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.)
