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Buying a home is one of the most important decisions any of us make. Most people only do this a handful of times in their entire lifetime. It is more than just an investment in real estate. It is a life changing event as the Buyer transitions a house or condo into the Buyer’s home.

For many recent months there has been a low inventory of resale residential properties on the market which has resulted in multi-offer bidding wars. As a result, there is pressure on Buyers to submit unconditional offers. We are often asked by Buyers and by realtors whether they should make an offer to buy a resale residential property without having the offer conditional upon inspection. The easy legal advice to give is – DON’T DO IT! However, there are practical work arounds that can protect a Buyer in these situations.

A Buyer is always better protected by having an offer conditional upon an inspection. It is essential to have that inspection done by a qualified, professional home inspector. If the inspection report indicates certain deficiencies there is an opportunity for a Buyer to either…

1. Get out of the transaction
2. Negotiate for the repair of the deficiencies by the Seller
3. Negotiate for an abatement in the purchase price to cover the Buyer’s cost of repairing the deficiencies, or
4. Accept the property with the deficiencies and waive the condition

So what are the 3 options available to Buyers that decide to make an unconditional offer?

1. Sometimes the Seller has an inspection done before going to the market and provides copies of the inspection report to potential Buyers. This is preferable than having no inspection but Buyers must be wary of these “pre-inspection reports”. Was the inspection done by a qualified, professional home inspector? Can potential Buyers rely on the pre-inspection report as the Seller paid for it and not the Buyers? Unless the inspector agrees in writing that the Buyers can rely on the pre-inspection report there is no recourse by the Buyers against the inspector if there was an error in the report.
2. Another option is for the Buyer to arrange for its own inspection by a qualified, professional home inspector of the Buyer’s own choosing prior to submitting an offer. Any issues disclosed by the inspection will then be addressed in the offer by either a repair clause or by the purchase price being offered. Unfortunately, in this market the Sellers do not always agree to permit these pre-inspections, and sometimes there are timing issues that prevent these pre-inspections.
3. The last option will be to submit an offer without the benefit of any inspection. By doing this – a Buyer agrees to accept the property in an “as-is, where-is condition” and takes on all of the risk of deficiencies not known. In these situations, the Buyer should negotiate for certain representations and warranties from the Seller as to the state and condition of the property known to the Seller. At least by doing so – there will be some form of disclosure obligation on the Seller that might give a Buyer some recourse against the Seller if the Seller’s statement(s) turn out to be false.

The essential take-away from all of this? Potential risk and uncertainty exists for a Buyer! Thus you as the Buyer MUST retain the right team – consisting of a qualified and experienced lawyer, realtor and home inspector. With your team in place, you as the Buyer will received the help and guidance you need to navigate though this process we call home buying. Good luck!!!

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David H. Korman is a Partner at Kormans LLP. His practice areas include residential and commercial real estate transactions, commercial leasing and private and institutional lending. You can reach David at dkorman@kormans.ca. The information and comments herein are for the general information of the reader and are not intended as advice or opinion to be relied upon in relation to any particular circumstances. For particular application of the law to specific situations, the reader should seek professional advice. Kormans LLP cannot be responsible for the content of other sites. We expressly disclaim all liability with respect to actions taken or actions not taken based on content received from a third party website linked, directly or indirectly, to that of Kormans LLP.  The link to another site is not to be construed in any way as an endorsement of the host, the site or the information contained therein, nor is such link to be inferred as an association or affiliation with the host.