3 minute read
All About the Marland REALTORS® Property Inspections Addendum
BY TAYLOR KITZMILLER, ESQ.
Q: I am trying to explain the process of home inspections with a client who is selling their house. What’s the best way to have this conversation?
A: When buying or selling a home in Maryland, Maryland REALTORS®’ Property Inspections Addendum plays a crucial role in setting expectations and defining the rights and obligations of both parties regarding property inspections. This article provides an overview of how the Addendum functions and outlines the key rights and responsibilities at each stage of the process.
Inspection Contingency and Buyer’s Rights
The Property Inspections Addendum grants the buyer the right to conduct specific inspections, which must be completed within a specified period after contract acceptance (the “Deadline”). These inspections may include structural and mechanical systems, mold, environmental hazards, radon, chimney integrity, lead-based paint, and wood-destroying insects, among others.
The inspections serve to identify unsatisfactory conditions in major components and systems, not to renegotiate cosmetic or routine maintenance issues. If any of the agreed-upon inspections reveal unsatisfactory conditions, the buyer has two options:
Right to Terminate. The buyer may terminate the contract by providing a unilateral notice of termination before the Deadline. The buyer is not required to specify the reasons for termination.
Right to Negotiate. Instead of terminating, the buyer may submit a single written request for repairs or a seller credit, accompanied by the inspection report(s). Note that the seller only has to consider the first written request made by the buyer. This request must be made before the Deadline.
Seller’s Response and Next Steps
Upon receiving the buyer’s request for repairs or credit, the seller has five days to respond. The seller may:
Agree to all the buyer’s requests,
Agree to some but not all requests, or
Decline all requests.
If the seller either does not respond within five days or agrees only to partial repairs/credit, the buyer has two days to decide whether to:
Accept seller’s response; proceed with the contract,
Terminate the contract, or
Submit a counteroffer to continue negotiations.
If the buyer fails to respond within the two-day period, the contract remains in effect with only the seller’s agreed-upon repairs or credits included.
Further Negotiations and Final Decisions
If the buyer submits a counteroffer regarding repairs or credits, the seller has two days to respond. The seller may:
Accept the counteroffer,
Submit another counteroffer, or
Decline further negotiations; terminate the contract.
Obligations for Repairs and Re-Inspections
If the seller agrees to make repairs, they must be completed in a good and professional manner before settlement. The buyer retains the right to conduct a re-inspection to ensure the agreed-upon repairs were properly completed. Additionally, if the buyer’s lender imposes limitations on the seller credit, the credit amount will be adjusted to the maximum allowable amount by the lender.
Key Takeaways for REALTORS®
Ensure buyers understand the Deadline for inspections and subsequent negotiations.
Educate sellers about their obligations, including the importance of responding promptly to repair requests.
Clarify that inspections do not serve to renegotiate minor cosmetic or maintenance issues.
By carefully following the Property Inspections Addendum, both parties can navigate the home inspection process smoothly and reach a fair resolution. REALTORS® play an essential role in guiding clients through these steps to minimize conflicts and ensure a successful transaction.
Taylor Kitzmiller is Associate Counsel at Maryland REALTORS®.
