Should the Listing Agent Get a Copy of the Buyer’s Home Inspection Report?

From time to time, the house just doesn’t pass the “home inspection”.

The usual situation would be that the property is listed for sale. An agreement is struck with a condition placed upon the Buyer’s Approval of the Home Inspection Report.

The MLS is then noted as “SC” meaning “sold conditionally”. Naturally, there’s no mention of the price.

The next communication is that the Buyer does not wish to proceed, the home inspection fell short. Buyer’s discretion or not, in some way the house failed the test.

Now, quite possibly the Buyer’s agent might disclose some of the reasons, but are they real, are they legitimate, what would they cost to rectify?

The Listing Agent now has to remove the “SC” label but every agent who searches the listing (not the public) will be able to determine that it was once sold, subject to a condition. The condition was “home inspection” and then the deal fell through. So, obviously something MUST be WRONG with the house.

Going forward, we now have a challenge.

Should the Listing Agent ask for a copy of the Report? Do they really want to see it?

Letting the Buyer Go

Let’s assume that the Seller agrees to let the Buyer out. There are others who are interested and the Seller would just like to “move on”.

One could sign a Mutual Release, give the deposit back AND DON”T LOOK AT the Home Inspection Report.

I would think that it would be very unwise for the Seller’s Agent to get the report. Now, the Seller is under a “disclosure obligation” which wouldn’t be the case, if they didn’t have the report.

Kindly note that the receipt of the report by the agent is deemed to be receipt of the report by the Principal (Seller).

The Seller must disclose KNOWN material latent defects which render the premises unsafe or unfit for human habitation. Up until now, the Seller had no knowledge. Get the report and NOW the Seller KNOWS.

So, I would rather be very careful, and simply leave things the way they were. No knowledge of anything! No need to disclose anything!

Agreement Precaution

In retrospect, it would have been wise to have two conditions in the Agreement when the sale was marked “SC” on MLS. The two conditions should have been financing and Home inspection, never home inspection alone.

So, the counter-offer from the Seller should have included the financing condition even though one was not being sought by the Buyer.

Brian Madigan LL.B., Broker

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