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Phillip C. Querin
Partner - Portland, Oregon Office
philquerin@dwt.com
(503) 241-2300
The PMAR Inspections Advisory Brochure
[July 2003]
PMAR’s Risk Management Committee has recently
developed an advisory pamphlet that is available free of charge
to all members. It is located on the PMAR section of the RMLS website
located at www.rmlsweb.com.
The document may be downloaded in a read-only format – including
a place for Realtors® to attach their business card. However,
before handing out the brochure, agents are strongly encouraged
to become familiar with its contents, so they will be prepared to
answer questions concerning the inspections and verifications that
are listed.
The primary purpose of the pamphlet is for delivery to clients
in order to encourage a discussion concerning the variety of inspections
and verifications that may be useful to buyers in making their purchasing
decision. It can also be an invaluable tool as a risk management
device for Realtors®, in that it will act as a “prompt”
for agents when discussing due diligence issues that many buyers
may not think to ask about. It contains the caveat reminding
buyers that Realtors® are not licensed to perform specialized
inspections or other technical services, and encourages them to
consult their own experts. It also recommends that before they make
a purchasing decision, they do so only after they have resolved
any particular questions they may have concerning the property.
While the brochure is not intended to be all-inclusive, it does
contain a summary of many of the more common inspection and verification
issues that can arise in the standard residential real estate transaction.
A sampling of the inspection topics listed include such things as
asbestos, electrical systems, exterior siding, soil stability, underground
storage tanks, water related damage (e.g. mold), and many others.
In addition to reminding buyers about many on-site inspection items,
the brochure also encourages them to verify certain other off-site
issues, such as fire protection districts, schools, and flood plains.
For properties serviced by private wells, it encourages a discussion
about some of the other verifications that may be made, beside the
nitrate and coli form bacteria testing required by the statewide
OREF Real Estate Sale Agreement.
Lastly, the pamphlet reminds buyers that they may wish to verify
certain important records and public documents concerning the property,
such as condominium and home owner association minutes and financial
records, building permits, easements and deed restrictions. It also
reminds buyers about the existence of homebuyer protection plans.
Although this document is primarily intended for use by selling
agents and their clients, listing agents may wish to become familiar
with it, in order to properly advise sellers about what inspection
contingencies they might expect to see accompanying an offer of
purchase. For example, as most Realtors® know by now, the condition
of certain types of exterior siding raises concerns with many buyers,
which can result in slowing down or even killing a sale. Making
sure that your seller is prepared for these inquiries is the type
of proactive service that listing agents can provide their clients.
While the pamphlet is not intended to be a “checklist,”
and there may be certain specialized inspections not listed which
could be necessitated by the uniqueness of a particular property,
it should act as a reminder to agents about some of the more important
inspection and verification issues in residential transactions today.
But it is not enough for agents to deliver the document to their
clients without making sure that they have a full opportunity read
and digest it. Follow-up is important. And Realtors® should
always remember that in most cases, they know more about important
due diligence issues than their clients. In other words, Realtors®
should not assume that their clients will automatically understand
all of the information found in the pamphlet. For example, one of
the items listed in the verification section is “insurability.”
While most buyers may believe this to be a minor issue, it is becoming
increasingly important, since most insurance companies now track
the claims history of individual properties; the existence of prior
claims can affect the insurability of the home. This means that
if a buyer waits until the last minute to obtain insurance, he or
she may find the premiums to be much higher than expected, due to
prior claims (e.g. for water or mold damage) made by the seller
or even the seller’s seller. Conversely, a seller may be surprised
to receive an offer of purchase containing a contingency requiring
that the buyer be able to obtain insurance at a satisfactory premium.
It is for that reason that when using the PMAR Inspections Advisory
Brochure, that Realtors® deliver it to their clients and be
prepared to actually discuss and explain the significance of the
due diligence items it addresses.
Two further words of caution: First, one question that the PMAR
pamphlet may invite is almost sure to be “Should I have this
item inspected?” Realtors® should never discourage an
inspection. Remember, there is no legal “downside” to
recommending another inspection, but there can be a legal “downside”
in recommending against one. Rather, Realtors® should ascertain
whether (a) the issue (e.g. radon) is important to the client; (b)
the range of cost, if known; and (c) the likelihood that the particular
item needs further inspection beyond the standard professional home
inspection, if known.1
In all cases, the final decision concerning having further specialized
inspections should be left to the client. The Realtors’®
role is to provide information concerning the issue (e.g. the need
to determine whether water-front property is located in a floodplain),
and leave the final decision up to the client. While note-taking
is always encouraged for agents, it is imperative for risk management
purposes, if a client simply refuses to have certain inspections,
notwithstanding obvious risks (e.g. failing to obtain intrusive
moisture testing on an EIFS clad home, or declining a roof inspection
where the home inspector made only a visual observation from the
ground). In such cases, agents should make sure that they make their
file reflects the fact that they recommended one or more inspections
and the client declined.
Secondly, notwithstanding the caveat in the PMAR pamphlet that
Realtors® are not experts in such areas as the law, condition
of title, etc. buyer may ask – or even expect – their
agent to render an opinion concerning such issues. Realtors®
should avoid the temptation to do so. While there is nothing wrong
with going to the courthouse to obtain copies of certain public
documents that may affect the home, agents should scrupulously avoid
advising their clients about the legal significance of such information.
Rather, they should recommend that the client secure the appropriate
expert to answer their questions, and make the an entry in their
file that they have done so.
FOOTNOTES
1
If the agent is unable to determine the need for further inspection
beyond the standard professional home inspection – keeping
in mind that the Realtor is not expected to be an expert in such
areas - he/she should so inform the buyer, leaving the final decision
up to the buyer to decide whether to have the additional inspection.
© Copyright 2003. Phillip C. Querin,
Davis Wright Tremaine. No part may be reproduced without the author’s
express written consent.
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