Friday, September 26, 2008

Inspection, Pre-Inspection, Truth-In-Housing and Disclosures! What is Required?


As a Minnesota REALTOR®, my real estate clients, both buyers and sellers, are sometimes confused by inspections and disclosure requirements in the Twin Cities and surrounding suburbs. Sellers want to know what they have to disclose which in short is, every material fact a buyer would want to know. A handful of Twin Cities communities require a home to be inspected prior to listing it for sale. Buyers, especially in a changed market full of foreclosures and short sales want to what their rights are in regard to disclosures and inspections.

Recently while listing a home for clients in Anoka County, a first-time selling couple asked about pre-inspections. There home was beautiful with many updates and it was obviously well maintained. As they filled out the required disclosure, they brought up the subject of pre-inspection. A friend of theirs had recently sold a home and had it pre-inspected. When the offers came in, the buyers on their friends’ home opted to forego the inspection, choosing to just read the report. My clients were wondering if this was a common practice and if a pre-inspection was required.
In Minnesota, there is no Truth-In-Housing inspection requirement to sell your home at the state or county level. There are however a number of communities in the Twin Cities metropolitan area that do require a pre-inspection report. These go by many names: Truth-in-Sale of Housing Disclosure, Time-of Sale, Time-of-Sale Code Compliance, Dwelling Maintenance and Occupancy Code Compliance, Housing Code Compliance Inspection or Housing Maintenance Code Inspection. Some of these inspections are done by inspectors that are city employees while other communities have licensed private inspectors to perform the inspection of the home. But in most cases, it is the home owners responsibility to select a private inspector to perform the inspection prior to listing the home for sale.

The Twin Cities communities that currently require a home inspection are:Private Inspectors (Selected by Homeowner)

City Inspectors
Can I still have my home pre-inspected if my community does not have a truth-in-sale requirement?

Absolutely! Having you property pre-inspected and an inspection report available to potential buyers can speed along the buying process for many buyers. Some buyers will choose to review the report and not have another inspection completed making the offer not-contingent on an inspection. Other buyers will choose to have the inspector who did the pre-inspection come out to the home to explain the details in the report. This is often completed for a reduced fee to the buyer since the work has been completed and it is not as time consuming to the inspector. However a pre-inspection does not guarantee that the buyer will not opt to hire their own independent inspector to give another report on the home.

If I give an Inspection or Truth-In-Housing Report, do I have to complete a seller's disclosure?

If you have lived in the home, yes! It is required to disclose any material facts that you know about the home. However, in the case of an estate or rental property where the owner did not live in the home, the owner will have limited information regarding the property to disclose. In this case, an inspector's report can be offered in lieu of the completed disclosure to meet the state disclosure requirement. A buyer may also agree to waive their right to the required seller’s disclosure. In either of these cases, this will not exempt a seller from any local or federal statutes (i.e. for septic or lead based paint).

What if it is a bank owned home? Does the bank have to provide a seller’s disclosure on a foreclosure?

Minnesota state law does not have different rules for a bank or other financial entity. They must disclose material facts on a seller’s disclosure, offer an inspection in lieu of foreclosure or have the buyer agree to waive their rights to a disclosure.

If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me a call or visit my website for a FREE Relocation Packet. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.
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