A Copy to Seller Gets Your Deposit Back

It’s not used very often in today’s hot Seller Market.

Yet a buyer home inspection condition should be a staple due diligence clause in a buyer’s offer to purchase. Moreover, Buyers acting reasonably tend to accept minor, obvious defects. They realize homes are complex structures and that no home is perfect. Even new homes can require additional work.

Awareness of Noticeable Deficiencies

As a result of a reasonable examination at the time of viewing the home, Buyers, with the assistance of a good REALTOR®, can become aware of most if not all noticeable deficiencies at the time of making an offer . As well, smart sellers will and should disclose hidden defects they are aware of. They know full disclosure will lead to a fruitful negotiation. Depending on the nature and degree of any deficiencies, reasonable buyers will make an offer accordingly. The home inspection condition typically states that the Buyer be satisfied in his sole and absolute discretion.

Depending on the results of the inspection the buyer may:

• Accept the report and remove the condition,
• Attempt to renegotiate the purchase price or
• Decide not to proceed with the purchase due.

If the buyer decides to set the deal aside, they either let the condition lapse or communicate their dissatisfaction with the inspection report and that they will not be moving ahead. Typically the deficiencies noted in the report are communicated verbally to the seller.

Return of the Deposit

A release signed by both buyer and seller is required to free both parties from further obligation and for return of the buyer’s deposit. In almost all cases the deposit is returned to the buyer.

However the Issue of Good Faith Plays a Part
At times a seller asks for verification of the deficiencies that caused the buyer to terminate the deal. The buyer may choose to provide a copy of the report. A seller might be content with receiving portion(s) of the report pointing to issues that caused the buyer’s dissatisfaction.

Not Always the Case Though

Unfortunately, buyers sometimes deny a request for proof. They argue that they paid for the report and so it belongs to them. This approach can be viewed as unreasonable and cause push-back from the seller who then refuses to sign a release for return of the buyer’s deposit.

Possible Solution

The Ontario Real Estate Association has suggested a clause that can be added after the home inspection condition that reads as follows:

“In the event the foregoing condition is not fulfilled or waived by the Buyer, the Buyer agrees to provide the Seller with a true copy of the Inspection Report and all estimates related thereto prior to the return of the deposit herein.”

This clause should help to clarify matters up front: no copy of the report to the Seller, no return of the deposit.