The Home Inspection Condition
Prospective home buyers in the Toronto re-sale market are often faced with the difficult question of whether to inspect or not to inspect. Seldom elsewhere, that is, outside of Toronto, is the question asked and purchasers don’t typically think twice before making their offers to purchase conditional on home inspection.In a seller’s market, often resulting in multiple competing offers for the same property, a condition on home inspection may substantially reduce an Offeror’s strength of position vis-a-vis offers for similar consideration without the home inspection condition. As such, a prospective purchaser may have to consider that the land value alone justifies the high cost of acquisition irrespective of the quality of the structure erected thereon or its internal components.
In a more balance market, however, a condition on a satisfactory home inspection should always be negotiated. Home inspections will reveal any defects, otherwise unknown to a prospective buyer or buyer’s agent and will generally report the condition of:
1. The structure, including foundation, walls, and roof;
2. The electrical;
3. The plumbing; and
4. The mechanical including the heating and cooling equipment.
At our office we have heard clients go as far as to suggest that they were unwilling to make an offer for purchase conditional on home inspection on a recreational property for fear of discovering defects which would dissuade them from concluding the purchase transaction. Refusing to conclude is, of course, but one option in the face of a less than desirable home inspection report. Where a property is all the same a “must have”, the defects revealed by the report can be used as bargaining leverage in seeking to reduce the purchase price via an amendment. Defects will inevitably require rectification, the cost of which will be passed on to the new owner thus justifying the corresponding reduction to the purchase price. Strong legal representation should be sought in order to ensure that the compensation as far as the reduction to the purchase price is adequate to cover the expected costs of repairs and/or replacements.
Disclaimer: This article provides general information only and is not intended, nor is it to be relied upon as a substitute to obtaining legal advice.