You found the home of your dreams. You put in an offer for less than the asking price, recognizing, based on your one-time starry-eyed trip through the home, that it needs all new windows, but assuming everything else is in relatively good shape. You didn’t test anything, look at the foundation, or peek in the crawl space – but what could be so wrong? The seller accepts your offer and you do a little celebration dance. But as your agent reminds you – you still need to do a full home inspection.
In fact, the contract you and the seller just signed, has an entire provision governing the scope of this inspection you can do – and which you definitely should do. But keep in mind, all inspection requests are negotiable. The seller does not have to agree to do anything.
In Illinois, for the purchase of a single family home, most realtors use the 6.1 Multi-Board Residential Real Estate Contract. Paragraph 12 of that Contract governs the inspections that buyers may do, within 5 business days of the seller’s acceptance of their offer, at their sole expense and provides as follows:
12. Professional Inspections and Inspection Notices: Buyer may conduct at Buyer's expense (unless otherwise provided by governmental regulations) any or all of the following inspections of the Real Estate by one or more licensed or certified inspection services: home, radon, environmental, lead-based paint, lead-based paint hazards or wood-destroying insect infestation.
a) Buyer agrees that minor repairs and routine maintenance items of the Real Estate do not constitute defects and are not a part of this contingency. The fact that a functioning major component may be at the end of its useful life shall not render such component defective for purposes of this paragraph. Buyer shall indemnify Seller and hold Seller harmless from and against any loss or damage caused by the acts of negligence of Buyer or any person performing any inspection. The home inspection shall cover only the major components of the Real Estate, including but not limited to central heating system(s), central cooling system(s), plumbing and well system, electrical system, roof, walls, windows, doors, ceilings, floors, appliances and foundation. A major component shall be deemed to be in operating condition if it performs the function for which it is intended, regardless of age, and does not constitute a threat to health or safety. If radon mitigation is performed, Seller shall pay for any retest.
b) Buyer shall serve Notice upon Seller or Seller's attorney of any defects disclosed by any inspection for which Buyer requests resolution by Seller, together with a copy of the pertinent pages of the inspection reports within five (5) Business Days (ten (10) calendar days for a lead-based paint or lead-based paint hazard inspection) after the Date of Acceptance. If within ten (10) Business Days after the Date of Acceptance written agreement is not reached by the Parties with respect to resolution of all inspection issues, then either Party may terminate this Contract by serving Notice to the other Party, whereupon this Contract shall be null and void.
c) Notwithstanding anything to the contrary set forth above in this paragraph, in the event the inspection reveals that the condition of the Real Estate is unacceptable to Buyer and Buyer serves Notice to Seller within five (5) Business Days after the Date of Acceptance, this Contract shall be null and void. Said Notice shall not include any portion of the inspection reports unless requested by Seller.
d) Failure of Buyer to conduct said inspection(s) and notify Seller within the time specified operates as a waiver of Buyer's rights to terminate this Contract under this Paragraph 12 and this Contract shall remain in full force and effect.
What this paragraph definitely does not say is that sellers are obligated to repair anything a buyer requests. In fact – it does not impose any obligations on the seller to make repairs.
So, all this paragraph does is provide that buyers have the right to inspect. They may use professional licensed home inspectors to check the condition of the home and perform other more specific tests, including radon, lead-paint, mold, and wood-destroying insects. The most common inspections performed by buyers are the traditional inspection and radon tests.
But while the inspection right is a fairly broad one – the contract spells out some limitations that should guide buyers in the requests they make of sellers. Specifically, it states that “minor repairs and routine maintenance items” are not defects and not to be part of the inspection contingency. In other words, no home is perfect and those nail holes from the pictures, or scratches on baseboards from pets, are not things buyers should ask sellers to address. That said – arguably, if the nail holes are extremely large or picture removal has created actual damage to the wall beyond just a nail hole, a case might be made that this is more than a minor repair.
This section goes on to further narrow things down, clarifying that “The fact that a functioning major component may be at the end of its useful life shall not render such component defective for purposes of this paragraph.” So, even though the roof is in year 19 1/2 of its 20-year expected life and may start leaking any minute, so long as it is still functioning as of the time of the inspection (i.e. no leaks) – it’s not defective and a buyer would be wise to not ask the Seller to replace the roof or provide a credit for its replacement. Because of this, it’s useful for buyers to try get the age of some of the major mechanicals, roof, etc. before making their offer to the seller so that any replacement costs can be factored in.
After any professional home inspection, buyers should receive an inspection report. Keep in mind though, inspectors are not necessarily familiar with the contract provisions governing the inspections that buyers may do. And most likely, the given inspector will make note of everything they consider to not be up to snuff – even those things that are “minor repairs” and “routine maintenance.”
After reviewing the report, buyers should discuss with their attorney, their options on how to address any inspection issues. First, the buyer can simply accept the condition of the property and make no requests. In the case of a contract where the parties have agreed that it will be “as-is”, this acceptance is the only option for the buyer aside from terminating the contract altogether. If a buyer does not want to terminate, but is not entirely satisfied with the condition of the property, the next option is to “serve Notice upon Seller or Seller’s attorney of any defects…for which Buyer requests resolution by Seller…”. In this case, the buyer may request that the seller make repairs, provide a closing credit or answer questions – whatever the preferred choice is. If no resolution can be reached by the parties, either party can terminate the contract.
After these requests have been made, the parties may then negotiate the resolution of the requests. Again – the seller does not have any obligation to make the requested repairs or provide a credit. That said, in some instances, with material defects, a seller should keep in mind, that if the buyer decides to terminate the deal because the seller won’t do anything, the seller will likely then have an obligation to disclose those defects to the next buyer that comes along.
Legal considerations aside – as a buyer or seller, if you want the transaction to move forward, with inspection issues, consider the position of the other side. If you are asking a seller to replace a furnace that still works fine, that they have had no issues with in their 20 years of living in the home and that they have diligently serviced each year, you might come up against a brick wall. And if you are a seller and being asked to install some GFCI outlets in the kitchen and bathrooms, while this may seem like a nuisance, it will show the buyers some good faith and is a relatively easy repair.
In all instances though, it’s important for buyers and sellers to know that everything relating to the inspection is negotiable, and can widely vary on a case-by-case basis. One seller might be unwilling to do anything the buyer asks of them, while another seller, who feels they got a great purchase price, might agree to do even the most minor repairs. But in every instance, a buyer and seller should get the help of an experienced real estate attorney to help them navigate the sometimes very confusing process of negotiating inspection issues. Please contact Kelly Anderson at Lavelle Law if you need assistance with your next real estate transaction.