Solved! Who pays for repairs after the home inspection?


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Q: My husband and I made an offer on our dream home a few weeks ago, but now a home inspection has determined that the HVAC system was on the verge of failure. So who pays for the repairs after the home inspection? The sellers or us?

A: It’s not uncommon for a few problems to come up during a home inspection. Depending on the wording of the sales contract, each of the parties may have to pay. However, since a new HVAC unit is expensive to buy, either of you can withdraw from the contract without penalty.

In short – all cost obligations for paying for repairs must be specified in the sales contract. If it’s not in writing and not in the contract, it doesn’t count. An oral agreement does not hold up in court; it must be in writing. Read on for more information on who pays for repairs after a home inspection.

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The repair costs are negotiable during the contract phase.

Sales contracts vary depending on whether they are drawn up between two real estate agents or handwritten on a piece of paper to represent the sale between two private parties who do not use a licensed agent to conduct the transaction. Licensed agents must comply with all applicable state laws, while the same rules do not always apply to private parties.

Generally, a sales contract includes a loss of repair clause that determines who pays for repairs after an inspection. The clause may stipulate that the seller is responsible for repairs up to a certain dollar amount, after which the remainder of the costs are divided equally between the two parties. Alternatively, the clause may provide that the seller has the option to refuse the repair and that the buyer has the option to terminate the contract at that time and get any serious monies back.

If the buyer and seller cannot agree in negotiations who will pay the repair costs, the contract usually fails. The buyer looks for another home to buy and the seller’s home goes back on the market.

Who pays for repairs after a home inspection?

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In the case of an “As Is” contract, the buyer is responsible for the repair costs.

In some cases, sellers find the home is in a state of disrepair, but they don’t have the money (or time) to fix the issues. In this case, the seller can list the house “as is” which means that the seller is not responsible for any repair costs.

The buyer can still – and should – order inspections to determine the level of defects. This gives the buyer a clearer picture of the extent of the problems and is usually a consideration of whether the buyer wants to continue with the contract. The difference is that the seller is unlikely to undertake repairs for any damage found by a home inspector.

Depending on the wording of the sales contract – if the cost of repairing the house is significant – the buyer can potentially get out of the contract and get the serious money back. In the case of an as-is sale, there is practically no recourse or guarantee after completion.

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The repair cost can also determine whether the buyer or seller pays.

Unless the sales contract stipulates who will carry out the repairs, in most cases the seller pays – but the seller is not obliged to do so. Usually the seller wants to close the deal and agrees to pay the repair costs to help keep the sale going. This is more the case with extensive repairs such as putting on a new roof or replacing old cables.

If the repair costs are low, the buyer may not want to cancel the contract and can instead pay the costs later out of pocket.

If the seller agrees to pay the repair costs, this does not mean that the seller will immediately call in a contractor and carry out the repairs. It is more likely that the seller will receive bids for the repairs and then the cost of the repairs will be reimbursed to the buyer from the seller’s proceeds as part of the closing costs. The buyer will then use the money to fix the problems.

Who pays for repairs after a home inspection?

Photo: depositphotos.com

It may be in the seller’s best interest to pay for the repairs.

Some states have laws that encourage a seller to report any defects in the home’s materials. When a real estate company advertises the home, the real estate agent asks the seller to fill out a disclosure form that lists all known defects. A copy of the disclosure form will be given to all prospective buyers prior to submitting an offer. Deficiencies that need to be disclosed often include knowledge of water damage, flooding, termite damage, structural problems, or problems with HVAC systems or wiring.

However, disclosure statements are only based on what is known to the seller. If the seller is not aware of any issues with the HVAC system, this will not be indicated on the disclosure form. However, as soon as an inspection finds the problem, the seller is required by law to disclose the HVAC problem from that point on. Because of this, it is often in the seller’s best interests to pay for the repairs now as these issues will need to be listed on future disclosure forms which can deter other potential buyers.

Occasionally, a seller agrees to pay at least some of the cost of repairs necessary to keep the business running, but buyers should be careful not to ask for cosmetic repairs, such as cosmetic repairs. B. new colors on walls or things that do not affect the structure or central home systems.

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If the seller has not disclosed a known material defect, the seller can assume the repair costs.

A seller can only be legally compelled to pay for repairs if the home is sold, closed, and then something goes wrong that the seller must have known about but not disclosed. For example, suppose the new buyers move in and the basement floods, causing them to hire a contractor to dry out the basement and replace the drywall. If the contractor mentions that he came out a year ago and did the same when the basement was flooded, it turns out that the seller did not disclose a material defect.

In this case, the buyer can sue the seller for concealing a material defect and request the seller to assume the costs of ongoing repairs. The court can then issue a judgment in favor of the buyer and ask the pre-seller to pay the repair costs.

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