Almost everyone who buys a home get a home inspection. While most inspectors are cautious in their evaluations, lately some have made a big mistake in not using two words that can make the difference between the successful protection of the buyer’s rights and potential economic disaster.
“Substantial Defect” is the terminology used in local real estate contracts to delineate a structural, plumbing, electrical, roof covering, water or sewer issue that would reasonably cost more than $1,500 to correct. Regionally, this applies to an individual item as opposed to the total for multiple issues as practiced elsewhere in the state, but all too often, an inspector states there is a problem and in his comments, simply directs the buyer to seek an outside evaluation by a qualified contractor.
Imagine the impact if this related to an attic where through lack of ventilation and excessive moisture from a bathroom exhaust, half of the underside of the roof sheathing was literally delaminating and rotting away, creating a health and structural problem. Remember that rotted sheathing can allow a person walking on the roof to literally fall through. Once you figure that the cost for replacing half the sheathing and most of the shingles would easily cost over $10,000, you know there is a problem.
Now consider that some attorneys can be unforgiving in protecting the seller’s position and refuse to negotiate (or extend the inspection period) if the exact words, “substantial defect”, are not used. Keep in mind that both the seller and buyer agreed to this language in the contract, therefore both are obligated to comply with its language. Presumably, failing to use the right words could mean that the buyer might have relinquished his right to negotiate the defect and is still obligated to close on the transaction even though they believe there is a serious problem.
Now keep in mind that I’m not an inspector or an attorney, just the person who works in between everyone and represents buyers and sellers. I’ve seen seller’s attorneys reject an inspection issue because the inspector failed to cite the correct language. It’s a situation easily avoided if the buyer or their agent takes the time to review all issues with the inspector at the conclusion of the inspection and they make certain that the necessary language is utilized.
For more information on the legal ramifications, consult your attorney.