Form-of-the-week: Authorization to Inspect and Prepare a Home Inspection Report – Form 130

An agent of a seller of a one-to-four unit residential property frequently asks the seller to grant them authority to order a home inspection report (HIR) on the seller’s behalf. The seller’s agent explains that the home certification process provided by a local home inspection company is a cost the seller incurs to properly market their property and avoid a buyer’s claims about the property’s condition.

The seller’s agent explains the HIR will be used to prepare the seller’s Condition of Property Transfer Disclosure Statement (TDS). The HIR will then be attached to the seller’s TDS, both being included in the agent’s marketing package presented to prospective buyers. [See first tuesday Form 304]

The task of gathering information about the condition of the property listed for sale and delivering the information to prospective buyers lies primarily with the seller’s agent. [Calif. Civil Code §2079]

Further, to retain control throughout the process of marketing, selling and transferring ownership to a buyer, the seller’s agent is the one who requests and uses the HIR (on behalf of the seller) to assist in the preparation of the TDS. The seller’s agent loses control over the marketing and closing process, and exposes themselves and their seller to claims of misrepresentation when the buyer goes under contract without first having the HIR.

The buyer’s reliance on an HIR at the time the offer is entered into relieves the seller and their agent from liability for property defects not observed during the seller’s agent’s visual inspection, or which should have been known to the seller or the seller’s agent.

However, if the seller’s agent is to rely on the HIR to avoid liability in the preparation the TDS, the seller’s agent needs to avoid acting negligently in the selection of the home inspector who inspects and prepares the HIR. Thus, the seller’s agent needs to exercise ordinary care when selecting the home inspector.

On receipt of the HIR, the seller may act to eliminate some or all of the deficiencies noted in the report. Sellers are not obligated to eliminate any disclosed defects when selling a property, unless they choose to. On the elimination of any defects, an updated report is ordered out for use with the TDS to deliver updated mandatory property disclosures to buyers intending to make an offer.

Related article:

Brokerage Reminder: Home inspectors – the buyer’s choice

first tuesday’s Authorization to Inspect and Prepare a Home Inspection Report is used to request an inspection. It authorizes the selected home inspector to conduct an inspection and prepare an HIR on behalf of the client. [See first tuesday Form 130]

The Authorization to Inspect and Prepare a Home Inspection gives the home inspector specific information regarding the requested inspection, including:

  • the property address;
  • the seller’s name and phone number;
  • the contracting party requesting the HIR (seller, buyer or agent);
  • contact information for the person to set up the inspection with;
  • a confirmation whether the agent will be present or not at the inspection; and
  • the anticipated fee to be paid upon the delivery of the HIR to the agent. [See first tuesday Form 130]

The form also includes instructions to the inspector that the HIR is to include:

  • an energy efficiency inspection;
  • any improvements that are not in compliance with building codes and for which no permits exist; and
  • the property’s compliance with safety codes for child resistant pool barriers, hot tub covers, automatic garage doors, door locks/latches, gas valves, security bars and water heaters. [See first tuesday Form 130 §6]

Editor’s note – When representing a buyer, it is good practice to recommend as part of the buyer’s due diligence that the buyer conduct their own inspections and investigations pertaining to all physical aspects of the property, regardless of any HIR provided by the seller.

The seller’s TDS is reviewed and updated by the seller’s agent, based on the supplemental HIR and their own visual inspection of the property. The TDS will be used to inform prospective buyers about the precise condition of the physical property before they make an offer to purchase.

Thus, the seller will not be later confronted with demands to correct defects or to adjust the sales price before escrow can close. The property will have been purchased by the buyer “as disclosed” prior to the seller’s acceptance of the purchase agreement offer. 130