Do Sellers Have to Disclose Inspection Reports from Failed Contracts?

By
Real Estate Agent with Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com TREC #0492321
http://actvra.in/BRc

FAQ #1 - Do Sellers Have to Disclose Inspection Reports from Failed Contracts?
I have often heard this question asked by many sellers who have their home listed on the market. Do I really need to disclose that inspection report from the buyer, who backed out of buying my home since the transaction failed to close? Of course the best answer is to Disclose, Disclose, Disclose, but sellers don’t necessarily have to disclose an inspection report that they received from the buyers, who backed out of the contract.

However, to prevent any legal actions to the sellers, any known material defect MUST BE Disclosed. Sellers will not want to be in violation of any Texas Property Code or the Deceptive Trade Practice Act. Therefore, it may be in the seller’s best interest to provide a copy of those past inspection reports, where the transactions failed to close. But watch this video presentation for more guidance about this issue with disclosing inspection reports.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Evelyn McCorkle 06/02/2012 11:02 AM
  2. Pam Sitterly 06/10/2012 07:49 AM
  3. Gabe Sanders 06/11/2012 04:11 AM
Topic:
Home Selling
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Texas Bexar County San Antonio
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Ambassador
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Yes, Debbie. We need to help keep our sellers current on these disclosures statements.

June 02, 2012 01:40 PM #18
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Carol Ann. I do get quite a few questions about those inspection reports too. Disclose is the Best.

June 02, 2012 01:41 PM #19
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Yes, Belinda. I have come to learn why Listing agents don't want that report. They don't have to Disclose what they don't know, so if the buyers never send a copy of the inspection report, the sellers will not have to disclose it. Unless we actually see these material defects, brokers are only aware of what is disclosed in those Seller Disclosure Statements.

June 02, 2012 01:44 PM #20
Rainmaker
164,641
Kate McQueen, SRS
KELLER WILLIAMS REALTY CLEAR LAKE NASA - League City, TX
Houston Bay Area Real Estate

Jerry, I posted a blog that was featured concerning this topic last year.  It started quite a debate at AR!  I had a buyer's agent email me and let me know that I would receive a copy of the inspection report later that day.  I responded by letting the buyer's agent know that the sellers did not wish to have a copy of it.  It started a debate between myself and the buyer's agent, and ultimately the sellers refused receipt of the report.  The sale went through, but if something would have gone wrong with this transaction, and it was shaky to say the least due to buyer's financing, the sellers would then have been in the position of needing to share the report with future buyers.

So, while many agents DISAGREE VEHEMENTELY (evidenced by the debate that resulted from my featured post) about not getting a copy of the buyer's inspection report for their sellers, I recommend NOT taking a copy of it.  There are too many inspectors out there that over state small issues and a seller should not be placed in the position of having to disclose things that may be non-issues.  Each buyer should pay for THEIR OWN inspection report, which then becomes THEIR PROPERTY, not the property of the seller.

June 05, 2012 10:06 AM #21
Rainer
185,098
Irene Durocher
Coldwell Banker BUYERS AGENT - Boca Raton, FL
homesweethome4u@att.net

Hi Jerry, great post and lots of information. Have a great day.

June 05, 2012 06:40 PM #22
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Kate, Sorry for not responding sooner. It's been that kind of week for me. But, I too believe that buyer's need to get their own Inspection Reports. I once had a buyer, who was upset that the inspector had sent a copy to the listing agent and sellers without her permission. Those reports are the property of the one who pays for it.

Have a Nice Sunday!

June 10, 2012 07:24 AM #23
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Thanks, Irene. Today is catch up time. Have a Blessed Sunday afternoon!

June 10, 2012 07:25 AM #24
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Hey, Jerry!  I included this post in Last Week's Favorites.  Have a great week.

June 10, 2012 07:50 AM #25
Rainmaker
444,363
Gay E. Rosen
Houlihan Lawrence - Larchmont, NY
Honest, Hardworking and always Professional!

Jerry great post and glad you featured..  You have given me inspriation for a blog psot and I will of course credit you ! Pat sent me here from her featured post.

June 10, 2012 08:13 AM #26
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Thanks, Pat. It's always an Honor to be included in your Weekly Favorites. You do just an excellent job finding many great posts to Feature. Have a Wonderful Sunday!

June 10, 2012 08:36 AM #27
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Gay. I am honored that you saw my post as an inspiration for writing another one. Send me a link when you publish it. Thanks, and Have a Great Day!

June 10, 2012 08:37 AM #28
Rainmaker
288,463
Carol Faaland-Kronmaier
Weichert, Realtors; Hillsborough - Hillsborough, NJ
PhD, e-PRO, Manville, Hillsborough, Somerset NJ Homes

Jerry, I also agree that when in doubt disclose. That is why it sometimes helps a seller to do their own home inspection before putting their house on the market.  It is always best if the sellers can repair any major issues up front.  Of course that is not always financially possible.

June 10, 2012 10:36 AM #29
Rainmaker
540,335
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Jerry, this is a fantastic blog. Disclose, disclose, disclose is right! I'm not sure I agree with giving any of the next potential buyers a copy of the inspection report, though. Different inspectors have different opinions about things. The original inspection report could scare off a buyer for no good reason, if written wrong. Any serious defects need to be addressed.

June 10, 2012 01:45 PM #30
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

The trick is to understand the defintion of "material" defect and sort it out.   Kate #21 brings up an interesting point. In fact at least in my area the home inspection reports are labeled as for the buyer (insert their name here) and not to be distributed.  Yet at the same time our home inspection contingency states a copy of the report must be provided along with the repair request.  It's a Catch-22. 

June 10, 2012 05:09 PM #31
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Eric, Sellers and Agents do have to disclose any known material defects, and most sellers do give buyers copies of any previous inspection reports. In fact, I just recently had a transaction where the seller wanted to give my buyer two prior inspection reports from buyers, who failed to buy their home. Of course, my buyer accepted them, but she still ordered a new Inspection Report on her own.

June 10, 2012 07:16 PM #32
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Carol. Those sellers that do have the means of making any major repairs prior to putting their home on the Market, normally have a smoother time during the transaction, since most buyers are not concern with the smaller fix it items.

June 10, 2012 07:21 PM #33
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Cindy. No one likes those Catch-22 situations. Understanding and identifying known material defects will save sellers and agents from any DTPA actions. I have had listing agents ask for a copy of that inspection report whenever my buyer has made a request for the seller to repair certain items. Then, other listing agents do not want the whole report, but only want to see those pages which identify the items being requested for repairs. 

June 10, 2012 07:29 PM #34
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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Jerry, in our area the buyer has to give the inspectors a consent to send the inspection to their agent. The complete inspection never makes it to the seller, just the sections with issues. Then they do need to address. I have not had any instances where the deals failed because of the inspections, but I would presume that had it been the case the seller would redo the disclosures, especially as I would certainly let their agent know I would be monitoring the property

June 10, 2012 08:25 PM #35
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Jerry Newman
Green Home Realty, 210-789-4216,www.Selling-SanAntonioHomes.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Ed. I think that is remarkable that as a listing agent you haven't had any deals that failed because of inspections. I see this a lot with First Time Home Buyers. Most get scared off when that inspector finds more than they want to deal with, or even ask the sellers to repair.

June 10, 2012 08:45 PM #36
Rainmaker
860,642
Donna Foerster
Cherry Creek Properties, LLC - Parker, CO
Metro Denver Real Estate Agent

Jerry~ Material defects MUST be disclosed.  I would likely counsel my clients to share the inspection report from the failed contract.

June 12, 2012 09:55 AM #37
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Jerry Newman

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