27 Oct How the Home Inspection Contingency Works for a Pennsylvania Seller
A home inspection contingency gives the buyer the right to have the house inspected within a set time and, depending on the terms in your agreement of sale, to ask for repairs or a credit, or to end the agreement. For you as the seller, it’s a negotiation with deadlines. Pennsylvania law also sets rules for the inspection clause in your agreement and for what the report has to say.
Here’s how it works, what you’re entitled to see, and how to handle a repair request.
What is a home inspection contingency?
It’s a term in your agreement of sale, when the agreement includes one. Pennsylvania’s Home Inspection Law refers to it as a provision on the buyer’s right to get a home inspection report, and what follows from the report, if anything.
Read that paragraph before you sign the agreement, while its terms can still be negotiated, and again before the inspection. Find four things:
- How many days the buyer has to inspect.
- What the buyer can do with the results, such as accept the house, ask for repairs, a credit or a lower price, or end the agreement.
- How many days you have to respond to a request, and what happens if you don’t respond in time.
- What happens if you and the buyer don’t agree.
Those answers set your deadlines and your options. If anything in that paragraph is unclear, ask your agent or a real estate attorney before you sign.
Who can do the inspection?
If your agreement provides for a home inspection, Pennsylvania law requires that provision to call for an inspection by one of these:
- A full member in good standing of a national home inspection association
- A licensed professional engineer
- A licensed architect
- Someone supervised by a full member in good standing of such an association, when that member agrees to be responsible for the report by signing it
To count under the law, an association has to meet several conditions. One is that no one can become a full member without having performed or taken part in more than 100 home inspections and passed a recognized or accredited exam on how to conduct a home inspection.
The law also treats it as an unfair or deceptive practice for an inspector, the inspector’s employer, or a business that controls or has a financial stake in that employer, to make or offer to make repairs for an additional fee on a house they prepared a report on in the past 12 months. Radon and wood-destroying insect remediation are the exceptions.
What does a home inspection cover, and what doesn’t it?
Under Pennsylvania law, a home inspection is a noninvasive visual examination of some combination of the house’s mechanical, electrical or plumbing systems or its structural and essential components, designed to identify material defects, and done for a fee in connection with, or to prepare for, a possible sale.
The law’s definition leaves out an examination of a single system or component, like the roof alone. It also leaves out an examination limited to specialty items such as wood-destroying insects, underground tanks and wells, septic systems, pools and spas, alarm systems, air and water quality, pollutants, toxic chemicals or environmental hazards. A buyer who wants any of those can order them as separate inspections.
If the buyer orders a radon test, the tester must be certified by Pennsylvania’s Department of Environmental Protection or be a Department-listed employee of a certified testing firm. For a house built before 1978, a federal rule also gives the buyer a chance to have it checked for lead-based paint before the buyer is bound, unless the sale is exempt or the buyer waives it in writing. We explain the rule in The Pennsylvania Seller’s Property Disclosure Statement, Explained.
What’s in the inspection report?
The law requires the report to be in writing and to include:
- A description of the scope of the inspection, including which structural elements, systems and subsystems it covered
- A description of any material defects found, with any recommendation to bring in an expert
- A clear flag on any material defect that poses an unreasonable risk to people on the property
The report also has to state that it’s based on the visible and apparent condition of the house on the day of the inspection; that it makes no representation about hidden defects that a competent inspection couldn’t reasonably find, and carries no warranty or guaranty; that if the inspector isn’t a licensed structural engineer or similar licensed professional, the reader may be advised to get a professional opinion on defects or concerns in the report; and that it isn’t an appraisal.
An inspector can’t give an estimate of what a repair will cost, out loud or in writing, except in the report itself, and only if the report names the source of the estimate, gives it as a range, and says the parties should consider getting an estimate from a contractor who does that kind of repair.
Can you get a copy of the report?
Yes. Pennsylvania law gives the seller the right, on request, to a free copy of the home inspection report from the person it was prepared for, which in a buyer’s inspection is the buyer. The inspector is a different matter: unless the law requires otherwise, the inspector can’t give the report to anyone but the client without the client’s consent.
Ask for it through your agent when the buyer sends a repair request. Reading the report itself, not only the request, helps you see what the inspector actually found.
What are your options when the buyer asks for repairs?
A repair request is a negotiation. You can:
- Agree to make the repairs before settlement.
- Offer a credit at settlement instead of doing the work. If the buyer is getting a mortgage, the loan’s rules can cap a credit and limit what it can pay for.
- Offer a lower price instead.
- Agree to some items and not others.
- Counter with a different fix, a smaller credit or a smaller price change.
- Decline.
What happens if you decline, or if you and the buyer can’t agree, depends on the inspection paragraph in your agreement of sale. Read it before you answer.
Weigh each item on what it is. Pennsylvania law uses the term “material defect” for what a seller has to disclose and what an inspection report has to describe: a problem that would have a significant adverse impact on the property’s value or that involves an unreasonable risk to people on the property. A structural element, system or subsystem that is near, at or beyond the end of its normal useful life is not, by itself, a material defect. An older water heater that works is a different item from one that leaks. What the buyer can ask for under the contingency is set by your agreement, not by this definition.
Whatever you agree to, put it in a written amendment to your agreement of sale, signed by you and the buyer. If you agree to make repairs, use qualified contractors, get any permits the work requires, and keep the receipts to show the buyer before settlement. A credit becomes a line on your settlement statement; for the other lines, see What It Costs to Sell a House in the Philadelphia Suburbs.
What if the inspection finds something you didn’t know about?
If the sale goes ahead, it becomes part of the negotiation.
If the sale falls through, you now know about it. Pennsylvania’s disclosure law requires you, unless your sale is exempt, to disclose the material defects you know about, so update your disclosure statement in writing before you and the next buyer sign an agreement of sale.
And if something you disclosed becomes inaccurate before settlement because of something that happens after you delivered the statement, such as new damage, you have to tell the buyer.
Should you get an inspection before you list?
It’s an option. A pre-listing inspection can show you problems a buyer’s inspector may also find, and gives you time to fix them or price around them before you list. Pennsylvania’s definition of a home inspection includes one done for a fee to prepare for a possible sale, so the same report rules apply.
Keep one thing in mind: anything it finds that’s a material defect becomes something you know about, and it belongs on your disclosure statement.
How do you prepare for the buyer’s inspection?
- Keep the utilities on, so the inspector can run the heat, the water and the electrical systems.
- Clear access to the attic, basement, crawl space, electrical panel, furnace and water heater.
- Have your records ready: repair invoices, permits, warranties and service records.
- Fix small things you already know about, like a dripping faucet or a missing outlet cover.
Frequently asked questions
Do I have to make the repairs the buyer asks for?
Not unless your agreement of sale already commits you to them. Repairs after an inspection are a negotiation: you can agree, offer a credit or a lower price, or say no. Whether the buyer can end the agreement if you say no depends on the inspection terms in your agreement of sale.
Who pays for the home inspection?
The buyer, unless your agreement says otherwise. The state’s disclosure form tells buyers they may ask to have the property inspected, at their own expense, by qualified professionals.
Can I get a copy of the buyer’s inspection report?
Yes. Pennsylvania law gives you the right, on request, to a free copy from the buyer, as the person it was prepared for.
Will the inspector tell the buyer what repairs cost?
Only within limits. An inspector can include a cost estimate only in the report, with its source, as a range, and with a note that the parties should consider getting an estimate from a contractor who does that kind of repair.
Thinking about selling?
An inspection goes better with fewer surprises. If you’re thinking about selling in Philadelphia or the Philadelphia suburbs, we’ll help you get the house ready, go through the inspection terms in your agreement with you, and build a net sheet for your house. Any value range we give you is a broker price opinion, and a broker price opinion is not an appraisal. Contact Plus Realtors and tell us where your home is.