Home Inspection Contingencies

inspection contingency

Put a Home Inspection Contingency in Your “Offer to Purchase”

inspection contingency and sales price
Buying a house is not a game of Monopoly! Waiving the home inspection and inspection contingency may cost you much more than the cost of a home inspection!

Home Inspection Contingencies

If you don’t believe in having a home inspection you should realise that your investment is at risk.  In reality, a home inspection contingency is your only safeguard where the voetstoots clause forms part of the sales price and contract.

In South Africa, the voetstoots clause is part of the purchase contract in most of the property sales. But, unfortunately, you will not find any home inspection contingencies in any purchase contracts.

You may not consider that a home inspection contingency is a big deal! In that case, ask yourself why a seller will refuse to consider your offer that contains a home inspection contingency. It has occurred to some of my clients! I told them to consider it a lucky escape!  

In addition, a seller selling a house below market value most probably has serious defects. Don’t fall for reasons like the seller is leaving for overseas or retiring to the coast.

A home inspection contingency should be added as part of the purchase contract when you have a home inspection. It means you can cancel the sale or try to negotiate repairs based on the results of the inspection.

In most instances, you should negotiate for at least a week to conduct a home inspection. The time can be shortened or increased during offer negotiations.

An example of a home inspection contingency

“The Buyers’ offer is contingent upon a satisfactory inspection within  7 (or _____ ) working days. Upon receipt of the results of such inspection, the Buyers may request in writing at any time within the agreed period that the Sellers make certain repairs or that the Sellers reduce the sales price to compensate for such defect(s). Such a request to repair or reduce the price does not terminate the contract and the Sellers shall have _____ days from receipt of such request to agree to make such repairs or reduce the sales price. If the Sellers do not agree, the Buyers shall have _____ days to waive the contingency and accept the property “as-is” or to declare the contract null and void. “

The contingency expiry date

The minimum time period you should try and negotiate is 7 working days from acceptance of your offer. At a squeeze, 5 working days may be sufficient if there are no serious problems, but it puts a lot of pressure on everyone!

Setting the date that a home inspection contingency should be released depends on the contingency you negotiate with the seller. It may not automatically expire unless you take a specific action such as signing a contingency release. That is if a release is part of the contingency agreement. Therefore, if it expires before you have it inspected, you lose the right to have the home inspected.

When your sales contract has a home inspection contingency, it is important to conduct the inspection as soon as possible. I may recommend that you call a roofing contractor to do further investigation of a problem in the ceiling space. But, for example, you might have to contact several roofing contractors before finding someone available in the time frame you need.

Therefore, it is very important to keep the seller and agent in the picture of what is happening. Furthermore, you should advise the seller on your decision to continue or to negotiate a better sales price or whether you intend to withdraw from the purchase contract before the expiry date. If you don’t, you may have to honour the conditions of the sale.

Types of Home Inspections

A home inspection involves many components, which are primarily structural and visual. However, if I discover defects beyond my area of expertise, I will recommend that you consult an expert.

For example, if the home’s water pressure is low, I will recommend an inspection by a licensed plumber. There could be a blockage the water supply system, or the plumbing pipes could be corroded. I may not be able to identify such defects by noticing the low water pressure. If I recommend further inspections in the report, you may wish to call a specialist for advice.

This is also why an inspection contingency and the time period is so important! It gives you time for specialist inspections if they are required!

Specialist inspections may include any of the following:

  • Pest and termites
  • Serious structural cracks
  • Electrical wiring
  • Heating and air conditioning
  • Lead-based paint
  • Foundation and basement
  • Sewer or septic system
  • Soil stability
  • Trees and vegetation
  • Water systems and plumbing
  • Mould
  • Asbestos

Importantly, don’t forget to ask for the building plans and other important documents!

Disclaimer: This inspection contingency article is intended for educational purposes only and does not constitute legal advice. Real estate procedures and documents may vary. Consult a real estate professional or lawyer in your area if you have specific questions about this subject.

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Consumers and the Property Practitioners Bill

Has the Property Practitioners Bill missed the point?

consumers

Are consumers offered more protection?

Parliament passed the new Property Practitioners Bill on Tuesday 4th December 2018. This bill has been on the cards before 2011!

The Bill was supposed to finally provide buyers (consumers) more protection in the secondary housing market.

However, it appears the Minister of Human Settlements and his staff and the National Assembly totally missed the point!

Here is that portion of the Bill:

CHAPTER 10

CONSUMER PROTECTION

Mandatory disclosure form

  1. A property practitioner –
    1. may not accept a mandate unless the seller or lessor of the property has provided him or her with a fully completed and signed mandatory disclosure in the prescribed form; and
    2. must provide a copy of the completed mandatory disclosure form to a prospective purchaser or lessee who intends to make an offer for the purchase or lease of a property.
  2. The completed mandatory disclosure form signed by all relevant parties must be attached to any agreement for the sale or lease of property and forms an integral part of that agreement, but if such a disclosure form was not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser.
  3. A property practitioner who fails to comply with subsection (1) may be held liable by any affected consumer.
  4. Nothing in this section prevents the Authority from taking action against a property practitioner or imposing an appropriate sanction.
  5. Nothing in this section prevents a consumer, for his or her own account, from undertaking a private property inspection to confirm the state of the property before finalising the transaction.

This is the protection this Bill offers to buyers (consumers) who buy properties from sellers.

So what has changed? Continue reading “Consumers and the Property Practitioners Bill”

Home Warranty

Is a Home Warranty worth the money you pay?

home warranty against defects

A new way to “protect” home buyers and enrich insurance companies is available in South Africa in the form of a “home warranty” which will protect home buyers against future defects for a period of 2 years!

The “Voetstoots Clause”

Thousands of homes are sold without any guarantee that the homes are free of defects. These homes are all older homes sold with the “voetstoots” clause in the “offer to purchase”. The Consumer Protection Act does not protect you, the buyer, in this case. Selling his home is not the seller’s normal course of business.

The seller’s disclosure is required to declare all known defects. Can you trust that document?

I would not!

You have to prove that the seller was aware of the defects and did not disclose them!

The defects could be maintenance issues or latent defects that the seller knows about, but that is hidden from view. Such defects can cost a lot of money to fix. Furthermore, the legal process is expensive and frustrating if there’s any doubt that the seller did not disclose known defects.

About the home warranty

An insurance company is offering a “home warranty” to protect you from issues and defects for a two year period. In addition, the premiums are determined on an individual basis according to the insurer. However, the cost of this home warranty apparently ranges from R12,000 for a one million Rand home to R28,000.00 for a five million Rand home!

The seller can include the cover as a feature of the sale, or the buyer may insist upon the home warranty as a condition of the sale. In both cases, payment for the warranty forms part of the offer to purchase.

There are costs like certificates of compliance, levies and rates clearances, bond cancellation fees and the estate agent’s commission on the sale that all come off the selling price. Then there are the costs the seller has of buying a new property and moving to it as well!

I can only wonder how many sellers will want to cough up such a large amount of money?

Which leaves you, the buyer, to protect yourself by buying into the home warranty!

But what does the “home warranty” work and protect you against?

Apparently, the key benefits of the home warranty are a cover against:

  • Roof, structure or workmanship defects.
  • Defects with foundation design, structure or workmanship.
  • Faulty electrics, plumbing, drainage, sewerage and gas installations.

If you will have a bond on the property you want to buy, your bank will insist you have a homeowner’s insurance. Furthermore, except for the foundation and structure, a homeowners insurance will cover most of the defects mentioned above. This includes flood water or storm damage to the structure.

In addition, the insurer’s home warranty includes a property inspection beforehand!

Why buy a home warranty?

A home warranty will provide a professional inspection report that lists any exclusions or defects so you know what you are dealing with when it comes to negotiation time.

Continue reading “Home Warranty”

The Voetstoots Clause

voetstoots clause

The Infamous Voetstoots Clause!

voetstoots clause in the estate agent's offer to purchase
The seller does not have your interests at heart! The Voetstoots Clause protects the seller, not YOU! Do the wise thing! Put an inspection contingency clause in the Offer to Purchase which says the offer is dependant on a satisfactory home inspection. Then, have a home inspection to protect yourself!

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Hidden defects could result in expensive repairs!

Be careful with the voetstoots clause! You are not protected from defects by the Consumer Protection Act with the voetstoots clause in an Offer To Purchase unless you are buying from a developer or builder. All the offer’s to purchase I have come across of all from estate agents and lawyers have the voetstoots clause. You can have the estate agent remove the clause but your offer will most likely be rejected!

In certain instances of concealed defects, you have recourse to the law. A legal determination will need to be made as to whether a defect was deliberately concealed or not. This will determine who is liable for costs. This can be expensive!

But you can reduce the risk with the Voetstoots clause if you make yourself aware and do the following:

Voetstoots and Patent and Latent Defects

A patent defect is clearly visible upon inspection. This may include items such as a crack in a wall or window, chipped plasterwork etc. The offer to purchase should clearly state who is responsible for repair or replacement.

A cursory inspection does not easily pick up a latent defect, e.g. a faulty geyser, a damp area concealed behind furniture or fresh paint, or a leaking roof.

Common law states that the seller is responsible for all latent defects for a period of three years from the date of sale.

The seller should supply all warranties and documentation of repairs and maintenance on the transfer of the property. Make sure that you are aware of all patent defects!

The seller and the voetstoots clause

Sellers stipulate that the property is for sale ‘as is’ (“Voetstoots”) in the belief that they can avoid expensive repairs. However, the seller remains responsible for any deliberately concealed latent flaw or defect.

The difficulty arises in that the burden of proof lies with you, the buyer, as to whether the seller knew, or ought to have known of the latent defects. This also determines whether you can cancel the contract, or claim some repayment from the seller.

You and the voetstoots clause

The offer to purchase document or seller’s disclosure should contain all detected faults. The fault records must also state which party will be responsible for repairs.

You can insist on certain guarantees, e.g. under ‘Special Conditions’. For instance, you can stipulate that; “The Seller warrants that the swimming pool on the property is not leaking at the date of signature hereof by him”.

For your own protection, you should negotiate a Home Inspection Contingency with the seller.

The estate agent (property practitioner) and the voetstoots clause

An important document is the “Seller’s Property Disclosure” which should form part of the offer to purchase. Sellers should disclose problems in the house to the best of their belief and knowledge. However, what the seller “believes” and what is actually true often diverges a lot!

The estate agent is a facilitator and not a party to the contract. Therefore, you can only prosecute an estate agent in terms of the Consumer Protection Act. This applies if the agents ‘supply’ of service was in contravention of the CPA.

If you are unhappy with the service given by the estate agent or estate company, or you suspect that they have violated either the law or the code of conduct governing the industry, it is always better to try and resolve the problem with them first. If you are still not happy you can approach the Estate Agency Affairs Board. The property practitioner’s ombudsman still has to be appointed as required by the Property Practitioners Act.

Protection against the voetstoots clause

With a home inspection report by THE HOME DETECTIVE, you get an accurate, comprehensive description of the true condition of the home you intend to purchase. You, the buyer, the seller, the estate agent and conveyancers can thus be a party to a fair deal.

The cost of the inspection is normally for your account.

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 Inspected Once, Inspected Right!®

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THE HOME DETECTIVE » voetstoots

Home Buyers Inspection

buyers inspection

Home Buyers Inspection

buyers inspection is a comprehensive home inspection
A Buyers Inspection is a comprehensive inspection for all home buyers who are considering buying a new or secondhand home. Without one, you are at definitely at RISK!

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Why you need a Home Inspection

Buying property with the “voetstoots” clause in the Offer to Purchase puts you at risk. As a result, you should have a home buyers inspection which is a comprehensive inspection and report with marked photos of the defects!

Furthermore, if you later discover expensive structural and maintenance faults with your new property, it can be heartbreaking. As a result, you either fix the faults at your own expense, or you go the legal route.

That why the EAAB (Estate Agent’s Affairs Board of South Africa) advises all prospective property buyers to have a Home Buyers Inspection.

At THE HOME DETECTIVE, I specialise in providing professional comprehensive home inspections for buyers. In fact, my detailed inspection report will help you to make an informed decision on whether to buy or not.

A timely home inspection can also save you expensive litigation post-purchase. Moreover, I am here to help you make the right purchasing decision. Unlike sellers and estate agents who do not have your interests at heart.

What does it include? 

When you choose me to carry out your home buyers inspection, I will carry out thorough, detailed buyers home inspection. I look at a variety of different facets, from top to bottom, including:

  • Roofing
  • Ceilings
  • Floors
  • All walls
  • Structural integrity (roof and structure)
  • Heating and cooling
  • Plumbing, electrical and gas
  • The condition of the property’s exterior space (stand and property walls)

Inspection report

On completion of the physical inspection of the property, I will compile an extensive and detailed buyers inspection report. The comprehensive inspection report will be available within 2 days of the inspection.

I am an internationally certified home inspector. I work within the strict Standards of Practice and Code of Ethics of the Internation Association of Certified Home Inspectors (InterNACHI).

With my experience, I’m in a unique position to provide you with a highly professional, buyers home inspection report.  As a result, you can rely on the information in the comprehensive report before you buy your home.

I am passionate about helping people find a structurally sound home.  Furthermore, I will ensure that you have as much information as possible about a property before you buy it. Therefore, this will make your purchasing decision easier and take the stress out of the transaction.

Also, my buyer’s inspection and the report will not cost you an arm and a leg. In short, my fee is a fraction of the purchase price of the property you wish to buy!

Finally, don’t forget to put an inspection contingency in your “Offer to Purchase”.

Get a FREE Quote NOW!

 Inspected Once, Inspected Right!®

SEE WHERE I INSPECT IN GAUTENG!

THE HOME DETECTIVE » voetstoots