Andrew Wetzel's Musings

July 26, 2017

Municipal Inspections: Be Prepared!

Filed under: Uncategorized — awetzel @ 5:28 PM

Buying or selling Real Estate offers a great deal of flexibility depending on the principals.  There may or may not be a mortgage (just because there is no mortgage contingency does NOT mean there will not be a mortgage!), inspections (perhaps there was a pre-listing inspection or the buyer did their “due diligence” prior to submitting an offer) or any other potential hiccup prior to swapping a deed and keys for money.  No matter how straight-forward an agreement might be between a buyer and a seller, most municipalities insert themselves into the process as if they were the center of the universe.

Listing agents MUST familiarize themselves with local requirements so that they can prepare their often uninformed sellers.  The cost of addressing some municipal inspection-related defects is high, at times exceeding the results of a property inspection!  The difference is that the list of repairs required by local municipalities cannot be negotiated with the exception of whether the buyer or seller will do them and when.  Repairs can generally be completed after settlement which is a way of saving the seller some aggravation should a buyer not be able to perform.  The seller theoretically has to “escrow” funds to cover the expense of the repairs and the buyer either has to be willing to put up with any aggravation related to the repairs being made while living in the property OR be willing to delay moving in should that be mandated due to the type of defects.

Buyer agents need to be aware of the local requirements for two reasons.  One is to make sure that they do not get “cute” and ignore items found during a property inspection thinking the municipality will require their correction.  The other is to make sure the appropriate items are requested and completed in a workmanlike manner with receipts provided should there be issues after settlement.

In PA the purchase agreement spells out language regarding the ordering of the municipal inspection and the alternatives related to it, a key one being the time frame for requesting the inspection so that there is sufficient time to schedule the inspection, address any requirements and then to have the codes officer reinspect to make sure the deficient items have been corrected.

So, who controls the codes officers or outside companies employed to handle these inspections?  What do you do when these inspectors are late for appointments or fail to to show up without calling?  What about any requirements that seem unreasonable to the point of intruding and possibly killing a sale (such as enforcing current building codes on old houses)?  What happens when inspectors move so slowly with scheduling their inspections or providing the list of deficiencies that it has an impact on the agreed-upon settlement day (which may involve one of more other properties settling)?

Different municipalities have different “lists” as far as what they look for.  Some simply want to ensure that there are no health violations against a property while others are quite literally more intrusive than a typical property inspection almost to the point of being punitiveWho is in charge?  I wish more home owners were aware of this process and exercised their vote and their voice prior to their being forced to confront the too-often harsh reality of these inspections.

In my experience, too many of these inspectors presume too much about their “value” and seem to think the process all about them.  True, they can make or break many sales but what inspires these folks to think that Real Estate revolves around them?  Did they sell or buy a house?  Respectfully, they are employees tasked with comparing property conditions to a list, informing sellers about what they found and then ensuring that the deficiencies were properly corrected.  While many inspectors are a pleasure to work with (it is a happy time, isn’t it?), I am sure that many of these positions are filled with “friends” of important people (“patronage“) which may or may not be fair but my only concern, other than their being “qualified” and having the “temperament” to handle a difficult time for many, is that they FAIRLY and UNIFORMLY enforce the established standards.

Generally speaking, it has been my experience that the most challenging inspections, meaning the ones which tend to look most closely at property conditions, tend to occur in less affluent areas where houses tend to sell to less affluent people.  These houses tend, on average, to often be less well maintained than other areas which means they may have fallen below the threshold of meeting existing standards.  Many of the buyers who buy these homes are likely to not be able to upgrade them and more likely to suffer greatly should something serious happen.  The local codes in many of these areas seem geared toward bringing the conditions of sold properties up to par.  I guess that has some merit.

My concern is that these inspections only focus on properties being sold, ignoring declining properties owned for decades by folks unable or unwilling to maintain or upgrade health and safety conditions.  How many die in fires each and every year where there were smoke detectors with missing or drained batteries?  It would be great if ALL houses in a municipality were held to some standard but I am not sure how to do that and I am not suggesting the owners be forced to sell for failing to meet municipal code.  That being said, this process seems opportunistic.

What happens when a sale falls through?  In the past I have encountered municipalities that REQUIRED that defects be corrected regardless.  That seems to make sense but it means that home owners may take on repairs without the ability to pay for them.  Is that fair for them or the contractors they hired?  What happens if the municipality allows the defects to go uncorrected even though they involve health and safety concerns?

Part of me thinks that the government should allow a buyer and seller to decide what is in THEIR “best interests” and keep their noses out of other people’s business.  Check for unresolved violations, make sure taxes and utility expenses are up to date and make sure that the exterior, especially walkways, is safe for the public.  Collect a small fee/ tax to cover the time and labor.  However, if you are going to walk inside and through and around someone’s home, be fair and be consistent and explain to me why the “list” should differ just because of the zip code.  If the purpose of these inspections is health and safety, why assume some are better equipped to protect themselves and others not?

Is there anything worse than a “partial nanny state”?



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