beyond.
Pay particular attention to any deficiencies noted by the inspector. Consider having your real estate agent, attorney, or another experienced professional assist in interpreting the inspection results. A second opinion never hurts for such an important investment.
Disclosing Report Findings
In most states, while the buyer owns the home inspection report, you are legally obligated to share the results with the seller. This is usually done through the real estate agents representing each party. You’ll want to stick to this requirement unless your purchase contract explicitly states otherwise.
Sharing the inspection report initiates important discussions between buyer and seller. You’ll be able to address any defects found and negotiate how they should be remedied before closing.
Mitigating Issues Found
While the seller is responsible for accurately representing the home’s condition, in most cases the buyer assumes responsibility for addressing any repairs called for in the inspection report.
You’ll want to get quotes from qualified contractors to make fixes and negotiate credits or lowered sale prices to offset these costs. This helps provide a fair transaction and builds goodwill between parties.
Taking care of issues discovered also protects against bigger headaches down the line after you take ownership. Tackling problems proactively is ideal whether planning to live in or rent out the property.
Obligations of the Seller
Sellers also take on key legal obligations where home inspections are concerned. These include:
Disclosing Known Defects
In most states, sellers are required to provide a property condition disclosure to potential buyers. This provides background on defects that may not be readily visible or known. Legally, sellers must be forthcoming about any issues they are aware of related to major systems, structures, or other material facts.
Ideally, sellers will use their disclosure as an opportunity to demonstrate good faith. Disclosing issues upfront, before an inspection occurs, helps avoid perceptions of concealing problems later on. Full transparency about any known defects allows buyers to make informed decisions with reasonable expectations.
Responding to Inspection Findings
Once the buyer’s inspection report is received, sellers should review the findings carefully. You’ll want to give thoughtful consideration to any areas of concern raised in the report.
If the inspection uncovers defects the seller was unaware of, it’s reasonable to get additional professional opinions. This can shed light on the extent and urgency of repairs needed.
However, sellers should keep in mind their legal duty to respond to inspection findings in a timely manner.
Negotiating Repairs and Credits
In most states, the seller does not have an obligation to proactively remedy problems noted in a buyer’s home inspection report. However, refusing to negotiate a reasonable resolution can jeopardize the deal.
Most buyers will request credits or lowered pricing to offset repairs called for in the inspection. sellers aiming for a smooth transaction will want to compromise here. A moderate credit is often preferable to losing the deal altogether.
Agreeing to pay for certain repairs upfront can also demonstrate good faith to buyers. Choose repairs selectively based on cost, complexity, and impact. Focus on fixes that may otherwise derail the whole agreement. Be transparent throughout negotiations.
Documenting Resolutions
As the seller addresses inspection items, proper documentation is key. All repairs made should be confirmed with invoices from the contractors who completed them. Credits or pricing concessions should also be noted in a contract addendum.
Careful documentation protects both buyer and seller. Buyers can confirm issues were addressed suitably. Sellers can demonstrate their efforts to remedy problems responsibly.
Using Inspections to Terminate or Renegotiate
Home inspection results can have significant legal implications in some cases. In certain situations, buyers or sellers may be able to use the inspection to:
- Renegotiate the deal
- Terminate the contract altogether
- Take further legal action
Here are some examples of how this can occur:
Major Undisclosed Defects
If the inspection identifies major hidden defects the seller failed to reveal, the buyer may have cause to reconsider the deal.
In some states, failing to disclose serious known issues like extensive roof damage or foundation cracks could be considered fraudulent misrepresentation. This may provide grounds for the buyer to void the contract and get earnest money deposits returned.
Even if misrepresentation is hard to prove, discovering big hidden flaws often leads buyers to request a lowered purchase price to fund repairs after closing. Buyers can threaten to terminate the contract in hopes of motivating sellers to negotiate credits or price reductions.
Discovery of Deal-Breaking Problems
Even if the seller was unaware, the inspection may at times uncover deal-breaking issues. Buyers can sometimes negotiate or terminate the deal, without fault to sellers, when inspections reveal:
- Structural instability needing major repairs
- Major code violations present
- Defects costing far more than expected to remedy
- Excessive unauthorized modifications made
Mitigation Isn’t Feasible
Repairing problems spotted in the inspection is not always easy or practical. For instance, very expensive foundation work may be beyond the buyer’s budget.
Terminating the contract amicably may be preferable to taking on massive repairs after the fact. Sellers can avoid headaches down the road if buyers lack resources to properly address issues.
Seller Refuses Negotiation or Repairs
As previously noted, sellers are within their rights to refuse repairs called for by a buyer’s home inspection. However, many buyers will opt to terminate deals under these circumstances. Without adequate resolution of problems found, they may feel the property is undesirable or overpriced.
In cases where minor negotiated repairs could save the deal, refusal to budge on the seller’s part can be counterproductive. They run the risk of having the transaction fail over a relatively small difference in expectations.
Inspection Omissions or Errors
On rare occasions, an inspector may fail to note a major defect during the initial home inspection. They may also provide inaccurate information about an issue that exists. This can mean legal recourse options down the road.
If a major problem goes unnoticed before closing, the buyer may be able to take action later against the home inspector. Specifics depend on state laws, but possibilities include professional negligence claims or filing licensing complaints.
Proving inspection negligence or inaccuracy can be challenging, however. Homeowners must clearly show the error falls outside reasonable inspector judgment. Hindsight bias also comes into play. Just because a problem arises later does not mean an inspector should have flagged it initially.
In general, inspectors are responsible for conducting a reasonably competent and diligent visual inspection per the standards and code requirements for a given property type. Most will not be held liable for issues they could not readily see or anticipate based on surface evidence at the time. But if negligence is proven, recovery may be possible.
Retaining Inspection Reports
Home inspection reports should be retained for future reference. As a homeowner, it’s advisable to hold on to inspection records for the entire period you own the property. This provides useful maintenance history and insight into the property’s evolution over time.
Even after selling, keeping your home inspection report for several years is recommended. This offers protection in case any legal claims are made regarding undisclosed problems by future owners.
Having clear documentation helps demonstrate your disclosure and negotiation efforts at the time of sale. All sellers should keep records showing due diligence to point to in the event of lawsuits down the road.
Inspectors also need to maintain home inspection reports long term. Many states specify records retention regulations for home inspectors:
- Washington requires inspectors to keep reports on file for a minimum of 3 years.
- In Illinois, home inspectors must retain their reports for 5 years.
- North Carolina mandates record keeping for 7 years.
Checking your state’s specific statutes is important. Personally retaining your reports beyond the minimum inspector retention period offers extra protection.
Using Home Inspections Wisely
Home inspections serve an invaluable purpose in real estate deals. But they also have legal implications all parties need to keep in mind. Following best practices based on your rights and responsibilities helps ensure a smooth process.
As a buyer, be sure to:
- Hire a professional, licensed inspector
- Attend the inspection yourself
- Read the full report closely
- Disclose findings to seller promptly
- Negotiate repairs and credits fairly
As a seller, you’ll want to:
- Disclose all known defects upfront
- Carefully review inspection findings
- Reasonably negotiate resolutions
- Document repairs properly
Both buyers and sellers should retain home inspection reports for an extended duration in case they become needed later.
With a clear understanding of the legal aspects, home inspections can provide you with greater confidence before committing to a property. They help pave the way for a transaction where all parties walk away satisfied.
