The Buyer’s Inspection on a Cancelled Deal

One of the knottiest issues in real estate for awhile now is, “what does the listing agent do with the Buyer’s inspection on a deal that ultimately falls apart?”

The question is problematic because — at least in Minnesota — home sellers and their agents have an independent duty to disclose any defects in the home they know about (or should have).

Translation:  if the Seller won’t disclose something . . . . you have to.

(Im)plausible Deniability

So, if the Buyer’s inspection is a disaster and they email you the Inspection Report, are you and your client deemed to know what’s in it, even if you don’t open the email?

Answer:  yes, because of a legal concept called “constructive receipt.”

And what if the Inspection Report is full of mistakes — or worse, cryptic “CYA’s” and disclaimers that ultimately amount to nothing? (example:  “cavity between sheet rock and foundation not visible; may contain mold.”) 

Then what??

Do you have an affirmative duty to educate yourselves about the issue(s)?

Obtain multiple (and expensive) inspections from specialty contractors (foundation/structural, HVAC, roofer, etc.)?

Duty to Update

Ultimately, the answer is case-specific.

However, the most conservative approach, at least, is to simply pass along the entire inspection (vs. a summary) and let future Buyers determine for themselves what’s cause for concern — and what isn’t.

(Of course, when the Buyer’s inspection clearly documents a material issue, the Seller is ultimately going to fix or pay for it, one way or another.)

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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