Should a seller have a home inspection done prior to listing (usually called a ‘pre-inspection’) to help with the sale of their home?
Lubos K. Pesta, Q.C., has written another informative article, this time pointing to the benefits and drawbacks to a seller arranging one:
New Trend: Sellers Arranging Home Inspections
A new trend has arisen in the real estate industry. Sellers’ agents are advising their clients to obtain professional home inspection reports before marketing and selling their homes.
The Seller’s Perspective
Sellers are being advised that this will benefit them in several ways:
- It will help them identify, early on, any problems that could be deal-breakers and, potentially, allow them to remedy the problems prior to a buyer becoming interested in the property
- It will avoid the uncertainty and delay caused by a home inspection condition by providing a buyer with a pre-existing home inspection report
- It will make their home more attractive to buyers by eliminating the need for the buyer to pay for their own home inspection.
While these are valid points, there are also good arguments against such a practice:
- The buyer may not have been concerned about the condition of the property at all and the home inspection report may raise issues that will result in the buyer offering less money or,potentially, deciding not to buy the property at all
- So long as sellers are unaware of defects in the property they cannot be expected to disclose these defects, but once a professional home inspection identifies problems, sellers may have a legal obligation to make the buyer aware of them
- If the seller chooses not to disclose the contents of the home inspection report to the buyer, both the seller and the seller’s agent may incur liability risk.
The Bottom Line
A seller should be fully advised of all the risks and benefits of obtaining a home inspection report at the listing stage in order to make an informed decision before obtaining a professional home inspection report.
The Buyer’s Perspective
Serious problems also exist from the buyer’s point of view.
The primary problem is that, unlike the real property report, which specifies that it is intended to be relied upon, not only by the current owner, but all subsequent purchasers of the property, the home inspection report is only intended to be relied upon by the individual who commissioned it.
If a buyer relies on a pre-existing home inspection report commissioned by the seller and subsequently discovers a problem that should have been identified by the home inspector, the buyer will have no recourse against the home inspector in negligence due to the principle of “privity of contract”. Since the buyer didn’t pay for the service, the home inspector is not liable to the buyer for any losses caused.
Secondly the motivations of the seller and the buyer are different. While the buyer would want to rely on the most thorough and professional inspection available, the seller may wish to economize on the costs involved. In relying on the seller’s home inspection report, the buyer loses the ability to carefully select the home inspector and have a direct means of communication with him.
Thirdly, unlike the real property report, a home inspection report is only intended to be a snapshot of the condition of the property at a given point in time. The real property report continues to be valid as long as the improvements on the property remain the same (once they comply, then they will always comply or be grandfathered even if the municipal rules subsequently change). However the condition of a property detailed in the home inspection report, can change dramatically in a very short time period. Some examples would include a hail storm damaging the roof, heavy rains resulting in a sewage back up or a furnace or water tank giving out unexpectedly. As a result, a home inspection report can quickly become unreliable.
The Bottom Line
Buyers should be cautioned against relying on a pre-existing home inspection report made available by the seller. A home inspection condition, with a professional inspection conducted on behalf of and paid for by the buyer, is still the best course of action and the best protection available to the buyer.
Lubos K. Pesta, Q.C.
Walsh Wilkins Creighton LLP
The comments expressed in this article are for information purposes only and serve to highlight general principles. Each situation is different and you should seek legal counsel before pursuing any particular course of action. These articles do not create a client/lawyer relationship and do not constitute legal advice. The opinions expressed herein are those of the author and not of AREA.
Copyright Alberta Real Estate Association. Reprinted with permission. AREA makes no guarantee as to the accuracy or completeness of this information.