Changes in 35R Inspection Contingency Forms Not Helping Buyers
One of the changes that the Washington Association of Realtors has made as of July of 2019 is to change the rules (their’s, not state law) on how inspection deficiencies can be relayed to the seller. Quite literally, the seller can refuse to look at any of the inspection findings. You, the inspector, find a Federal Pacific Electric panel? Put it in your report, but know that the seller can stick his or her fingers in their ears and refuse to hear anything. Ditto with pest damage, a foundation that has failed, a catastrophic roof leak. Under the current guidelines, none of that can be reported to the seller, even if the buyer wants repairs made unless the seller agrees to accept the findings in the report.
This has huge implications for the buyers in Washington State.
Let’s use the pest damage I mentioned above as an example. I, the inspector, go into the crawlspace. Not just any crawlspace, but through an access hole that I have to enter one arm at a time, suck in my gut, and think skinny thoughts. The kind of crawlspace a lot of inspectors don’t even attempt. I do, and I manage to get myself in. (Getting out can be a bit trickier,. btw.) While there, I probe the wood and note that it is significantly damaged and appears to be structurally unsound with a main beam failing. There are also mud tubes everywhere and, when I break one, little brown bugs scrambling.
In short, this is a big deal. So, in my report to you, the home buyer, I note the following:
That there is substantial damage to the structural framing of the home. The framing should be evaluated by a structural engineer for design of remedies to replace all damaged wood with sound materials. Once the remedies have been designed, a contractor should complete all work recommended by the structural engineer.
That a Pest Control Operator should be retained to determine the full scope of the pest problem - evident by the damaged framing, the habitation tubes, the presence of insects, and frass - and design a treatment plan to remedy the intrusion.
Along with these notes, which would be more extensive in practice, I would include pictures. Maybe even video. None would be transmitted to the seller unless they authorize it - in writing, no less.
You, the buyer, want these problems fixed and, since it isn’t your house, you would like the seller to absorb these costs.
With the changes in the 35R promulgated by the Washington Realtors, you are out of luck. Not only can you not tell the seller what is wrong with the house, you have to pay to determine the scope of needed repairs on a property you don’t even own. That’s accomplished by having your inspector recommend additional inspections which you will have a total of five days to complete. Legal counsel for the WR has stated that your inspector will be happy to do that.
And pay you will, because engineers and contractors are going to charge for the estimates. They have to as their time is worth money, too.
Who benefits? The seller, clearly. Legitimate expenses that should be born by the seller who has a property significantly defective can have you , the buyer, pay some of his expenses. Even better, from his standpoint, is that he wants you to spend your time at a point where life is ungodly hectic, to meet with the contractors. By the way, he doesn’t have to accept delivery of the estimates, either. If they do take delivery, the legal counsel for the Washington Realtors is suggesting that they not fix the items in question but negotiate a change in price or other terms so the repairs won’t be complete when you take possession.
And, if you walk away from the deal, the seller has no legal requirement to disclose the dangerous condition of the crawlspace. After all, so far as he knows, it’s in great shape.
And, if the next inspector isn’t as skinny or dedicated - and I have a reputation for both and for getting into crawlspaces that make other inspectors and a fair number of agents nervous - well, that dangerous condition won’t be discovered, probably until it’s too late and someone’s bank accounts get drained. Worse, someone gets badly injured.
My hope is that most reasonable sellers will opt to receive the report information, will agree to work with the buyers to have repairs made where necessary, where information flows freely, to the best and balanced interests of consumers. We’ll know in about five years..
On the plus side, I’ve already been busy designing solutions so my clients will get exactly what they need to trigger the Additional Inspections contingency period..