|The Home Inspection Clause
If properly worded, the home inspection clause will enhance a real estate transaction. Unnecessary challenges may arise if the wording of the clause is ambiguous. All parties involved in the purchase want fairness, accuracy and impartiality to be exercised by the home inspector, especially the vendor!
Let's examine some of the important premises of the home inspection clause.
1. WHO IS A QUALIFIED HOME INSPECTOR?
In the past, the following people have conducted the pre-purchase home inspection under the auspices of a "qualified home inspector":
In the above context, only a registered OAHI home inspector (R.H.I.) will:
- Registered Home Inspector (R.H.I.)
- A parent of the purchaser
- A general contractor
- Uncle Tom, the plumber
- A knowledgeable family friend
- A realtor, an appraiser
OAHI inspectors have proven their technical proficiency. They practice fairness and impartiality.
- Have membership in a professional organization. (The OAHI, established by Provincial Statute).
- Have appropriate errors & omissions insurance
- Have appropriate comprehensive general liability insurance coverage.
- Have undergone an accreditation process which tests experience, technical proficiency and professionalism
- Conduct their inspections according to a strict procedural guideline and to a professional Code of Ethics
- Are accountable to the public through requirements in the Statute.
2. WHAT IS A HOME INSPECTION?
Without properly defining who is to perform the inspection there is absolutely no way to forecast what procedures or standards an inspector will apply to the house. For example, are cosmetic issues reported on? Is the roof condition reviewed? Clearly, the inspection process must been defined.
If the inspection is to be conducted by an OAHI inspector, the inspection parameters are clearly defined by the Association's procedural guidelines. These guidelines ensure that all functional aspects of a house will be inspected. The procedures are not destructive ensuring that the vendorĘs property is respected at all times.
An OAHI inspector will also be practising in accordance to professional conduct guidelines. It is important to note that the OAHI Code of Ethics guide the inspector so that they:
3. WHAT IS A "SATISFACTORY HOME INSPECTION REPORT"?
- cannot use the inspection as a vehicle to solicit repair work.
- shall not comment on the marketability or purchase price of the subject property.
- should not enter into or make reference to the re-negotiation process.
- will not offer opinions on the advisability of purchase
This is subjective wording indeed. If the clause is to accurately reflect the purchaser's concerns in a reasonable manner, the clause could read as follows:
"...functional problems affecting safe and reasonable habitability of the dwelling...."
"....this transaction is subject to the purchaser receiving a satisfactory home inspection report...."
In the past, some home inspection clauses have been limited to structural defects. It should be noted that this excludes serious defects such as electrical, plumbing and heating problems.
Some clauses state that the home inspection covers major structural and mechanical defects. However, this particular clause will not cover water penetration through the foundation wall or the building envelope. (i.e.) roofing or walls.
4. THE RENEGOTIATION PROCESS
Rightly or wrongly, prospective purchasers have used the inspection report to abate the selling price. However, these renegotiations are rarely conducted on a level playing field as the vendor and vendor's agent rarely see the inspection report. It is recommended that the clause contain some mention that the vendor can obtain a copy of the report under certain circumstances.
To summarize, here is what a well constructed inspection clause could read ...
"This offer is conditional upon the Purchaser obtaining at their own expense, on or before __________________ am/pm, ____________________, 2013, an inspection of the subject property by a Registered Home Inspector. If, within the allotted time, the said inspection reveals major functional deficiencies in the property which the Purchaser is unwilling to accept or waive, and the Vendor is unable or unwilling to remedy or satisfy, this Offer shall automatically terminate. The Purchaser shall furnish the Vendor with a complete copy of the inspection report before the expiry of this condition if not waived."