In a sellers’ market, often times, buyers feel pressured to present the most appealing offer by waiving the home inspection condition to increase their success chance in the offer battle. Other times, buyers also feel tempted to give up on an inspection condition in exchange for a seemingly nice discount on the purchase price. But here are the reasons why you should always insist on having the home inspection condition in your Agreement of Purchase and Sale.
Know what you are getting yourself into
The home inspection report helps detect safety issues with the roof, foundation, gas line, electrical and heating systems, and etc. It can also identify the current condition of the structure itself and whether anything needs to be replaced. It helps the buyer to understand the costs to fix the issues and gives the buyer a chance to gauge whether they can still afford the property with all the added costs.
Have a way out
Home inspection clause usually provides the buyers an option to walk away from the agreement if the inspection does not come back satisfactory. In most cases, the power to decide whether the inspection is satisfactory is in buyer’s sole discretion. If the buyers for any reason aren’t pleased with the result, no biggie, the deposit they paid to the brokerage will be returned to them. The agreement will come to an end.
Avoid the potential big surprise
One predicament that buyers finding themselves in after closing is that they discover major defects with their property. This often means an extra thousands of dollars or even more that they have to spend on repairs and ongoing maintenance. Even though buyers could potentially resort to legal action to claim damages, all the time and investment they have expend and all the legal costs incurred will probably make them wonder why on earth they took a chance with the property they viewed less than 5 times (or even less!).
Avoid potentially being sued for contract breach
Say, even if the buyer is lucky enough to discover a deal breaker defect in the property they have signed themselves up for before closing, despite not having a home inspection condition. At that point, backing out from the binding contract isn’t that easy. The first consequence that the buyer will face is losing the deposit entrusted with the brokerage. An unaccommodating seller could also bring a legal action against the buyer for all the losses the seller has suffered as a result of the buyer’s breach.
The home inspection report also offers the buyer a powerful tool to negotiate the purchase price. Where repairing the deficiency identified by the inspection is somewhat costly, and the seller is eager to sell the home, the buyer can utilize the inspection report as an excellent bargaining chip to nail a better deal.
Since 2017, the home inspection field has been regulated under the Home Inspection Act,2017, S.O. 2017, c. 5. This Act established mandatory licensing for home inspectors and the minimum requirement for the contract between the home inspection provider and the client. This Act has shed more light on home inspection process for home buyers and real estate lawyers.
Need help with reviewing your Agreement of Purchase and Sale to make sure you’re adequately protected, or you’ve discovered a major defect in your newly closed home and not sure what to do, call one of our knowledgeable real estate lawyers for a free initial consultation today.
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