New Home Inspection Contingency Law Takes Effect on January 1 2013

According to the National Association of Realtors  Legal Survey,  75% of respondents ranked lawsuits stemming from nondisclosure of a property's problems among their "top three current and future issues." No matter how much you do to prepare your home for sale, an inspector will almost always find something wrong. Often, problems are minor and inexpensive enough to either fix or allow a credit for in the home price, it’s the discovery of major deficiencies — or an unwillingness to negotiate — that can kill a deal. Have you ever been in the middle of a deposit dispute or lawsuit because of conflicting opinions over inspection results? Just what is a deficient condition? Is yellow shag carpeting a deficient condition?   If a seller discloses that a roof is 20 years old, can the buyer walk away because the inspector tells them the roof is near the end of its useful life? The Rhode Island Association of REALTORS® addressed these and other inspection contingency issues in the RIAR Purchase and Sales Agreements and a new law goes into effect on January 1^st, 2013 that reflects these changes. The new law will create a due diligence period of 10 business days during which a home buyer could have inspections conducted. Here is the new inspection contingency: § 5-20.8-4 Buyer's rights to inspection. [Effective January 1, 2013.]. – (a) Every contract for the purchase and sale of real estate shall provide that a potential purchaser or potential purchasers shall be permitted a ten (10) day period, exclusive of Saturdays, Sundays and holidays, to conduct inspections of the property and any structures thereon before the purchaser(s) becomes obligated under the contract to purchase. The parties have the right to mutually agree upon a different period of time; provided, a potential purchaser may waive this right to inspection in writing. (b) Failure to include the provision required in subsection (a) of this section in the purchase and sale agreement for real estate does not create any defect in title. (c) Failure to include in the purchase and sale agreement the provision required in subsection (a) of this section shall entitle the purchaser to void the purchase and sale agreement by providing notice, in writing, to the seller prior to the transfer of the title at a closing. This week Monica Staaf, counsel for the Rhode Island Association of Realtors® spoke with Rich and Steve about the new changes and how they will affect transactions going forward.   They had a very informative discussion about the new law and inspection strategies. This Week’s Real Estate Insight: While the new law helps to clear up some problems with inspection issues, your best hedge against such disputes is to fully disclose any and all defects. Pre-inspections can also help you avoid unexpected issues, fix any repairs that need to be done, or disclose and price your home accordingly. Buyers often have no idea how much repairs can cost, a repair estimate from a reputable contractor may assuage the buyer's concern.