A buyer’s home inspection condition has become a staple in an Agreement to Purchase. Buyers acting reasonably, however, tend to accept minor, obvious defects. They realize homes are complex structures and that no home is perfect. Even new homes require additional work.
As a result of a reasonable examination at the time of viewing the home, and with the assistance of a good REALTOR®, Buyers can become aware of most if not all noticeable deficiencies at the time of making an offer to buy. As well, smart sellers will disclose defects if there are any, and any remedies taken. They know full disclosure will lead to a fruitful negotiation. Depending on the nature and degree of any deficiencies, reasonable buyers will make an offer accordingly.
The home inspection condition typically states that the Buyer be satisfied in his sole and absolute discretion. Depending on the results of the inspection the buyer may:
- Accept the report and remove the condition,
- Attempt to renegotiate the purchase price or
- Decide not to proceed with the purchase due to defects noted.
If the buyer decides to set the deal aside, they either let the condition lapse or communicate their dissatisfaction with the inspection report and that they will not be moving ahead. Typically the deficiencies noted in the report that caused the buyer to opt out are communicated verbally to the seller.
In either case, a release signed by both buyer and seller is required to free both parties from any further obligation and for the return of the buyer’s deposit. In most cases the seller signs the release and, in turn, the brokerage returns the deposit money to the buyer.
However the Issue of Good Faith Plays a Part
At times a seller wants verification of the deficiencies that caused the buyer to terminate the deal. This can be accomplished by simply providing the seller with a copy of the inspection report. At a minimum, a seller might be content with receiving the portion of the report that addresses the concern or issues that caused the buyer’s dissatisfaction.
Unfortunately, buyers often deny a seller’s request for proof on the basis that they paid for the report and it belongs to them. Such defiance can be taken as unreasonable and cause push-back from the seller who then refuses to sign a release for return of the buyer’s deposit.
The Ontario Real Estate Association has suggested a new clause that can be added after the home inspection condition that reads as follows:
“In the event the foregoing condition is not fulfilled or waived by the Buyer, the Buyer agrees to provide the Seller with a true copy of the Inspection Report and all estimates related thereto prior to the return of the deposit herein.”
This clause should help to clarify matters up front: no copy of the report to the Seller, no return of the deposit.
Check Out: Homes For Sale in Niagara