August 3, 2008
Buyer Walked After Home Inspection
August 3, 2008
Dear Dave: The Buyer of our home had a home inspection and, without even asking for repairs of a few small items, just up and walked away from the whole deal. Is this legal? Can we ask for the earnest money? Our Realtor doesn’t seem to be able to help.
Answer: If you used the standard MLS Agreement to Purchase the answer is “Yes” it’s legal, and “No” you can’t ask for the earnest money. Everything you can or cannot do is determined by the contract you signed. What is legal is, 99% of the time, determined by what you contracted to do. (Certain agreements are not enforceable, and of an illegal nature, even if you did sign, such as an agreement to buy Heroin, or an agreement you signed under duress).
Until 3 or 4 years ago, the standard Earnest Money Agreement at the time stated that, following a home inspection, the buyer had the right to request repairs. No right to rescind or back out of the contract was included.
However, in Paragraph 12(h) of the most recent MLS form, it allows a buyer 72 hours to terminate the agreement after receiving the Home Inspection Report. Paragraph 13 goes on to say that when the agreement is terminated, absent a default by the buyer, the earnest money shall be returned to the Buyer.
Sorry, if a seller wishes to avoid your circumstances he must amend the standard contract, and this is a very simple procedure. Contracts are just paper with words on them, and words can be changed to reflect your wishes. Always ask your Realtor to explain the contract, or see an Attorney before signing.
Dear Dave: Is a Home Inspector liable for errors in the inspection? We bought a house and 2 months later found out that the heat exchanger in the furnace was cracked. It cost us over $3,000 to fix it.
Answer: In general terms, anyone who purports to be a professional in his field can be held liable for negligence in carrying out those duties. However, most home inspectors limit their liability, in the inspection agreement that you signed, to the amount you paid, usually around $300. You could try lodging a complaint with the State Division of Occupational Licensing, but this is a convoluted process and not likely to get you very far, especially with a furnace issue.
Your home inspection agreement would have explained that the inspection is “visual” only. Most home inspectors will remove the panel on the furnace and look for flame irregularities, gas leaks, unusual noise or obvious damage to the heat exchanger. They may also perform a carbon monoxide test. However, only a small part of a heat exchanger can be “visually” inspected without dismantling the furnace and removing it.
If you buy a house with a gas forced air system, you should always have it inspected by a Heating Technician. This could cost up to $200 but includes a complete examination of the system. Heat exchangers have a natural life of 15 to 20 years, but I have seen them crack as early as 2 years after installation. Cracks are dangerous because they grow, and because they emit carbon monoxide. Only a thorough examination can discover cracks in the heat exchanger. You have the right and duty to inspect any and all of the home before you buy, so make sure you budget a little extra for checking out this crucial element.
Dear Dave: Could you explain what is meant by the phrase “time is of the essence” in a contract?
Answer: When you sign a typical Agreement to Purchase Real Estate, there are many references to times and dates. Time for recording the transaction, time for inspections, time for providing 90% letter, time for issuing preliminary title report – and perhaps others.
In other words, timing is an important element of the agreement between the buyer and the seller. If certain deadlines were not agreed to, the parties would not have signed the contract. Both buyer and seller proceed on the understanding that the other party will fulfill obligations by certain dates.
“Time is of the essence” is a legal expression that intensifies or underlines the obligation to meet deadlines. This clause strengthens the legal rights of the party harmed by a failure of the other party to meet any deadlines.
If the buyer fails to perform an inspection by the date specified in the agreement, the right to inspect is lost. If the transaction fails to close and record as per the date specified in the agreement, the contract dies. If a buyer or seller fails to provide information promised, by the due date, the other party can void the contract.
“Time is of the essence,” written in the contract, is a reminder that you must adhere to your commitments, or face the legal consequences.
Dear Dave: We are putting up a greenhouse in the back yard. How far from the property lines does it have to be?
Answer: As long as it is a temporary structure, not on a permanent foundation, it doesn’t matter, unless you live in a subdivision with specific covenants restricting outbuildings.
What you do want to watch out for is easements on your property. Try to keep your greenhouse out of any designated easements, as utility companies have a permanent right to access that portion of your property. Easements will be shown on your as-built survey. Never encroach on those areas with any structure that has a permanent foundation and, if your greenhouse encroaches, keep in mind it could be necessary to move it if access is required by the beneficiary of the ease
