Buyer Beware: Home Inspection Analysis and Advice
Most real estate contracts require Sellers to obtain a municipal Certificate of Occupancy (CO). What many Buyers do not realize, however, is that municipal inspections are typically limited to a review of obvious code violations, and many towns merely conduct Smoke Detector and Fire Extinguisher examinations.
Therefore, the key protections afforded to Buyers in the contract of sale are usually found in home inspection and wood destroying insect inspection contingency clauses. With regard to such inspections, I urge all of my clients to:
- Hire qualified and thorough home and termite inspectors;
- Personally attend the home inspection(s) whenever possible, and ask your inspector any and all questions necessary for you to evaluate the cost and/or risks associated with any noted defects or deficiencies;
- Focus on “material defects” which the State of New Jersey (NJAC 13:40-15) defines as “a condition, or functional aspect, of a structural component or system that substantially affects the value, habitability or safety of the dwelling, but does not include decorative, stylistic, cosmetic, or aesthetic aspects of the system, structure or component”;
- Obtain follow-up inspections by qualified roofers, home contractors, electricians, mold experts, masons, etc. whenever recommended by your home inspector; especially if the item in question has the potential to be expensive or to adversely affect the health and/orsafety of those in the home;
- Be exceedingly cautious concerning items that may appear to be minor or inconsequential, but could, in fact, turn the home into a “money pit” or represent a significant health or safety threat. Examples include, but are not limited to:
- Any evidence of a below ground oil tank as same could result in hundreds of thousands of dollars worth of remediation if an oil leak is discovered;
- Any evidence of current or prior water leakage assame could indicate an ongoing plumbing,roofing or other structural problem that could mean significant hidden damage, such as mold infiltration, rotten beams or flooring, electricalhazards, etc
- The presence of toxins or hazardous substances such as lead based paint (if the home was built prior to 1978), asbestos, etc., which pose obvious health risks, and which may also be extremely expensive to remediate
- Watch for notations on the inspection report indicating that significant structures, systems, or items were “hidden” or “inaccessible” during the inspection. Generally speaking, a buyer is obligated to proceed to closing despite defects if same could reasonably have been revealed and dealt with during the home inspection contingency period. Therefore, you should ask your inspector to note any and all concerns regarding accessibility and request that follow-up inspections be conducted after these areas are made accessible by the seller
- Any indication that significant work was performed after the home was originally built (i.e. additions, demolitions, tank removals, patios, built-in pools, finished basements, conversion to natural gas, etc.) In such cases it is imperativefor you to confirm that proper permits were obtained from the Township, Homeowner’s Association, etc., before the work was performed and that final approvals were received after the work was completed. If any such work required State agency approvals or permits such as site remediation, permits for dock, etc., it is imperative to obtain and review evidence of compliance.
The primary concern of most real estate attorneys will be to reduce or eliminate potential costs and liability, but only you can decide upon the degree of risk you are willing to tolerate in order to close on the home you have selected.