Can a seller refuse to see an inspection report?

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A man in a suit looking at a document in his hand

11/12/2014 | Author: Editorial Staff

My buyer client is on day four of his 10-day termination-option period. I sent a copy of his inspection report to the listing agent along with an amendment for repairs, but the listing agent told us that his client refuses to open the report or negotiate for any repairs. What can my buyer do?

If the buyer is not satisfied with the information in the inspection report or cannot get the seller to agree to requested repairs, the buyer can exercise his right to terminate the contract before his option period ends.

A broker or seller who receives an inspection report is charged with knowledge of the information in the report even if the broker or seller does not open the report. While sellers and listing agents should review inspection reports they receive on the property, a buyer or buyer’s representative can't force them to review the reports. There is also no requirement that sellers agree to or even consider amendments requiring the seller to perform repairs to the property.

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Categories: Legal
Tags: legal, legal faq, inspection, buyers, sellers


Comments

Nick on 05/07/2015

I see 2 different conversations going on here and some of you got off topic.  Some of these responses to comments didn’t even relate to the comment they were responding to.  I’m sure a lot of intelligent folks are staying out of this conversation because of the quality of remarks on it.  I also see some name calling and accusing people of being attorneys, accusing agents of whining and crying, inspectors that want to argue about what Brokers should contractually do or are legally required to do, a few Brokers that want to argue that they know the law and everyone else doesn’t….. and if you are reading these comments for the first time, and read the article being commented on,  yes, it is sad.  The back and forth irrelevant banter and need to be confrontational belongs on Facebook or other social media.  This is starting to look like comments under a Yahoo news article.

Mike McEwen on 05/07/2015

Jonathan (whoever, not whomever)sounds more like a lawyer than an ethical licensee.  Nobody was victimized.  The truth is what matters.  Mr. Scholer is the one who needs to be applauded.  An intelligent agent will be able to put the defects in a proper context.

Brigitte Mueller on 05/07/2015

Stuart Scholer this is far the best answer to this long standing (since Nov 2014) discussion. Over the years I had the best dealings with agents who used common sense and educated their clients on their end. Great comment!!!!

Stuart Scholer on 05/07/2015

If the system and industry was so simple then who would need us Agents???
Come on guys….  The discussion was…“Can a Seller Refuse to See An Inspection Report?”  Well, yes! BOTH Buyers and Sellers will do whatever they want!
Once again…. the AGENTS have to educate their Clients to deal with this stuff….  and keep the deal moving along…. whether it busts out or not. You Agents want to cry all day long about how hard life is. I did the same when I first started my career.
I got some real good advice from a personal friend of mine that was a long time veteran. He listened to me cry on his shoulder for about 20 minutes and then he said….  “hey Stuart…. HEY!!! STUART!!! Listen to me…. and then he said…  ‘That’s Real Estate’”  And that’s all he said… I quit crying and got back to work.

Rick DeVoss on 05/07/2015

Jonathan (Whomever)—— Your point is well taken.
But perhaps people would be able to understand your comments better had you proof read it before hitting “send.”  You seem to have left out the critical word “not” in a sentence, and that, obviously, changes the whole meaning of a sentence.
When posting on line, please, people, proof read everything you write at least once.  Others are reading our professional remarks.  (Of course, since some of you remain incognito, maybe you don’t care.)

I like your remark about what is law and what has been made up by some trade association or some Broker.  We sometimes forget to check the source, and get wrapped up in the paperwork.  For example:  The IABS form does not say you have to give the form to the customer.  We are required to give the INFORMATION to the customer!  And a better example: Nothing requires the buyer sign the Seller’s Disclosure Notice and give it back to the seller’s agent!  Texas law requires that the seller give the info to the buyer; it doesn’t say he has to give it back signed.  The whole issue is covered by Paragraph 7 of the TREC contract.
Too many office managers are trying to CYA.  Let’s not get buried in the paperwork, people.

Johnathan on 05/07/2015

@Rick DeVoss

The recent discussion is not about a GFCI device missing.  The recent discussion is about how a seller was “victimized” by having to disclose the contents on an inspection report that was later refuted by another Inspector and their report.  The use of the GFCI example displays how the sellers, buyers, and even the RE Professionals themselves, are being “victimized” by the system.  The RE system itself is convoluted and confusing to many including the Professionals who participate in it.

What is interesting to note with this recent claim of a seller being “victimized” is that too is the RE Agent/Broker’s own system contributing to it.  In this example Ms. Dixon has claimed the sale was lost due to a faulty inspection and report.  The Texas Property Code does define the minimum required items that a seller must disclose.  The Property Code does not even require a seller to advise a buyer that previous inspections of any type have been performed.  That requirement has been added by TAR/NAR and is not even on the TREC form OP-H.  If TAR/NAR did not have this requirement on their forms, and Brokerages did not add it to their forms, then this discussion would be a moot point!

Rick DeVoss on 05/06/2015

>Once again, I will object to anyone being allowed to comment on here without disclosing their first AND last name.

It would seem that some of you are tripping over the small stuff.  If the buyer wants to ask for a GFCI breaker, he can.  If the seller wants to refuse to put one in, he can.  And if the buyer wants to install it after closing, he can!
So why are we getting so upset over an item that costs about $20 at Home Depot?
Why do Buyer’s Agents not counsel their clients to go buy one and install it?  Why is it such a big deal on an inspection report? —-or the repair request?
(Please don’t write back and say that a “licensed electrician” has to install it.)

The bottom line here is that you will get AT LEAST 3 different opinions if you hire 3 different inspectors.  We should all prepare our buyers better for what that inspection report is going to say.  ~Let’s stop blowing things out of proportion.

Johnathan on 05/06/2015

@Stuart Scholer

Is a bathroom vanity outlet that is not protected by a Ground Fault Circuit Interrupter (GFCI) device, with the house built in 1950, “functioning as intended”?  The answer is yes as it was not intended to have a GFCI in 1950.  However according to the TREC SOP this outlet is a “defect” since it is a safety hazard.  So even though it might have been “functioning as intended” in 1950 it is no longer “functioning as intended” according to TREC.

Stuart Scholer on 05/06/2015

An item that is no longer “code” is not necessarily a defect if it is functioning as intended.
If an Agent, whether a Listing Agent or a Buyer’s Agent cannot navigate around this stuff then they had better sell new homes only!

Stephen Williams on 05/06/2015

I think the crux of the rub here is, the buyer’s goal in this scope is to learn as much about a property as possible.  The seller’s goal is to get it sold, honestly, ethically, and fairly.  Unless a seller is offering as part of the marketing and sale to make the home as perfect as possible, what rational seller would want to cultivate and harvest as many opinions about condition as possible?  As many of my colleagues have suggested, usually the contention comes with issues that might be subjective rather than objective.  And if anyone argues that there can’t be subjective condition issues, you’re not living in the real world.  I find it interesting that a previous post implies that there might be a flaw in a second inspection while ignoring the possibility that the flaw (or ambiguity) might have been in the first inspection.

Mike McEwen on 05/06/2015

Mr. Eberwine gave a very intellectually honest explanation.

Johnathan on 05/05/2015

@Eve Dixon

If the seller is being “victimized” it is by the convoluted Standards of Practice (SOP) that licensed Inspectors are required to follow.  Many items required to be marked deficient in the reports are based on building code requirements.  Unfortunately the different versions of building codes used can be somewhat disparate and those that write and force the requirements pick and choose which code versions will be used for each situation.  One clear example of this is the installation of Arc Fault Circuit Interrupter breakers.  TREC forced the requirement to call out even an old home with all original equipment to be called as deficient if AFCI’s were not present.  Recently they revoked that requirement and regressed to a much older version of the National Electrical Code version that does not require their installation in as many locations as TREC originally demanded they be in.  So the SOP once again becomes a convoluted mess that you have to deal with when selling a home and encounter these situations.  If you feel your clients are being victimized you should complain to TREC but not about the Inspector but more so about those that are developing and writing the rules the Inspectors must follow!

mark eberwine on 05/05/2015

Eve,

Why did the deal fall-thru?
Are we assuming that the 2nd inspector was the all-knowing, all-wise inspector who was clearly correct on all the confusing issues, all of the disputed issues?
If the 1st inspector was calling out deficiencies based on current Code, installation practices/methodology, he was doing exactly what he should be doing.
If you are concerned that the deficient box was checked, complain to TREC.
If the 2nd inspector did not call out deficiencies because the house was ‘built to Code’ when it was built, he is violating TREC Rule.
Call me, I’ll be happy to go thru the house and provide you a disinterested 3rd inspection.

Eve Dixon on 05/05/2015

Ok my question is this.  My seller and I did not ask for the buyer inspection report but received it along with an amendment for repairs.  The report was confusing, items listed did not make sense and the seller was in dispute with many.  The sale fell through.  A s a result of this inspection report which now the seller is obliged to disclose, the seller paid for their own independent inspection to clarify those things that did not make sense in the buyers inspection report.  Now here is where a seller gets victimized by having to disclose a buyers inspection report.  The first inspection done by buyers inspector held to current code items that were built under a different code at time of construction.  He made no allowances which he should have done but rather marked the items deficient and cost the sale to fall through.  How does now the seller who is forced to disclose erroneous information of deficiencies on a home explain this without explanation by just copying that first inspection report??  No new buyer is going to know that that inspection report is deficient and erroneous.  They will also see the second inspection report again without explanation.  Here the seller is honest but victimized.

bonobos marcos on 12/05/2014

I had this same issue and so I’m glad you asked this question. I requested a form from the seller after entering the contract but the seller refused to provide it. I will now terminate the agreement since I won’t know the value of the house.http://www.brockmanengr.ca/en/

Mike McEwen on 11/17/2014

This is nuts!  So what if the report comes form the buyer and so what if two different reports may vary.  If a seller has been advised of defects he needs to check into them.  If they can be refuted, fine.  If not, then fix the problem.  Don’t bury your head in the sand!

Mike McEwen on 11/17/2014

The answer is crystal clear.  What part of “knew or should have known” do licensees and sellers not understand?  It doesn’t matter who had the report done or how old it is.  Get a copy whenever possible!  Burying one’s head in the sand can get one a lawsuit.

Rick DeVoss on 11/16/2014

Linda—-  Although I may not be clear on your scenario, I will make a short comment.  We should tell our buyers Up Front that all inspections are the responsibility of the buyer, if he wants to make them.  The seller has no responsibility to pay for an inspection, and that is the way you want it to be.  The Inspector, whoever he is, should be working for the buyer.

Now let’s go back to the Report.  Remember, an inspection report is simply one person’s opinion of the condition of the property.  If you hire a second inspector, you will get another opinion.  The first one you get may not be totally right.  So why should a seller be saddled with some opinion that a buyer paid for??

The seller should stick to commenting on the SDN only on the things that he knows about, and knows to be a fact.  Why should he have to include somebody’s opinion when he didn’t even hire them to report to him?  We have all seen a licensed inspector who says “I don’t really know what is wrong with it, so you’ll need to consult a technician on this system.”  ~If THAT is all the inspector knows, how much is his opinion worth…?

Linda VanBebber on 11/16/2014

I do not see a clear answer here.  I have this question, if as a sellers agent with a one year old inspection report in hand on the home, asks a buyers agent to NOT send their inspection report,  just a list of what repairs they want completed and the agent sends the inspection report via docusign just calling it the homes address.pdf.  I feel this is deceptive and should have some recourse because it puts me in a position we asked to not be in, and we have to add their report that is saying this home needed slab repair possibly.  The buyer wants to put the responsibility on the seller to see if it needs it in this instance.  They do not want to pay for a structural engineer to inspect.  So who is really being unethical?

Stuart Scholer on 11/14/2014

I have represented buyers on two transactions that were similar to this one. The Seller would do no repairs and no comment! My Buyers bought the houses anyway.
Can’t say the Listing Agent was “covering” or “coaching” for the Seller. Can’t speculate (nor do I have any interest in speculating) on what the Listing Agent would do with the info if my Buyer were to Terminate.  Can’t say the Seller was dishonest or hiding anything at that time or in the future. I think that I CAN say that this was a good strategy on the part of the Seller. He had a house that my client desired, they came to an agreement on the price and the Seller stuck to his guns. Why not??? If my Buyer wouldn’t have bought it there was other buyers ready to snap it up. Good for my Buyer that he bought the house and good for the Seller!

Mike McEwen on 11/13/2014

Good for you Ms. Mueller!  I always tell my agents “I can’t stop you form being sued, but, if you did nothing wrong, you will prevail in the lawsuit.”  I have been there on three occasions and my ethics, honesty, knowing the law….......and full disclosure kept me on the right side of morality.

Mike McEwen on 11/13/2014

A wise seller will ask for a copy of the inspection report.  It could be a life (sale) saver.

Mike McEwen on 11/13/2014

P.S.  TREC can only answer questions regarding TRELA.  You will be better off calling the TAR attorneys.  They are able to answer questions in a much broader context.

Mike McEwen on 11/13/2014

Regarding Dustin (fill in the last name)‘s comments, in a lawsuit it is called discovery.  I am comfortable w/ my flawed logic.

Mike McEwen on 11/13/2014

Great comments, Mr. Eberwine.

David Moore on 11/13/2014

Brigitte, you made me laugh ! My wife would have appreciated the comment more than I, but I have learned after decades of marriage that you ladies are smarter !!

I had no idea that my simple question was going to be twisted and adulterated into…. I have no ethics or that I am out for a buck !!! It never ceases to amaze me how easily assumptive and judge-mental people can get when they are working with little facts about a situation.  Very presumptious comments by two individuals today !!

I am done with this conversation but appreciate all of you level headed individuals. Also, have learned that I will contact TREC legal hotline about any legal question !

Bon Voyage !!

Brigitte Mueller on 11/13/2014

Holy Cow, this is going on for a whole day now and only two people in this discussion have common sense. I don’t name names. If someone is searching for a lawsuit they always will find something. Has nothing to do with ethics. Disclosure, disclosure that is the key and still there always can be a lawsuit with all the attorneys looking to make a buck. If seller doesn’t know about defects he/she doesn’t know. That’s why the buyer has the right to have an inspection done and can back out of the contract. If the buyer chooses not to share the inspection report so be it. Buyer has all the right to keep the report. One question, why is no femal real estate agent participating in this discussion? Maybe we have more common sense? Y’all have a great day.

Mark Eberwine on 11/13/2014

Musta hit a nerve.

Nobody was saying anything about the seller asking for the Inspection Report.

This is all about refusing the Inspection Report from the person who paid for the Report and wants the seller to have it so that everyone is on the same page and full disclosure occurs for the next potential buyer.

The attorneys that go after your seller for defects that they were unaware of because you counseled them to not accept an Inspection Report, are gonna have a field-day with you and your broker.
The attorneys that attempt to defend your seller for defects that your seller was unaware of because you counseled to not accept an Inspection Report, are gonna have a field-day with you and your broker.

Dustin on 11/13/2014

Mark and Mike have no actual common sense behind their comments.  Full Disclosure is disclosing what is known by seller(s) and their licensed representation.  It does not mean asking for something they didn’t even pay for.  Do you understand that as a buyer pays for the home inspection they thereby own it.  What you are really lobbying for is that every seller must exhaust all opportunities to find out more than they already know.  It is a buyers responsibility to find out if they are purchasing and receiving an asset they are comfortable and satisfied with, and it is the sellers responsibility to disclose all known defects.  NO ONE here is not promoting full disclosure.  Everyone is promoting full disclosure.  It’s just we (the rest of us) intelligently understand what disclosure is, and what it isn’t.  Full Disclosure is not requiring a seller to request an inspection they do not own and did not pay for.  It is not requiring a seller hire or pay anyone to find more.  Keep in mind home inspections are general inspections, which leads to more and more and more according to your logic.  At the point of a home inspection, a general home inspector may say the HVAC needs to be assessed by a licensed HVAC technician, and the electrical panel needs to assessed by an Electrician, etc etc.  This means that a home inspection is not actually giving the proper data for a seller to provide full disclosure.  It’s only giving partial amount.  The seller would then have to hire all other licensed experts the home inspector deferred to in order to go as far as you want them to go.  You aren’t going to disclose actual defects many times, only comments from home inspectors to have a licensed expert assess further.  None of this is a seller requirement and is ludicrous to say they must go through all of this so they can disclose what they did not already know to be a defect.  This is the sellers CHOICE.  The seller can decide to go this far with it or decide to do what is legally required and ETHICAL, disclose what they know.  Your idea that agents like me are not promoting full disclosure in untrue.  Full Disclosure is fully disclosing what the seller knows to be true about the home.  The only way to across the board legally accomplish your misplaced and flawed idea is to mandate all sellers pay for their own home inspections and fully disclose all findings, or all buyers pay for inspections and share that report with the seller so the seller then can share all findings.  That is ludicrous.  Those of us that practice the common sense method of normally transacting business by having our seller clients disclose all currently known defects, and therefore also disclosing what we the listing broker knows, is full disclosure.  The idea the seller must go beyond that is non-sensical and doesn’t provide the basis of what we are here for, ethical fiduciary duty to assist a client in the ethical sale of an asset to achieve their objective.  I don’t see anyone on here promoting commissions over their fiduciary duty, but I do see 2 fringeworthy individuals with flawed logic and some aggressive agendas.  Googling the names of 1 of these brings interesting results and might explain that person’s comments.

mark eberwine on 11/13/2014

I have a suggestion.
When the buyer hires an Inspector and discovers that house has major defects, or a plethora of, and myriad of, so-called, ‘minor defects’, and decides that they no longer want to purchase the house,  TAR should tell TREC to require that the seller receive a copy of the Inspection Report.
Then…
The seller is only required to disclose the Report and its findings, once the subsequent purchaser hires their own Inspector and receives their own Inspection Report.
It’s quite simple, really.  Full Disclosure is always in everyone’s best interest.

Those of you that have tried to justify why you shouldn’t do everything you can to promote full-disclosure (I.e. “The instructor told us not to accept the Report”, “My seller shouldn’t have to disclose ‘minor’ items”, etc.) are looking at this issue through the a commission biased prism.

There are many ethical, hard-working agents who find themselves on the wrong end of a lawsuit.  Why?  It is almost always a lack of proper disclosure.  Partial disclosure is not proper disclosure.  Full disclosure is always proper disclosure.

For those of you not paying attention, your TAR allowed TREC to become a ‘Self-Funded, Self-Directed’ agency.  TREC is completely funded off of the backs of its licensees.  Do you think that some of the disclosure games that brokers and their agents play will cost them?

If TREC were to step up to the plate and require an ‘Office Policy’ directive that mandates that the Broker’s Office Policy state whether or not their agents had to recommend that their selling clients accept the Inspection Report, there would be a whole lot more disclosure going on.

 

Mike McEwen on 11/13/2014

The jury will get to decide what a minor issue is.

Mike McEwen on 11/13/2014

I think one of the bloggers is a criminal defense attorney.

Mike McEwen on 11/13/2014

I would not go so far as to say it is unethical for a seller to not have his house inspected.  There may be practical reasons why he can’t.  There are definitely benefits to doing it.  For example, finding major defect issues that could impact a sale if they are not immediately addressed.  I have even told seller clients that it is in their best interest to fix a known defect before marketing the home.

Brigitte ueller on 11/13/2014

Dustin I whole heartedly agree with you. I could not have said it bette!  If each side is doing their fiduciary duty and is going by our ethics standards there shouldn’t be any problem. A seller cannot and is not obligated to report any minor issues on the seller’s disclosure. Every agent should use some commen sense and not accusing others being unethical because they don’t agree. I am mostly working with buyers and always advise to have their own inspection report.

Mike McEwen on 11/13/2014

I definitely will tell an instructor no not suggest we cover our eyes.

Mike McEwen on 11/13/2014

Any seller or seller’s agent who refuses to receive material information about the condition of the residence is unethical.

Dustin on 11/13/2014

I think almost everyone will agree with David Moore.  Fiduciary duty to your seller client!  If you follow Mike’s logic that it is unethical, then I could go as far as to say every seller that does not order their own inspection to get every known detail prior to listing or at least prior to an offer, is being unethical.  There are 2 sides, 2 objectives, with 2 sets of fiduciary duties, and 2 sets of legalities and ethics.  NOWHERE, and no how, is any seller, or listing brokerage, being unethical, by not seeking, seeing, requesting, and wanting every detail of a buyer’s inspection report that the buyer paid for.  That is not unethical, and not against the law.  It’s the system of selling an asset and having an agenda.  That’s selling.  Disclosing what IS known, is required and ethical, wanting to know everything is not required and not unethical.  When I as a listing broker do not want, request, and tell not to send, then I am following my fiduciary duty to my client and my ethics for TAR and TREC.  As long as we disclose what is known and follow the rest of out ethical guidelines, then we are ok, and the seller is ok.  Buyers representation does their fiduciary job by advising on a home inspection.  If the buyer orders an inspection, and has a termination option period, then that side is doing their own due diligence.  What’s the difference if my seller obtained an inspection report up front, which they are not required to do, and disclosed all defects, versus the buyer obtaining their own inspection and arriving at the same results, known defects.  Both sides are protected.  Both sides followed the fiduciary duty to their clients, and both seller and buyer can proceed with their objectives,  Mike’s logic is flawed.  NOT every seller must seek out every known defect.  That diligence resides on the buyer as well.  The seller must disclose known defects, but not search, pay for, and seek out those the seller does not know.  That’s a ridiculous statement and flawed in all sense of selling an asset.  If the seller follows their disclosure requirements, and their representation does too, and holds fiduciary duty and ethics ahead, then everyone is ok, the system can move forward, the buyer and their representation can protect themselves and do their job, and all parties are protected with no legal or ethical bonds broken.  Asking for every seller to ask for a report they didn’t pay for, and then disclose every single line item that report yields, is very flawed intelligence.

Stephen Williams on 11/13/2014

“The seller should be apprised of every single detail in the report.  Having access to all facts is the best way to CYA.” —Mike McEwen

Is it a fact that a A/C unit should be cleaned because an inspector admittedly puts that in every report without looking at the unit? (Maybe the seller just had it cleaned the day before. Maybe it doesn’t really need cleaning.)

Does a seller need to now disclose that his home isn’t up to current electric code, when previously he was making no disclosure at all about code compliance?

I’m just curious.  I don’t know the answers.  But I certainly don’t want to remain an unethical idiot.

Mike on 11/13/2014

Any MCE instructor who says the SD should not be provided is probably a real estate licensee who is trying to teach an agent how to salvage a commission,  An attorney would not give such advice.

Mike McEwen on 11/13/2014

Seller’s Disclosures must always be updated when there is new material information.  That is a no-brainer.

David Moore on 11/13/2014

Then tell the MCE instructors to stop suggesting we NOT ask for them.

Mike McEwen on 11/13/2014

I’m amazed by how many agents do not want to know the details of the inspection.  Reminds of a decades-old comedy where the actor would shout “I see nothing!”

Mike on 11/13/2014

Bob, the seller should have access to all defects.  If the buyer refuses to share the report, there is not much the seller can do; he could always get his own inspection.

David Moore on 11/13/2014

Mr McKewn makes the assumption that people are unethical because they ask a simple question. Good thing you are not a judge sir.

David Moore on 11/13/2014

We are not dealing with an unethical seller. In fact, my seller is very ethical as am I.

I have been taught by MCE instructors to tell buyers agents NOT to provide inspection reports to me or my seller. I understand that if one is sent, we are considered to be responsible at that time. Once again, if a buyer just TELLS me what they say the inspector found, does that mean my seller has to update the SD for next buyers ? What is so difficult about this question ?

Mike McEwen on 11/13/2014

In response to Mr. Moore’s question about the seller not wanting to see the report, we, again, are dealing w/ an unethical seller.

Mike McEwen on 11/13/2014

The seller should be apprised of every single detail in the report.  Having access to all facts is the best way to CYA.

David Moore on 11/13/2014

Let me be VERY CLEAR here. First of all, I never made any comment about not wanting to disclose material facts. I asked a very simple legal question…which is…. if a buyer does not provide an inspection report but TELLS us about something they say was found in their buyers inspection, does that obligate my seller to update the SD ?

I appreciate the discussion but un-tempered comments need to be addressed. Of course, it is all about disclosure but if you tell me something and do not have it collaborated by something official, does that mean we are to assume they are telling us the truth or are accurate in their assessment ?

Mike on 11/13/2014

Mr. Eberwine has made some very gogent observations.

Mike McEwen on 11/13/2014

Any seller who takes steps to avoid knowledge of defects in his house is an idiot and unethical.  Any agent who collaborates w/ such a seller should lose his license.  I see way too many comments that are about commission salvation and not full disclosure.

Dustin on 11/13/2014

Those that receive a buyers inspection report from the buyer or buyers agent are “charged with the knowledge of the information in the report even if the broker or seller does not open the report”.  There are different strategies listing agents may employ, but it’s simply a disclosure issue.  I communicate to buyers agents, and I tell my agents to do the same, to NOT send me the full report unless we ask for it.  I only want the repair request AND the corresponding inspection pages that address the specific repairs being requested. A good percentage of contracts fall through during termination option, so the seller is required to legally and contractually disclose all known issues to all subsequent buyers/parties.  That’s the outcome of receiving the full report, even if they do not know those issues because they never opened that report, that is what our seller is now required to do.  The Sellers Disclosure Notice states at the top that the disclosure therein is as of the date it is signed, but if the seller is charged with the full knowledge of an inspection report, how is the seller fully protected, and the listing brokerage fully protected, unless there is a new sellers disclosure completed disclosing all defects noted on inspection report?  Seller is “charged with the knowledge” means they must disclose this information, in one form or another.  This is why the practice of not sending the entire report to the seller/listing agent should be widely accepted, and as a courtesy, I do not ever send it. The only time I ever send a full report is when the seller requests it, and prior to having it sent, I explain the repercussions of that decision.

Rick DeVoss on 11/13/2014

Wow!  Lots of opinions here…
It seems like we all need more MCE classes on this topic!

Let’s be clear about the requirements for the Seller’s Disclosure Notice.  The State has not mandated any particular form for a seller to use.  Therefore, we see many different forms being used, with different questions, and multiple pages.  The law says that the seller has to disclose any pertinent information about the property that he has in his possession.  ~It does not say that he has to answer any particular question that was formulated by some other office’s attorney.

But many of the forms in use ask if the seller has received any inspection reports about the condition of the property.  It does not say he has to disclose what the prospective buyer told him.  (The buyer is not a licensed inspector.)  Should the seller disclose the inspection report he got when he was buying the house??  Whether or not the seller paid for the report is not the question.  The question is:  Does the seller have knowledge of the defect?  ...And if he does, then he must disclose it.

Listing Agents should be very careful not to encourage the seller to leave some information off of the SDN.  The agent should Never be a party to covering something up.    I know it is hard to ‘walk away from a listing’, but maybe the agent should take the seller to her attorney, and let the attorney explain the consequences to him.    (There are many title companies with an attorney who would do that for free.  I use one in Southlake that has Two attorneys on staff.)

I don’t like the idea that my buyer just spent $400 only to find out that we had to terminate during the option period due to the seller’s refusal to spend $500 to fix the roof that was damaged in a hail storm.  (All the neighbors had fixed their roofs.)  We firmly believe that he knew about the hail storm, and failed to disclose the info about the roof on the SDN.  Once he was told about the roof condition by his own inspector, he should now disclose it to the next buyer.  (But did he change the SDN?)  (I would like to submit another offer to find out!!)

The bottom line is that it will cost him more than $500 of holding costs on a vacant house while he searches for another buyer.  ...So did his agent do him any favors by not counseling him on the wisdom of just fixing the roof?  ...And did she not insist that he change the info on the SDN?

“Austin:  I think we have a problem.”


Joseph on 11/13/2014

@Ms. Mueller,

Summaries are not required in inspections reports but TREC does require the summary to be identical and complete wording as what is in the body of the report and that does include section/sub-section headers.  As a result the summary, if performed per TREC requirements, is nothing more than a copy of the report body!

brigitte Mueller on 11/13/2014

Joseph, the summary is part of the inspection report written by the inspector and the last page of any report signed by the inspector.

J. ARMENDARIZ on 11/13/2014

The inspection is recommended but not required as well as the seller is not obligated to do repairs.

Brigitte Mueller on 11/13/2014

In regard to Bob’s comment, By sending only the summary report, the seller can see that my buyer is willing to overlook minor items and is asking only for major repairs if any. Over all the years I am in this business I had never one seller complain, always looked at my amendment with the summary and negotiated the repairs.

Joseph on 11/13/2014

So far what I read here, for the most part, is that Agents should not even consider sending the seller the full report since they don’t want the deal killed if the report contains items that are required disclosure items but the buyer is willing to correct on their own?  Again as asked to @Mike Smith if the report contains 50 pages of deficiencies and the buyer is only asking for one page of corrections and using the entire report to display their intentions of working with the seller then how does it serve the buyer not to send the entire report?

As for the comment regarding having Inspector’s create a “Summary” in their report please take the time to read the TREC requirements for this.  If a summary is created it must be a duplicate of what is in the body of the report so what good does creating a summary do?

Bob on 11/13/2014

Sully asks in a comment:
“Does anyone see any issue with the seller requesting the potential buyer not to send the inspection report, but to send any required repairs to the seller?”

There are many agents who share and practice this outlook. The key thing in the process is what the buyer considers to be important enough to request that the seller have repaired. The inspector has been hired to deliver a report for the buyer specifically. It is intended to inform a buyer as fully as possible as to the condition of the property.

As has been noted in other comments, different inspectors may or may not note minor items. Some add comments or opinions by rote - i.e. “HVAC needs to be serviced.” The unit may be cooling and heating within tolerances, but “cleaning is always advisable.” Does this become a disclosable matter?

Asking that buyers simply submit a list of repairs requested lets the buyers know that seller is willing to consider the matter.

Some buyers’ agents simply send the full report with the amendment asking that all items marked as needing repair be attended to. While this might be considered good “defensive agency,” the question arises as to whether it is a true representation of the buyers’ position. Suppose a buyer is willing to accept the property with any number of minor issues and the negotiations fail because the seller feels backed into a corner? Was the buyer well served?

Brigitte Mueller on 11/13/2014

I don’t understand the problem.  After inspection is done I send the signed amendment to the seller with repair request. I always ask the inspector to have a summary page included so my client(the buyer) can initial the items he/she wants to have repaired. The report was payed for by the buyer and sometimes the report can be 15+  pages long. Life is complicated enough why make it worth by confusing the parties involved? If the seller wants more information my client always gives permission to send the report. After all they paid for it and own the report. As I wrote on another subject before, communication between all parties is the key. Seller wants to sell, buyer wants to buy.

Stephen Williams on 11/13/2014

While I’m all for full disclosure, I certainly think it would be more efficient if a buyer, after inspection(s) would simply send seller a list of requested repairs, if any, instead of sending a report.  Assuming the deal is going to close, the report itself accomplishes nothing on it’s own for the seller, but is only a tool for the buyer to formulate a plan going forward.  If the seller subsequently wants to debate the need for such repairs, then seller can ask for report at seller’s discretion.  So, I guess the only thing we’re discussing, is seller’s obligation regarding the knowledge of the inspection report if the pending deal DOESN’T close.  Obviously, objective issues like active termites and a leaking roof must be disclosed.  In my experience, however, some inspectors put some subjective information in reports (AC needs cleaning - “I put that in all my reports” many inspectors have told me) that sellers have to deal with going forward.  We deal with it truthfully on a case by case basis.  I find it interesting that Mr. Eberwine acknowledges that there are “incompetent” inspectors, but implies that they’re never hired for the first inspection.  If we have a difference of opinion, that might be why.

David Moore on 11/13/2014

Switching gears a little. I have a question. If selling agent and seller tell buyer and buyers agent NOT to send any reports and buyer does not send report but does send an amendment asking for certain repairs, does that constitute that seller update SD based on hearsay ? So if buyer backs out and buyer has TOLD seller about certain deficiencies without providing an actual report, is seller obligated to update SD at that time ? Since there is not report actually provided, would this not be considered hearsay ?

Joseph on 11/13/2014

@Mike Smith

If the buyer has a report with 50 pages of deficiencies listed but they are only asking for 1 page of those to be repaired, and are willing to deal with the other 49 pages themselves, then how do you get that point across without sending the entire inspection report?

Mike Smith on 11/13/2014

If I were a Buyer’s agent in this situation I think I would recommend just sending a detailed repair request with an amendment to the contract.  There is no need to ruin the deal by upsetting the Seller and their Listing agent if your client wants the house.  You don’t have to send the report to get one’s point across to the Seller and the Listing agent.

Morris "Bill" Austin on 11/13/2014

My understanding is that IF the buyers sends the “Actual Inspection Report” to the designated place in section 21 the it is deemed “received” by the parties and would need to be disclosed. I have seen “inspectors” who are copy righting their report and in this case I believe permission is needed from the inspector. All the inspections I see state that they are specifically “exclusively for us by” the person paying for the report.

Joseph on 11/13/2014

The article is a good starting point to discuss this issue but leaves confusion in the following questions already asked. 
1.  If the seller’s Agent has received the report and the buyer refuses to review this report then possible seller disclosure additions might not be made by the seller.  What is the Agent’s responsibility to ensure that an updated disclosure is performed if material defects are listed on the inspection report not already on the disclosure?
2.  If for whatever reason an updated disclosure is not performed, the home is instead delisted, the seller Agent contract is terminated, then a new seller Agent contract is afterward created (with the same selling Agent/Agency) what is the responsibility of the listing Agent/Agency to ensure a proper disclosure is created to include any material defects that were identified in that prior inspection report that they had possession of?
3.  If the seller refuses to create a new or amended disclosure based on material defects listed in the inspection report, the seller terminates their contract with the listing Agent, and then the seller initiates a new contract with a different listing Agent/Agency then assuming that the original Agent/Agency is aware this has occurred what responsibilities does this previous Agent/Agency have to at least ensure the new Agent/Agency is aware of the disclosure discrepancies?

Mark Eberwine on 11/13/2014

Sellers are often not aware of the inherent dangers of refusing to accept an Inspection Report.  Those far outweigh, as Sam puts it, the possibility that the Report will be inaccurate.
Seller’s are often coached by ‘their’ agent to not accept the Inspection Report.  They don’t know any better.  When they refuse to accept the report, here’s what can and does happen…
The seller has no idea what a turd their house is.  So… they refuse to negotiate with the buyer.
The deal goes South.
‘Their’ agent actually set the seller up for failure.
Next…
A subsequent potential purchaser is lied to about why the previous transaction went ‘South’.... “The previous buyer couldn’t get financing.”
The subsequent potential purchaser hires an inexperienced or incompetent Inspector, because the buyer’s agent told them to shop around for the cheapest Inspector or guided the buyer to the agent’s ‘boy’.
The Inspector does a poor-quality inspection.
The buyer is all happy that the house is “great’.
The buyer moves in and discovers unreported and UNDISCLOSED roof leaks and water damage.
Why undisclosed?  Because the seller didn’t know about them and ‘their’ agent advised them to not accept the previous Inspection Report(s).
The buyer sues everyone after a highly unsuccessful mediation.
The Inspector’s E&O Insurance policy picks up the deductible for the agent’s E&O policy.
The listing agent is out of a little time, but they got their commission.
The seller is up a creek and forced to pay many times what it would have cost them to negotiate with the first potential buyer.
TREC could easily put together a Listing Agreement Addendum that lists all the inherent dangers of not accepting (and disclosing) previous Inspection Reports, but until TAR tells TREC to do this, it won’t happen.
One more thing,  TAR allowed TREC to remove and Inspector’s requirement to report improper drainage and improper ventilation.  This puts homebuyers at risk of foundation failure, higher utility bills, and fungal growth.
When that happens, guess who gets sued?

Jay on 11/12/2014

Shouldn’t this be discussed prior to making an offer on that property?  Is it the Buyers Agents responsibility to find out if the seller is “Willing” to make repairs BEFORE the Client Pays an Inspector to preform the Inspection?  Oxymoron?  Or is the Buyers Agent at fault for not getting this Information? Great Topic!

Shawn Gray on 11/12/2014

If this buyer terminated, then going forward the seller would most definitely need to update the seller’s disclosure AND provide a copy of the report to future buyers.  However, this could be simply a matter of an “as is” mind set and a seller unwilling to negotiate repairs.

Mike McEwen on 11/12/2014

You sound like an attorney who is representing the seller’s agent and the explanations all sound like a dodge.  You need to study up on the DTPA and call both a TREC attorney and a TAR attorney.  Each will tell you that that seller is avoiding knowledge of the readily available truth.  No jury will exculpate that seller nor his agent.

Sam on 11/12/2014

This article implies liability against a listing agent and their client if a buyer provides an inspection report. Here’s the issue I see with that position.  The listing agent serves the seller, and neither the listing agent or seller hired or reviewed the credentials of the inspector. The inspection may not be accurate and it would then follow the property, which could limit future buyers or kick out certain loan types all together. This does not serve the interests of the listing agent’s clients.

Saying a listing agent “should have known” simply because a report was emailed might not hold up in court as the listing agent has a duty to protect their client. Here’s a conflict to consider: if I’m the listing agent and I look at an inspection report am I serving my client’s interests or my own?  I think that would depend on if the listing agent’s clients could be held liable for an inspection report rev revealing defects.

I’m not certain which position would prevail though, but I would certainly consult an attorney about my course of action.

Mike McEwen on 11/12/2014

If the seller is not willing to acknowledge the information in the inspection and report it in the seller’s disclosure, the seller’s agent has two options:  He can—and probably should—terminate his relationship w/ the seller; or he can let any future prospect know that there was an inspection that the seller chose not to inform himself about and that the prospect, should he go ahead w/ a purchase, definitely needs to have the home inspected because it would be in his best interest because the seller’s agent has personal knowledge of the defects.

Roger on 11/12/2014

The buyer or his agent can easily cut and paste from most inspection reports the exact verbiage of the items buyer wants repaired into the amendment.  If the seller wants to see parts of the report then, send them.  I think the buyers would be ok with this.  I think supplying the entire report maybe the buyers agents wish but it is not required.
If buyer opts out of contract the sellers disclosure, doesn’t the seller need to be amended to include the report to future prospects?

 

Sully on 11/12/2014

Does anyone see any issue with the seller requesting the potential buyer not to send the inspection report, but to send any required repairs to the seller?

Mike McEwen on 11/12/2014

There is no law or rule requiring the seller to look at the report, but he could still be sued under DTPA inasmuch as he had access to possible defects.  That’s where the “should have known” part kicks in.  He would have to be an idiot to not look at the report.

Jennifer McLafferty on 11/12/2014

IF the seller didn’t open and review the report, and the Buyer terminated, does the seller have to disclose the report to all future buyers and update the seller’s disclosure?

Mike McEwen on 11/12/2014

Under the “knew or should have known” clause of the DTPA, that seller could be sued.  That seller is also not an honest person if he will not look at the report.  He could also end out regretting it if there were a functional failure in the house that he could have prevented.

Sully on 11/12/2014

I always find conversations on this topic interesting. What rules or laws require a seller to look at a report they did not request or pay for?

gerald waldon on 11/12/2014

Representing the buyer in a situation like this, I would certainly encourage the listing agent to review the home inspection presented. As it stated, the seller would have been advised even if they don’t read it. Hard to believe a seller would not want to know what they said about the home!

Sometimes the seller(s) truly stick to the “as is” condition of the property. Advice to buyers would be terminate quickly and move on to another property!


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