Home Inspection Issues

Issueswithrespecttohomeinspectionsseemtoariseinconnectionwithreal

estate contracts in the following contexts:

1.Property Condition Disclosure Report and Other Seller Representations

2.The Home, Pest and Environmental Inspection Contingency

3.Workhavingbeendone by aSellerwithoutobtainingandclosingout proper

permits

4.Swimming Pools and Central Air Conditioning

5.Walk Through Issues

I.The Property Condition Disclosure Report and Other Seller Representations

inspections,testsandothermethodsofdeterminingthephysicalconditionofthe

property”. Thus, for a Buyer to recover against a Seller for misrepresentations contained

in the Property Condition Disclosure Report, the Buyer must prove: 1. that the Seller had

actualknowledgeofthecondition(notthattheSellershouldhaveknownofthe

condition);and2.ThattheBuyerreasonablyreliedontheSeller’srepresentation

contained in the Property Condition Disclosure Report.

It may be difficult for the Buyer to prove such reliance since the report, itself, invites

a Buyer to obtain a home inspection.

However,adifferenttheoryuponwhichaBuyermayrecoverfromaSellerfor

misrepresentations as to the condition of the Seller’s propertyis for negligent

thatwasheardbytheConnecticut AppellateCourt.TheBuyerallegedthattheSeller

made misrepresentations concerning carpenter ant infestation in the house.As a result of

the infestation, the Buyer had to replace the kitchen floor and treat for carpenter ants for a

totalof$4,600.AttheSeller’surging,theBuyershiredaprofessionalinspectorto

inspectthedwellingasrequiredbythecontractofsale.Theinspectordidnotdiscover

any infestation. Noting that a Seller is not required to obtain a pre-conveyance inspection

testwithrespecttothephysicalconditionofthesubjectpropertytheCourtheldthat,

since the Seller had no actual knowledge of the infestation, the Buyer could not sue under

Section20-327eoftheGeneralStatuteswhichrequiretheSellertoprovideaproperty

conditiondisclosurereportform,holdingthat20-327doesnotgovernnegligent

misrepresentation actions.Although theCourt found that the Seller’srepresentation was

negligent, the Courtconcluded thatthe Plaintiff did not rely on thenegligent

misrepresentation since the Buyer employed a home inspector at the Seller’s urging.

ContrastthatwithShearnvs.McGinnis,a2005caseinwhichtheSeller

representedthataswimmingpoolwasingoodworkingorder.WhenBuyerdidthe

inspection, the pool cover had snow on it and couldn’t be removed for inspection prior to

purchase. When the pool cover was removed after closing, the Buyer discovered that the

walls had collapsed. The swimming pool company representative testified that the pool’s

failurehadbeenongoingforoneyear.TheCourtconcludeditwasunlikelythatthe

the Sellerto replace the furnace, andthe Court found that theBuyerdid not relyto their

detrimentonSeller’smisrepresentation.TheCourtstatedthatafteraBuyerbecomes

aware of a defect, the Buyer is obligated to negotiate an acceptable solution or walk away

fromthedeal. Thus,dependingoncircumstances,Buyermaynotbeentitledtorelyon

the home inspection report.

onthepropertyconditiondisclosurereportformprovidedtotheBuyer.Thelisting

agreementstatedthattheywerehardwoodfloors.Aftertheclosing,thePlaintiffs

brokertestifiedthattheSellerssaidtheywerehardwoodfloors.TheCourtentered

judgment for the Plaintiff for the cost of the drainage system and hardwood floors.

InZielvs.Walsh,another2005case,Sellersindicatedontheirresidential

propertyconditiondisclosurereportthattheydidnotknowaboutanyproblemswith

sewer lines, except that the sewer line to the street had to be cleaned approximately every

twoyears.TheBuyertooktitletotheproperty,theplumbingandsewerlineallegedly

collapsed,causingtheBuyertospendover$15,000toremediate.TheBuyersuedthe

SellerclaimingthattheSellershouldhaveresponded“unknown”totheplumbingand

sewersystemquestion.TheCourtfoundthatthepropertyconditiondisclosurereport

encouraged theBuyerto arrange an inspectionwith a professionalinspector and thatthe

inspectorthey employeddid notdiscloseany problemswith thesewer.Sincethere was

noproofthattheSellershadanyactualknowledgeaboutthesewerproblem,theCourt

foundintheirfavor.TheCourtconcludedthattheSellersdidnotknowingly

misrepresent the property’s condition.

II.Home, Pest and Environmental Inspection/Tests

Paragraph 17 of the Greater Hartford Association of Realtors contract contains the

homeinspectioncontingency.Itprovidesadatebywhichtheinspectionsneedtobe

accomplished,andthebasicstandardsthehousemustmeettopasstheinspection.The

standardforthehomeinspectionisthatimprovementsarestructurallysoundandthe

mechanical,electricalandplumbingsystemsareingoodrepair. Astowooddestroying

laterthanthreedaysaftertheinspectioncontingencydate.FailurebyBuyertoso

terminate relieves Seller from any obligation with respect to the condition of the property.

If Buyer terminates the contract in a timely fashion, Buyer is entitled to the return of their

deposit.

AlthoughaCourtmaynotholdthatthedatefortheinspections,andthethree

hardy to be unmindful of the relevant time frames.

certain work indicate that the work to be performed must be done by a licensed contractor

andinaccordancewiththerequirementsoftheapplicablebuildingcode.Manyofthe

could raise such issues as part of their home inspection and is probably by taking this

position, that the failure of the seller to obtain or close out permits reasonably leads to

buyer to conclude that improvement may not conform to building code, and therefore,

may be unsound or unsafe.

If, however, the issue is not raised as a result of the home inspection, but comes

up shortly prior to closing, the question is whether the buyer has a remedy.The answer

may depend, in part, on whether there is an open permit on the subject improvements

which have not been closed out, or whether no building permit was ever applied for. The

seller may have some liability for common law misrepresentation or concealment in the

event that a seller fails to disclose the defect which is known to the seller but not known

to the buyer. Since an open permit is discoverable by a buyer using ordinary due

diligence, the seller may not be obligated to disclose that fact. However, where work is

done by a seller who never even applies for a permit, the buyer may not easily be able to

discover that fact, although it may well be within the knowledge of the seller who may

have a duty, therefore, to disclose it to the buyer.

Notwithstanding the language of the contract, therefore, the buyer may have

rights under such circumstances to extend the contract and obtain their deposit back.

unless there is an impact upon safety of life or property.

My suggestion as to the best practice in this area is to include in your real estate

contract a provision for attorney review. A diligent buyer’s attorney should insert a

provision into the contract requiring seller to obtain and close out permits for any

required buildings, structures or improvements subsequent to the issuance of the original

Although the Property Condition Disclosure Report requires the Seller to disclose

airhavebeenproperlyserviced.Finally,itmaybeusefultoprovideforanescrowat

closing for such items and/or to purchase a home warranty to cover the potential repair to

such items.

V.Walk through issues

Walkthroughsofthepremisespriortotheclosingshouldbeconfinedto

determine two things: 1. First, that any repair work the Seller agreed to do has been done;

and2.Tomakesurethatthepropertyisinthesameconditionasitwasonthedateof

contract,ordinarywearandtearexcepted.Itisimportanttoschedulethewalkthrough

foratimeaftertheSellerisfullymovedout.SomeBuyersseethewalkthroughas

anotheropportunitytoraiseinspectionissuestheyshouldhaveraisedduringthe

inspection period. There is nothing in the contract which permits this. Often, I will hear

that a Buyer claims that they could not have discovered during the inspection period what

they are discovering for the first time minutes before the closing.

CourtsarenotusuallysympathetictoBuyerswhocouldhavemadeamore

thoroughinspectionduringthetimeoftheinspectionperiod;however,ifthereisreally

something that is important to the Buyer which cannot be inspected during the inspection

period,thereoughttobeawritingsignedbybothBuyerandSellerwhichextendsthe

recent case, Ajruli vs. Possemato, (April, 2007) is instructive.

Thelawsuitwasbroughtbyacouplewhopurchasedpropertywithouthavinga

homeinspectiondonefirst.ThecontractprovidedthattheBuyerwouldpurchasethe

housein“asis” condition,butthatthe Buyerhadthe righttohavethe houseinspection

done“forinformationalpurposesonly”fifteendaysfromthedateofthesalescontract.

and although the agent said he would take care of it, in fact, the home was not inspected.

The agent,however,indicatedto the Buyersthat everythingwent fine.Shortly afterthe

realtor defended the lawsuit on the basis that they had no contractual obligation to obtain

ahomeinspectionfortheBuyers,buttheCourtdisagreed,citingtheBuyerBroker

VII.Home Inspector Liability

The test relative to home inspectors seems to be that if the Buyer can establish that it

was reasonably foreseeable that he or she would rely on the report rendered by the home

inspector, andthat the home inspector failedto exercise due care in the inspectionor the

preparation of the report, and the inspector’s failure to exercise due care in the inspection

orinthepreparationofthereportoftheinspectionwastheapproximatecauseofthe

Plaintiffslosses,thePlaintiffmayrecoverdamagesagainstthehomeinspector.In

Hoppersteadvs.Inspector,Inc., a1997case,theinspectordidnotenterthe crawlspace

area. Although thereport indicatedthat theinspection covered“readilyaccessibleareas

oftheproperty,includingatticsandcrawlspaceswhichpermitentry”theCourtfound

thattheinspector’sfailuretoenterthecrawlspacerenderedtheinspectionseverely

deficient.Theinspectormissedproblemsofdryrock,powderpostbeetleinfestation,

termite damage and otherrepairs. The Court awarded the Plaintiff damages in excess of

$10,000.00 stating that the home inspector knew or should have known that the purchaser

wouldhavereliedonhisreportontheconditionofthepremisesindecidedwhetherto

purchase the property or to seek the cost of repairs from the owner.

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