[WSBARP] NWMLS Form 35 now prohibits disclosure of inspection report???

[Roger Hawkes]

I don’t do a ton of real estate forms work; but I am curious about the process by which the forms and related requirements get changed; does anyone have first hand info about this change for example?

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Kary Krismer
Sent: Wednesday, September 28, 2022 7:06 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>; Erik Marks <erik at egmrealestate.com>
Subject: Re: [WSBARP] NWMLS Form 35 now prohibits disclosure of inspection report???

Yes, it's been that way for some time, with the most recent version providing a waiver of the inspection contingency.

It's a good change because:  (1)  The seller did not pick the inspector, and the inspector may be an idiot; (2) The buyer will use it to blackmail the seller; and (3) It creates disclosure headaches for the seller if the deal falls through.

I once spent considerable time verifying the proper flashing with the contractor and architech, where the inspector didn't know his stuff.  Later I discovered an obvious siding defect the inspector missed.  Both would have required work that would have cost $20-30k, but the former  was unnecessary.

Kary L. Krismer
John L. Scott, Inc.
206 723-2148
On 09/27/2022 5:29 PM Erik Marks <erik at egmrealestate.com<mailto:erik at egmrealestate.com>> wrote:


I am in the process of renewing my broker license and ran across something that strikes me as very odd.  I would be interested in hearing from people on the list who might work in the residential forms space and understand the context.  What I learned is that NWMLS Form 35 (Inspection Contingency) now provides that the Buyer agrees NOT to provide a copy of the Inspection Report to the Seller, and that if the Buyer does so, then the inspection contingency is deemed waived.

My first question is why is this in the form?  The only answer I can come up with is that the purpose of the clause is to protect the Seller from gaining knowledge of what is in the Inspection Report so that the Seller does need to disclose that knowledge to a future buyer if the pending sale falls through.  Is that correct?

And if so, then holy cow am I confused by the decision to add that provision.  There are entire sections of the license-renewal-course dedicated to saying that the Listing Broker must avail themselves of reasonably available information about the property, and cannot intentionally keep their head in the sand.  For example, one quote from the materials is” "Strategic Ignorance is unethical and illegal. Licensees must always conduct a reasonably competent and diligent visual inspection of property offered for sale and disclose the facts that such an investigation reveals.”  Reference is made in the materials to Easton v Strasburger, 152 CalApp 3d 90 (1984) as the seminal case underlying the principle that intentional ignorance by the broker is a breach of ethical duty.

If intentional ignorance by a broker is a breach of ethical duty, wouldn’t the inclusion of a clause in the PSA that prohibits  a buyer from sending a 3rd party inspection report to the Listing Agent, when the Listing Agent knows the inspection report is likely to contain material information about the condition of the property?  And, although the broker did not draft the form, the broker did provide the form and the broker signed the form.

I don’t get it….  Thank you to anyone who has special insight on this issue to share.

Erik


--
Erik G Marks
Attorney at Law
PO Box 16247
Seattle, WA 98116

(206) 612-8653
erik at egmrealestate.com<mailto:erik at egmrealestate.com>
Physical Office:
4220 SW Spokane St
Seattle, WA 98116


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