I’m off for another pre-purchase inspection in the morning for a deal set to close tomorrow. Most people wonder what this is and if it is necessary.
Most offers today include a clause in the Agreement of Purchase and Sale giving the buyer the right to one or two further inspections of the property following acceptance of the deal and prior to the closing. One of those usually takes place on the day of closing. The purpose is to ensure that the property is in essentially the same condition that it was when the buyer made the offer.
If you read the fine print in the pre-printed forms we use for an Agreement of Purchase and Sale, there is a clause that says the property remains at the risk of the seller until the deal closes. It goes on to say that the Seller will maintain insurance on the building until that time as well. It’s an important clause and I could write a book on the number of times it has become an issue.
One time, there was a house fire two weeks before the closing date that destroyed the kitchen. In that case, the buyers agreed to accept the insurance proceeds and close the deal after which they’d put in a new kitchen. In another case, the sellers had moved out two weeks prior to closing. In the following two weeks, a flood occurred that extensively damaged the basement of the house and, it was not discovered by anyone until the pre-purchase inspection took place. In another case, vandals had entered the house the night before the planned closing and again, there was extension damage. In all cases, the insurance saved the deal and everyone closed the transactions with full knowledge leaving nobody fuming.
One of the most common issues we’ve encountered is when a large amount of garbage or debris has been left behind by the seller resulting in hundreds of dollars of dumping fees and transport. In such situations, the lawyers will usually call for a hold-back on some of the funds until the refuse is disposed of by either party. I recall one such situation which caused an irate seller to throw a few punches at us!
There is story after story but suffice to say, a pre-purchase inspection is ALWAYS a good idea. Missing or replaced chattels, damage caused by a move or a sudden leak can all ruin a closing. Better to know before handing over thousands of dollars and taking possession.
Do you like what you’re reading? Click here to subscribe and we’ll send new blog posts directly to your email inbox. P.S. Bloggers like comments!
When it’s time to buy or sell real estate in the Collingwood, Blue Mountain or Georgian Triangle area, contact Marg, an experienced and competent Broker who’s ready whenever you are!