Financial Responsibilities for Repairs After Home Inspection in NJ
Determine Responsibility for Repair Costs and the Need for a Well-Drafted Home Inspection Contingency with the Help of Our Real Estate Attorneys.
Whether you are buying or selling a home, the home inspection process is one stage of a real estate transaction that can cause both parties to hold their breath. During a home inspection prior to the close of a real estate property, a home inspector will investigate whether there are any problems with the home’s foundation, structure, plumbing, electricity, or anything else about the property. This process can uncover issues that were not readily apparent to the buyers and allow them an opportunity to make an informed decision about their purchase.
Buyers do not want to purchase an issue-ridden property requiring costly repairs and sellers do not want a buyer to walk away from the deal (or be forced to cover expensive or time-consuming repairs themselves). So, when a home inspection reveals defects, structural issues, and needed repairs, who bears the cost of the repairs: the buyer or the seller.
From a legal perspective, the answer (as with so many things in the law) is it depends. It depends on the terms of the real estate contract and how the parties negotiate their next steps. If you are navigating a real estate transaction, understanding and protecting your rights within your sales contract is critical.
Understanding Home Inspection Contingencies in NJ Property Sales
It is very common in a real estate sales contract for the sale of the property to be contingent upon the home inspection. This provides buyers with an opportunity to walk away from the deal or negotiate repairs or the terms of purchase in the event of discovering major issues with the property as a result of the home inspection.
However, the language of a home inspection contingency in a real estate sales contract may be very general, allowing for a broader range of outcomes through negotiation, or it may be very specific in how the need for repairs will be addressed by the parties to the contract. Typically, at a minimum, a home inspection contingency will outline a timeline for conducting an inspection, which party will select the home inspector, and how soon after a home inspection the buyer must give notice to the seller that they wish to renegotiate the terms of the sale or walk away from the sale.
Who is Responsible for Establishing the Repair Expenses?
Following the inspection, the home inspector will generate a home inspection report. This report will detail any issues with the home with could include roofing issues, plumbing leaks or septic system issues, cracks in the foundation, rotting wood, termite damage, faulty wiring, problems with the heating, ventilation, and air conditioning (HVAC) system, damaged windows, water damage, mold growth, and more. While the inspector may provide an estimate for repairs, they typically do not. They may provide homeowners with an expected range of costs for the repairs, but the quote will be determined by a professional who is specialized in repairing that specific issue.
Generally, the buyer will obtain a quote from the proper professional (a contractor, plumber, roofer, electrician, etc.) for the cost of repairs and use that quote to renegotiate the terms of the sale or justify their right to walk away from the transaction without being in breach of contract. The seller may also wish to obtain a quote for repair costs to ensure reliability of the buyer’s estimate.
Addressing Key Legal Aspects of Repairs and Home Inspections
There are no repairs that are required by law when selling a real estate property. However, there may be some repairs that are necessary for the property to meet the code requirements of the town or city where it is located in order to be in compliance with zoning laws or permissible for habitation in the dwelling.
The results of a home inspection may reduce the value of the home. While many lenders do not require a home inspection, they do require a home appraisal, and known-defects and issues in the property can impact the appraised value of the home. It is important for buyers to understand any major issues that could reduce the value of the property.
Managing Negotiations to Protect Your Interests after a Home Inspection
If a home inspection reveals the need for repairs, whether it is one major repair or many smaller repairs, the negotiation process is initiated by the buyer submitting a counter-offer, so long as the real estate purchase was contingent upon inspection in the parties’ contract. This is a fairly standard clause; however, buyers should not assume that their real estate agent included this provision in their initial offer or that the clause was properly included in the sales contract. Instead, it is critical for buyers (and sellers) to have their contract reviewed by an experienced Monmouth and Ocean County real estate attorney at our law firm to ensure that a home inspection contingency is included in the sales contract and that it is drafted to adequately protect your interests.
Depending on factors including the contract price of the home, the fair market value of the property, the cost of repairs, how long the repairs will take, other time constraints impacting the parties, personal financial considerations of both parties, and other influences like the buyers commitment to that particular piece of real estate, negotiations after a home inspection can take many different forms. The buyer may simply wish to walk away from the deal completely without negotiating at all or if their initial counter-offer following a home inspection is not accepted by the seller. More often, the buyer may request the seller to make some or all necessary repairs. They could also ask for the seller to cover more of the closing costs or if the seller was already covering closing costs or the closing costs would not cover the costs of the repairs, then the buyer may request the seller to provide cash for the repairs. Another solution that the buyer may request (or the seller may counter with) is to reduce the sales price of the property to account for the cost of repairs.
Contact Bronzino Law Firm for Assistance Addressing Home Inspection-Related Financial Responsibilities in New Jersey
At Bronzino Law Firm, our real estate lawyers can review your situation and recommend the most favorable options. If you enlist us to represent you in your real estate transaction, we skillfully protect and advocate for what best serves your needs and your future. No matter where the real estate purchase or sale you want to make is taking place in Monmouth and Ocean County areas, such as in Point Pleasant, Holmdel, Bay Head, Mantoloking, Long Branch, Brick, and Barnegat, our attorneys can help. Call (732) 812-3102 for assistance, or check out our contact form.