What are Mandatory Repairs?

Legally, there is no such thing as a “mandatory” repair after a home inspection. Some states have an “as-is” contract that releases the seller from any responsibility to make repairs. The buyer accepts the property in its current condition, but has the right to walk away from the deal if too many issues turn up.

However, requirements that do need to be met by home sellers are largely dependent on three factors:

• The Purchase Agreement: Standard purchase agreements generally contain a home inspection contingency that allows the homebuyer to back out of the deal should the inspection turn up any major issues.
• Lender Requirements: Some lenders, particularly those that offer government loans, only approve mortgages on homes that meet their standards for safety, livability, and mandate that certain issues be addressed before closing. These lenders will have an appraiser inspect the property and appraise the value of the home before a deal can be made.
• Local Regulations: Some areas of the country have particular items that the seller of a home is responsible for before a sale can take place. For example, if a home inspector finds home improvements the seller made not to code or without securing a permit, the local building official will hold the seller liable. They will require the seller to bring the improvements up to code and pay increased permitting fees.

Inspections can turn up an array of concerns, from very minor cosmetic issues to more severe issues that prevent the home from being inhabitable. With that said, home inspectors will qualify anything structurally or mechanically deficient, unsafe, not functioning properly, or not in accordance with a state’s standards. These need to be made top priority, and may include:

• Structural: Major structural hazards or against building code violations.
• Foundation: Damp or wet crawlspaces, windows and doors that show uneven gaps, sloping floors, and cracked concrete are indications that a home’s foundation is in need of repair.
• Pests: When looking through the home for any pests (bugs, small rodents, etc.), the biggest issue to keep an eye out for is termite damage.
• Water: Standing water in the basement, water stains on the ceiling, poor water pressure or leaks, and drainage issues could indicate bigger problems.
• Faulty Electrical: House fires are often caused by faulty electrical wiring.
• Mold: Mold usually indicates larger problems and need to be addressed quickly. Mold can also be a major health hazard, especially black mold, and may lead to asthma or other serious health issues.
• Rot: Rotting in framing or around wood decks, windows, or doors is also usually indicative of larger problems.
• Roofing: Roofing problems aren’t always cause for alarm, but when a home inspector sees structural damage, mold, or flashing damage, the roof is generally in serious need of repair.
• Toxic or Chemical Hazards: These may include a positive asbestos or radon test, a sure sign that your home has a significant indoor air pollution problem, or carbon monoxide leaks from appliances, such as water heaters or furnaces.

Who Pays for Repairs?

If any of these issues arise, they need to be addressed immediately, but who bears the responsibility to pay for them? Technically, all repairs are negotiable. As the seller, you are not obligated to pay for anything, but you should disclose all known issues in good faith and work with the buyer. If you don’t, you will be at risk of losing the sale. Some options might be:

• Make the Repairs: If the repair requests are reasonable and you can afford to complete them, this is usually the best course of action. If the deal falls apart, you’ll be required to disclose the findings of the report when you re-list your home, and you could risk scaring off a future buyer.
• Give a Credit: The sellers can negotiate to lower the purchase price to account for the cost of repairs or a cash allowance. That way, the homeowner doesn’t have to manage the repairs, but still absorbs some of the cost. Some buyers also like this option, as it allows them the freedom to pick their own contractors and make sure the work is done correctly.
• Offer a Home Warranty: Purchasing a one-year home warranty for the buyer can be a nice option too. It will only cost you a few hundred dollars, and it gives the buyer peace of mind in case any issues come up in the first year after closing. This is especially appealing for inspection findings that aren’t necessarily failing items, but aging systems that will need to be replaced within the next few years.
• Barter: You can always offer to barter with other items, like furniture that wasn’t originally included but the buyer might want, or appliances you weren’t planning on leaving behind.