Couple of issues here which cannot be clarified without looking at the actual purchase agreement, which I’m assuming is a standard RPA-CA REVISED 4/10:
Page 2 of 8: Section 4. A. (1) – if either box was checked in this section, then the buyer’s lender is more than likely going to ask for a copy of the termite report AND either a Section 1 Clearance OR an “AS-IS” Addendum – even if Section 1 was not specifically asked for in the contract (in an Addendum, WPA or written in on page 4, Section 11. D.). Current lending practices have the underwriter asking for all clearances from any reports that are mentioned in the contract UNLESS there is a specific “AS-IS” Addendum. In reality, it’s a case of the lender actually changing the contract and if you don’t agree, no loan. It’s not right, not fair, but very, very real. We’ve learned to write all our contracts with these boxes left blank.
Page 4 of 8: Section 11. B. – if the box beside “Wood Destroying Pest Inspection and Allocation of Cost Addendum (C.A.R. Form WPA)” is checked, then the WPA is an integral part of the contract and the lender is going to want to (1) see any copies of Termite Report(s) performed and (2) is going to ask for a Section 1 clearance. Depending on how the WPA is written, they might even ask for Section 2 clearances as well.
Wood Destroying Pest Inspection and Allocation of Cost Addendum (C.A.R. Form WPA):
Section 2. B. – if any of the boxes are checked, then any Section 1 items found in those specified areas will need to be cleared. As a general rule, in our area, we do not check the box for decks because, in many cases, this opens a Pandora’s box of issues that cannot be resolved without expensive re-inspections and, in many cases, tearing up perfectly good decks to see what’s underneath. Decks and fences are usually purchased “AS-IS.” If it’s a structural deck that is an integral part of the house, that’s a different matter. ALSO … we always meet the Termite Inspector and specifically exclude external areas we do not want inspected. Once it’s in the report, it cannot be altered. If not handled correctly, this can cause HUGE issues in escrow. As an example, if you have a Section 1 issue on the external deck of a condo in an HOA and it gets onto the report, the bank will want the HOA to remedy the situation – and that could take 8 weeks or longer. Bottom line – it can blow the entire deal because the bank won’t fund without the clearance and the HOA won‘t do the work in a timely fashion.
Section 2. C. (1) If the box for Seller is checked, then any Section 1 on the report needs to be cleared. Unfortunately, if the agent wrote the contract to include the deck, then it has to be included. If the deck has Section 1 items in the report and Section 4. A. (1) was checked, then the lender may insist that the deck be cleared even it WAS NOT checked in WPA Section 2. B.
If you are trying to back out and any of the above apply, you will have a hard time doing so – unless you can demonstrate that the costs of selling after including the Section 1 Repairs for the deck would make the sale untenable. As long as the buyer’s contingencies have not been removed, you may have some room to maneuver. I know a few sellers who’ve cancelled their sale because the found costs of repairs were more than they could handle. It might be possible to write an “AS-IS” Addendum excluding the deck from Section 1 repairs. If you DO cancel, you would most likely be expected to pay buyer out-of-pocket costs for Inspections and the appraisal.
Additionally, if it can be demonstrated that your agent did not perform due diligence to you by explaining every aspect of the contract as explained above, then you may have some recourse with your agent – talk to their broker, if necessary.
Last resort, talk to an attorney who specializes in real estate contracts.
What does the contract say? You have to do what you agreed to do. If you agreed to pay for and repair Section 1 active infestations, and that mildew falls under Section 1, than you're obligated to do it. If you didn't agree to it, you don't have to and the buyer can walk. Read your Purchase Agreement; your answers are all in there, and your dual agent should be able to point you to the exact plact to find it.
That mildew won't be going anywhere, so it'll have to be fixed at some point. And, also, now you know that using the same agent for both sides is a huge mistake, and could cost you money in the long run. There are lots of agents out there who routinely take listings at less of a percentage than the bueyr's agent gets, they're not all 3%-ers.
Good luck, I hope it all works out for you!
I'm sorry to hear about the situation you are in!.
1. Are you still inside the contingecy periods or have they been removed already?
2. By the contract does it say you have to fix this particular issue? Have the buyers given you the written request for repairs? etc
3. Do you have a Wood Destroying Pest addendum filled out with the contract? That's usually where it will specify what type of work exactly you signed up yourself to do!
And also, how much are the repairs?.. Just curious.
And depending on the dates and time frames, you can cancel a contract based on buyer's performance!. So maybe there is something they haven't done or deposited the $ on time, etc..
Hope this helps!
Real Estate Supergirl
Allison James Estates and Homes
7 Horton Plaza,
San Diego, CA, 92101
If you agreed to the Section1 repairs up front in the Purchase Agreement your buyer submitted to you, then you have a duty to repair it if thie mildew is a Section 1 repair. If you don't, then you'll have defaulted on the contract. If you did not agree to any repairs in the Purchase Agreement, say you only agreed to pay for the termite report, then you are under no obligation to do the repairs, and the buyer can decide weather to continue with the sale. Please read your contract, you will find exactly what you need to do.
If you're worried about civil issues, this is beyond the scope of anyone here. For this, you'll need to consult with a real estate attorney.
Why your agent isn't explaining this to you, I'm not sure...
I hope your sale closes!
1. Contact the termite inspector for clarification of the Section 2 work and why it is Section 2.
2. Have a different termite inspector either review the report with you or perform another inspection.
3. Contact your lender to see if they will require the Section 2 work to be completed (usually don't).
These are intended as options most buyers have in similar transactions. Without being party to or knowing about your contract terms and conditions, this is not intended as advice specific to your transaction.
My best advice is to contact a real estate attorney. Without knowing what your contract states, it would be irresponsible for me to advise you.
It really depends on what you agreed to in the offer.
Did it say you were going to cover Section 1?
That should let you know.
It's a bit difficult dealing with the same agent representing both parties because you never know which side they are favoring.
Please let me know if you need anything.
Daniel Di Matteo
Century 21 Award