Contact to Close: Resolve Inspection Issues


Once a buyer has a physical inspection done on the property, it’s now time to see if both sides can come to agreement in terms of how to resolve the issues that are discovered from inspection. The inspector will provide a report usually within a day, and this documents the items that he or she found when looking through the property. These reports often include pictures and can be shared with the other party if the buyer wishes.

Negotiation following inspection usually happens through the buyer’s and the seller’s attorneys. This is because contracts often allow a five-day period for modifications on the contract to be requested, and they also often allow up to 10 business days after the contract is signed to have any requests to be agreed upon. If agreement is not reached after ten business days, then either side is free to walk away from the deal without penalty.

Source: Wikipedia Commons

Inspection issues can arise from many sources. A single family home or a condo could have issues within the building such as mold, malfunctioning appliances or HVAC equipment, and shoddy workmanship with doors not closing easily, etc. Depending on the problem and the number of requests made by the buyer, an owner might decline to resolve an issue, resolve the issue by fixing the problem, or provide some sort of financial compensation instead of fixing it (usually in the form of closing credits that offset what the buyer will pay at closing). If a buyer has a laundry list of requests to fix insignificant problems (like a squeaky door hinge or a spot of paint), they run the risk of souring the seller’s disposition to working with them. Usually a seller will offer some kind of remedy though even if it’s a small financial credit. On one occasion my clients made numerous requests, and since the seller was extremely handy he simply fixed most of the items himself since it was easier for him to do so than most people who would have to hire plumbers, electricians, or other specialists. Another client recently requested a seller fix a number of electrical outlets that were installed with reverse polarity, and the seller simply offered a $1,000 credit for this and other problems instead of going through the trouble of having an electrician come over.

If the property is a condo, the home owner’s association (HOA) throws additional factors into the resolution. A discovered issue with the home owner’s association (HOA) may be an obstacle even if the condo itself has no problems. For example, a recent client found out after their offer was accepted that there was a roof problem and the HOA was figuring out whether it would be covered by insurance or whether each unit owner would have to contribute out of their own pocket through a special assessment. At first the seller agreed to cover any cost that was assessed before the closing date (transfer of ownership), but since we decided it was likely that this decision would happen after my clients closed we eventually worked out a solution where they set aside money in an escrow account that my clients would receive in the event that they had to pay a special assessment for the roof (otherwise the seller would get it back after a year).

If both sides cannot come to agreement within 10 days, the deal is not dead unless one side decides to walk away. It is fairly common for one of the attorneys to request an extension on attorney review in order to continue the negotiation. More often than not both sides would rather see the deal work out, but if one side thinks the other is unreasonable and unwilling to budge… that might sink the deal. Once inspection requests are agreed upon and any other issues the attorneys need to sort out are taken care of, attorney review is completed. This is a major checkpoint in the contract to close process.

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