For many years, these standardized forms were basically designed to protect real estate agents and keep them out of trouble. Despite their historically self-serving nature, these forms tended to be quite fair and balanced to buyers and sellers alike. The current changes, however, seem to have tilted the playing field more toward the seller.
Starting in January, all properties being sold using the new forms are being sold as is. What this means is that unless buyers insert inspection contingency clauses or seller’s property condition representations into their contracts, the buyers will have no protection if the home is later discovered to have unacceptable or even defective, unsafe or unsanitary structural damage or components.
Sellers will not be liable for conveying defective or even non-working plumbing, heating, ventilation, air conditioning and other systems. The seller’s sole responsibility is to deliver the property “free and clear of trash and debris, broom clean and in substantially the same physical condition as determined” on contract date, date of home inspection or other agreed-upon date. Gone are the days when buyers could rely on the seller’s express written warranty that all systems are in good working order and repair. The seller is not required to make even lender-required repairs in the event that the buyer’s lender requires that repairs be made as a condition of the loan.
There is, however, some good news for home buyers in that agents also have revised their six-page addendum of clauses to include two mutually exclusive forms of home inspection clauses. The first paragraph, called Home Inspection Contingency, provides the buyer with a right to conduct a home inspection and present the seller with a list of items that the buyer wants the seller to replace or repair.
The buyer can also request dollar credit in lieu of repair or replacement of the unsatisfactory inspection item. After receiving a copy of the home inspection report and the buyer’s list of requested repairs, replacements or dollar credits, the seller can opt to make repairs, replacements or provide credits. The seller can decline to make any repairs or concessions, but must notify the buyer of such a decision within three days of receiving the buyer’s inspection report and notice. Failure to provide the three-day notice may deem the seller to have agreed to the buyer’s requests.
The other inspection contingency in the second paragraph of the addendum of clauses is called General Inspection Contingency (No Right to Negotiate). As the name implies, this inspection does not give the buyer any right to ask the seller to make any repairs or concessions. The inspections provided for by this clause are for informational purposes only. If the inspection is unsatisfactory to the buyer in his sole and absolute discretion, his only right at that point is to notify the seller that the contract is void and to receive his deposit back.