[WSBARP] NWMLS Form 35 now prohibits disclosure of inspection report???
Kary Krismer
Krismer at comcast.net
Wed Sep 28 15:46:33 PDT 2022
The buyer already has the information in their inspection report, so
they don't need it. The disclosure statement law has long provided that
the seller does not need to disclose information that they learn from
the buyer's inspection report--on that transaction, as opposed
subsequent transactions where they somehow learned of the inspection
results.
As to your hypothetical second buyer that did not do an inspection, that
is entirely their problem and a direct result of not having done an
inspection. If their inspector missed it, that would definitely be a
different issue, but there the fault would possibly lie with the
inspector (assuming they are also a pest inspector, which few are these
days).
As to your Eaton v Strasburger case, that is California law. I'd
suggest looking at 18.86.030(1)(d) and (2) for Washington law, as well
as reading Douglas v. Heller as well as Jackowski v. Borchelt. But
simply put, there is nothing in Washington law that I'm aware of that
requires sellers or brokers to go looking for issues, and if they were
required to look at a buyer's inspection report that would be a huge
impediment to allowing the inspection in the first place (Ignoring the
protections fo Douglas v. Heller and Alejandre v. Bull given in allowing
inspections).
Finally, it's not so easy to just determine what in an inspection report
is material, immaterial or outright false, and legal liability could
result from making such a determination.
Kary L. Krismer
206 723-2148
On 9/28/2022 9:21 AM, Erik Marks wrote:
>
> Kary,
>
> Thanks for the response. I don’t disagree with you that it is
> practical for the Seller, and Seller’s broker, to avoid looking at the
> Inspection Report. What I am saying, however, is that choosing to not
> look at the Inspection Report seems to me to be a violation of the
> duty imposed on the Seller’s broker to review readily available
> information about the property they are selling, and to disclose to
> the Buyer all information obtained that is material.
>
> The Seller’s Broker definitely could reject statements in the report
> as being inaccurate, exaggerated, incomplete, or similar, and
> therefore deem then immaterial and not in need of being disclosed.
> But intentionally avoiding receipt and review of an inspection report
> that is known to exist goes much further than that. For example, what
> if the Seller is unaware that they have an extensive termite problem
> that has compromised the structural integrity of the house; the first
> buyer’s inspector discovers this and reports on it and the buyer
> terminates the based on conditions discovered during the inspection by
> Acme Inspection Co, but providing no detail; the house is then sold to
> a second buyer, who waives the inspection contingency, and discovers
> the termite problem after closing. It seems to me that the second
> buyer would have a claim, under the reasoning in Eaton v Strasburger,
> that the Seller’s broker breached her duty to avail herself of readily
> available information about the property when she deliberately avoided
> looking at a report about the condition of the property that she was
> listing for sale.
>
> Erik
>
> *From: *Kary Krismer <krismer at comcast.net>
> *Date: *Wednesday, September 28, 2022 at 7:05 AM
> *To: *WSBA Real Property Listserve - email to post
> <wsbarp at lists.wsbarppt.com>, EGMRealEstate <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> 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 3^rd 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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