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What if an inspection report reveals problems?

Published on October 15, 2019

A seller and a buyer agree on the purchase price of a property. So far, so good. An offer to purchase is made, pending a favourable inspection. However, during the inspection, the building inspector uncovers some defects. Major work will be required. Now what?

An unsatisfactory inspection report gives the buyer the right to withdraw their offer. But before making this decision, it is recommended that the two parties discuss the matter. After all, the house still meets some, or even many, of the buyer's needs, and the seller likely still intends to sell.

The first thing to determine is whether the defects are minor or major. It would be a shame to have the transaction fall through for a problem that can be solved simply and easily. But even if the defects are major, it may still be possible to reach an agreement that takes these findings into account.

Who will do the work?

Either the owner or the buyer may be willing to do the necessary repairs. Generally, a motivated seller will agree to do some work to honour the agreement. The buyer may also agree to do the renovations: it may be the opportunity to make other preferential changes to the property at the same time.

Renegotiating the sales price

If the owner doesn’t want to do the work, the buyer will generally try to renegotiate the price, making a second offer that subtracts the estimated cost of the renovations. This will let the buyer respect the budget they set for the purchase.

Of course, the responsibility for the work can also be shared. The details of the new agreement will then simply be added to the Offer to Purchase, and each party will be required to honour the commitments they make in the document.