Do you know what a home inspection is?

Do you know that buyers may not be entitled to home inspections?  What does it mean to have an inspections and why should you have them? Let’s review what a home inspection is.

There is a very important legal principle in Virginia that real estate buyers, and real estate sellers, need to know.  “Caveat Emptor”.  Roughly translated, Caveat Emptor means “buyer beware”.  In practice this places burden on buyers to inspect the properties they may purchase without relying on sellers to provide information about the property.  There are some requirements placed on sellers by statute to disclose information about the real estate they offer for sale, but those requirements are minimal. 

With regards to residential real estate, many people have heard of home inspections.  Although, in my experience, I find that a vast majority of people don’t have a correct understanding of the term “home inspection” nor do they fully understand what this means to a residential sales contract.  As a result, there is significant risk to buyers.

First of all, “home inspection” as used in residential sales contracts – this may vary depending on the language in the contract documents used for a given transaction – can refer to different things.  “Home inspection” can and does typically refer to a comprehensive inspection that includes multiple topic-specific inspections over a specified period of time.  The widespread confusion I witness is that most people misunderstand “home inspection” to be a single event where one inspector conducts one inspection.  This confusion is caused, in part, by Virginia licensing persons they call “home inspectors” and those inspectors refer to their inspections as “home inspections”.  I usually refer to these as the “main home inspection” or “inspection period” since it is the most comprehensive yet is not the only inspection.  Far too often home buyers have a “main home inspection” and falsely believe that this is all they can get.

There is a lot missing due to that confusion.  Buyers can have diverse inspections such as inspections of HVAC systems, plumbing, electrical, structural, fireplace & chimney, radon, and various others during this period.  Licensed home inspectors know a lot about inspecting homes.  Yet, many of them are not licensed experts on these other matters.  Although, most “home” inspectors I know can perform radon inspections.  Let’s say you have a “main home inspection” and your inspector states that the HVAC does appear to be cooling or heating properly, or the inspector discovers some electrical outlets are not working.  You may want to have an HVAC expert inspect the HVAC and an electrician inspect the electrical components so you can learn what the problems actually are so you can further learn whether or not you may be concerned about them.  So, which home inspection pertains to the Home Inspection Contingency?  Answer:  All of them.

Home Inspection Contingency?  What’s that?  If buyers and sellers agree to include a Home Inspection Contingency in the sales contract, buyers have the right to conduct a home inspection.  There is no default legal entitlement to home inspections afforded to buyers.  In fact, buyers can waive inspections and, consequently, have no inspections. This is subject to negotiations leading to agreements to permitting inspections noted in the sales contract.  Even more important to buyers than being permitted to conduct inspections is having this Contingency.  This means that the contract is contingent upon these inspections, specifically the results of the inspections and the buyers’ decision to continue with the contract or void the contract.  Buyers have the right to void the sales contract during the period of the Contingency.

Here’s how it works.  Buyers submit an offer to the sellers, to buy their home, that includes a Home Inspection Contingency for a specified period of time which is usually about 7-10 days following the ratification of the contract.  When sellers and buyers finally sign and date the offer documents, they form a ratified contract.  The first day of the Home Inspection Contingency is the day following the day the contract is ratified.  Buyers obtain their own inspectors – notice that “inspectors” is plural – and coordinate their visits to the home.  “Reasonable” is an important standard for both buyers and sellers to understand.  Sellers are contractually obligated to provide reasonable access for inspectors, the buyers, and the buyers’ agent.  In turn, demands by buyers should also be reasonable.  For example, if buyers are trying to schedule inspections every day on short notice, that may not be considered reasonable.  And, if sellers do not accommodate inspections because they are concerned about the potential results or perhaps they just “don’t want to be inconvenienced that day”, then the sellers may be on the wrong side of a legal complaint for failing to provide reasonable access.  During the Home Inspection Contingency period, buyers have the right to void the contract based on their “sole discretion” which means for any reason whatsoever and that further means it can be based on any of the individual inspections.

Again, “home inspection” for a residential sales contract refers to a comprehensive inspection of the subject real estate during a specified period of time.  That comprehensive inspection can be conducted by an aggregate of multiple topic-specific inspections focusing on the home, the land, structures on the land aside from the home itself, and other matters.

There is a similar inspection opportunity for land sales contracts and commercial sales contracts, in case you’re interested.  In Virginia this is commonly referred to as a “feasibility study period”.  This study period commences when the sales contract is ratified and continues for a period of time specified in the contract.  During this study period, buyers can and should conduct a variety of inspections and other research needed in order for the buyers to determine whether or not the property can be used as the buyers desire.  Similar to residential sales, buyers may void land and commercial sales contracts during this study period.