RE: TERMITE INSPECTIONS/REPAIRS

RE:    TERMITE INSPECTIONS/REPAIRS

There has been lots of confusion as to how buyers and sellers should handle termite inspections, reports and Section I repairs now that the WPA form is not available.

THE NEW RPA.

Under the new RPA, the seller has no obligation to pay for the cost of the termite inspection or pay for the cost of Section I repairs.  I suspect that CAR changed the RPA because of complaints by sellers who unexpectedly received astronomically high Section I repair bills.

The new RPA eliminates all reference to the costs for termite inspections, reports and repairs. CAR intends for the parties to negotiate termite Section I repairs by using Request for Repairs prior to expiration of the 17 day inspection contingency period.  In other words, Section I repairs would be lumped in with all other repairs requested by the buyer.

This is unacceptable since lenders require completion of Section I repairs and many buyers lack the ability to pay for those repairs.  As a selling agent, I would want to allocate the cost of inspection and Section I repairs to the seller right from the beginning.  This has been custom and practice for many years.

BUYER RECOMMENDATIONS.

If you represent a BUYER, then I recommend that you require seller to pay:  (1) the cost of the termite inspection report; and (2) the cost to complete Section I repairs.  Consider the following procedure-

1.   RPA. Complete paragraph 7A(ii) to require that seller pay for the “inspection and report for destroying pests and organisms (“Wood Pest Report”) prepared by a registered structural pest control company.”

2.  Addendum. Attach a separate Addendum to the RPA requiring seller to pay for Section I repairs using language similar to the following:

“Seller shall pay for all work recommended to correct “Section I” conditions described in the Wood Pest Report required by paragraph 7A(ii) including the cost of inspection, entry and closing of those inaccessible areas where active infestation is discovered.”

“Prior to Close of Escrow, Seller shall deliver to Buyer a written Pest Control Certification of Completion showing that no infestation is found or that required corrective work is completed.”

It is important to use the Addendum.  Do not place this requirement in the RPA since it would be very easy for seller to overlook.  The Addendum is “obvious” and will result in less risk that seller will attempt to avoid paying Section I repairs prior to close.

SELLER RECOMMENDATIONS.

If you represent a SELLER, then you may want to control the amount that seller agrees to pay towards Section I repairs.  For example, if a seller receives an Offer requiring him/her to pay all Section I repairs, then seller may want to respond by Counter Offer agreeing to pay for only  $2,500.00 or $5,000.00 in Section I repairs.  This way your seller is not consenting to a blank check for Section I repairs.

SUMMARY.

These recommendations  essentially allow you to use the new RPA to allocate termite inspection costs and Section I repairs in the same manner as we did when the WPA forn was used.

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