How Much Must A Seller Repair After A Home “Fails” An Inspection
You’ve found the home of your dreams, made an offer and had it accepted. This is a huge and exciting milestone! But before you can pop the champagne and truly celebrate, you have to go through the escrow period and any negotiations that arise after the inspection report comes back.
In some cases, the inspection report will indicate some major red flags and repairs that can cause some serious, deal-killing conflict between the buyer and seller.
However, with a greater understanding of what the seller is truly obligated to repair, those negotiations can be made much smoother.
Here is an explanation of Florida law as it pertains to home inspections.
In paragraph 9(a) of the contract, a general repair limit should be indicated. If the seller obtains estimates to make the repairs that are at or below that limit, the seller will proceed with making said repairs. However, if the estimates exceed that limit, the seller has three options:
- The seller can agree in writing to make all of the repairs up to that limit and compensate the buyer for any additional repairs that need to be made. For example, if the limit is $1,000 and the repair estimates are $1,500, the seller can offer to pay the buyer the additional $500.
- The buyer can make a written request to the buyer to indicate which repairs they want them to make in amounts up to the limit. Additional required repairs will become the buyer’s responsibility in an ”as-is” condition.
- If neither party send a written request or notification within the 5-day timeframe, the contract can be canceled by either party. If the contract is canceled, the buyer is entitled to receive their earnest money deposit back and both parties will be absolved of obligation to one another.
Wood Destroying Organisms (WDO’s)
A separate limit exists to address the problem of wood destroying organisms like termites. If the cost to handle the infestation and damages costs is within the limit stated on the contract, the seller will be responsible for those repairs and extermination.
However, if the costs to make repairs and eliminate the infestation exceed the repair limit, you will need to provide written notice of what you want from the seller. The seller can also provide written notice of how much they are willing to contribute towards the problem. Again, if neither party provides any written notice within the 5-day period allowed by the contract, either party can cancel the contract.
If you are a buyer obtaining financing to purchase the property, it is very important that you and your Realtor comply with any extra obligations required by that lender. Unfortunately, in some cases, the costs of repairs grows once the work begins which could lead the lender to deny the financing so you need to be proactive.
Closing Out Permits
Finally, it is also crucial that all open permits on the property be closed before the ownerâ€™s title is transferred over. If the cost to close open permits or pay off any fines exceeds the limit, the seller does have the option to compensate the buyer. This is typically done in the form of a credit to the buyer at closing. Again, the standard 5-day period which can lead to cancellations of the contract exists here too.
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There’s no need to try and navigate the complexities of things like inspections and negotiations when you buy and sell real estate. Simply hire a Realtor that cares more about helping you achieve your goals than padding their own pockets.
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