Understanding Your Building Inspection Contingency. Pamela Taylor, Realty Center – Broker Associate
Understanding your building inspection contingency is very important! I personally, have witnessed buyers lose out because their agent didn’t understand the contract or how to exercise their buyer’s rights. Don’t let yourself be this buyer! Hire an experienced agent that will guide you through this process and advise you of all your options.
It is important to know that there are two main types of contracts “with repairs” or “without repairs” on residential resale homes. Typically the contract without repairs is called and AS IS contract. This type of contract normally has a clause stating the building inspection is contingent upon buyer approval. If you, the buyer doesn’t approve of results, then up may cancel the contract. You may even be able to try and renegotiate to get some repairs done or get a lower price on some contracts. A contract with repairs which is considered a Standard contract, usually only gives the buyer the ability to cancel if certain types of repairs that are listed on the building inspection go over a dollar amount limit as specified on the contract. For example, the contract might state that the seller is only required to fix structural items found up to $1000 and wood destroying organisms up to $1000. So this would mean that if the repairs found were under $1000 in each category you, the buyer would be required to continue on with the purchase. But what if your building inspector also felt that the roof had a useful life of only another 5 years, but it currently had no leaks or damaged shingles? Because it is not damaged then you would be required to continue on with the purchase without any roof repairs. This would also mean you have a potential major repair that you need to budget for in the near future and may not be financially prepared. This not a good situation to be in. These potential issues and scenarios should be discussed prior to submitting your contract to the seller, so you, the buyer are prepared.
The best way to avoid being put in this situation, is to get and experienced agent. A good agent will help you come up with solutions and help you navigate through building inspection issues when writing and negotiating the offer. One potential solution is to make the sales contract contingent on your approval of your building inspection. Making the building inspection contingent on your approval, gives you more power. It allows you to cancel a contract or maybe renegotiate if the repair issues found by your building inspector are not acceptable to you.
Another important item for buyers to remember, time frames are very important in a For Sale and Purchase Contract of a Home! Regardless if you, the buyer are trying to get repairs agreed upon to be done, or to cancel the contract this must be done within the building inspection period allotted in the contract. Don’t put yourself in a position where you lose your escrow or are unable to get certain repairs done because you did not act within the frame-work of your contract. Remember verbal is not enforceable in Florida when it comes to real estate, so all requests and agreements must be in writing and then signed by all parties ( Buyer and seller) for it to be enforceable. Insist, that your agent get it in writing.
Important questions to ask regarding your building inspection contingency:
- Is my inspection contingency AS IS or With Repairs?
- How many days do I have to complete my building inspection(s)?
- What type of items is the seller required to fix per the contract that are found on the building inspection and what is the total dollar value that the seller is required to repair?
- How do I report the findings of the report to seller and ask for required repairs?
- What is the deadline for letting the seller know my intentions regarding repairs?
- What is the deadline for canceling the contract based on the building inspection contingency? Does my contract allow me to cancel?
- Is the building inspection contingent on my approval?
Please note that on REO listed homes for sale each lender uses their own contract. This means it is very important to understand your building inspection clauses on the contract. Regarding new home purchases through the builder, most builders do not allow you to even do a building inspection unless you write it into the contract. Again, each Builder has their own contract that they use, so pay special attention to your rights regarding repairs.
Contact The Taylor Team today and we would be happy to represent you in your home purchase and guide you through this process while advising you of your options email: Pam@OrlandoRealtyCenter.Com. Cell 407 970 4465. We have the experience, knowledge and proven track record that can give you confidence when buying a home!
Next Weeks Blog is on ….. looking at your options once you have your building inspection. Ask for repairs, renegotiate price, accept property as is or cancel contract.