Home Inspection Conundrum

 It is common practice for buyers to include the provision in a purchase agreement that makes the sale contingent upon completion of a home inspection. That gives the buyer permission to enter the property with any inspector of choice to investigate the condition of systems, appliances and structure of home and outbuildings. The buyer then has the sole discretion to 1) reject the outcome of that inspection and walk away unscathed, 2) negotiate repairs and move to closing, or 3) move forward to closing with the property in as-is condition. 

The standard language in the state-wide Inspection Contingency prohibits the buyer from providing any portion of the printed inspection report to the seller or seller’s broker. If they do that without first gaining written approval from the seller, they conclusively waive this contingency and their earnest money becomes at risk. The reason for that standard business practice is to protect sellers from the future legal obligation to provide disclosure of any newly discovered deficiencies to the next buyer, in the event that the first buyer terminates the transaction. 

Some prominent attorneys think that obligation to disclose potentially puts sellers at too much risk. I disagree with that logic, because I believe that anything a seller can discover about their property is an opportunity to further disclose and insulate against liability. The problem may lie mostly in the fact that all home inspectors are not created equal. Many reach faulty conclusions about some property conditions, which in theory would have to be disclosed along with valid conclusions. Another side to that argument is that the buyer paid for the inspection and therefore owns that information. If they decide to walk, they may not want to give up that information without recompense. 

In a recent case, the seller is an estate, which is exempt from providing the standard state-mandated disclosure to the buyer. The heirs know very little about the actual condition of the property. The conundrum in this case is that the heirs wanted to see a copy of the home inspection, even though they would then be obligated to share that information in total with a new buyer if that transaction terminates even though they did not intend to make any repairs. In the end, the seller did request a copy of the inspection (that buyer paid for) mostly out of curiosity, but so they actually would/ could share that information with the next buyer if first buyer terminates.