Who Pays For a Home Inspection Report When Buying A Home if the report is then used by a subsequent buyer and that buyer benefits from its use?
Q: As a short sale buyer, I paid for the well and septic inspections on a home. During the walk through, the seller casually disclosed the well water had potentially harmful contaminants (arsenic and sulfates).
When the seller disclosed the issue, I only had three days left on the contract’s ten day inspection period. After trying to arrange and obtain samples for arsenic and sulfate tests, we realized the test results would take longer than the inspection period and would significantly extend the closing date. As such, I backed out of the contract.
When the next buyers closed, they used the well and septic inspection reports that we paid for and refused to reimburse us. The listing agent informed us this happens a lot and the second buyers do not have to reimburse us for the inspections. Are the second buyers obligated to reimburse us for the inspections?
A: The short answer to your question is that the second buyers are not obligated to reimburse you for information or inspection reports that they happen to see or obtain through the real estate brokers or other parties.
Your question does raise a couple of interesting questions and issues that buyers may go through when buying a home. In many parts of the country real estate contracts may contain a provision allowing a buyer time to have a home professionally inspected. If the buyer performs that inspection and does not like what he sees, then the buyer is allowed to walk from the deal.
There are times that buyers forget or don’t know that certain inspections may take time and that time may cause them to go beyond the dates for the inspection in the contract. These other useful and necessary inspections may be for radon gas, water testing or lead in the soil or water of a home. If you’re buying a home, you may want to schedule these tests early in the process and make sure that you have ample time to obtain the results. You want as much knowledge about the condition of the home to make an informed decision about whether to proceed with the home purchase.
When you order inspections (that are outside the usual course of a home inspector going to the home and taking a look around), you need to know how long you need to wait before getting the inspection reports. Some tests and reports may take up to five or so days to get back.
You may have made a wise decision not moving forward on your deal on the basis of the information your seller told you about contaminants in the water for your home, but you probably should have been planning to test the well water for your prospective home earlier in the process. It’s not unusual for home buyers to test the source of their future water when that water comes from a well. In some parts of the country, sellers may be required to deliver copies of recent well water test reports (though it appears your seller may not have been required to deliver those test reports to you).
We’re not sure of the process you took in deciding to cancel the purchase of your home. But it appears that you may have ordered the water tests and canceled the deal before you received the test results. If that was the case and you ordered the test results, those test results should have gone to you. Then it would have been up to you to disclose those results to the seller or not.
If you did disclose the results to the seller, the seller would have had the report and could have delivered it to the buyer. It’s rather hard for you to protect the information you received once that information was given to the seller. However, if the information was ordered by you and delivered to your real estate agent, your real estate agent ordinarily should not deliver information you may have ordered and give it to the sellers.
Finally, in many parts of the country, sellers are required to disclose known defects in a home. It would seem that the contaminants in the water may fall within that category if the levels are high enough and the seller disclosure form should have detailed that problem for you to see. If your state has a seller disclosure form and you received it, take a look and see if the water issue was disclosed. If it was disclosed, you were put on notice.
If the water issue wasn’t disclosed to you and should have been disclosed, your seller disclosure laws may provide that you may be entitled to some reimbursement for some of your costs from the seller. The laws of each state differ and you may have little recourse with your seller, but you may want to check it out or talk to a real estate attorney further about your options.
However, given that the seller was selling you the home in a short sale, it’s unlikely that the seller has much money to even pay for the report you ordered even if he or she might otherwise be obligated to you for that cost.
Sometimes, you just have to move on and buy the home that is right for you even if circumstances might have benefited others that came after you.