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Who pays for defects found in a home inspection?

I am trying to sell my house. A home inspector made some good suggestions about things that really should be done. What is the normal percent that the seller is responsible for under paragraph N? What is paragraph N?

ANSWER:

Paragraph N is found in what is commonly referred to as the "FAR/BAR Contract." The FAR/BAR Contract is a uniform printed form of contract for sale and purchase of real estate which was developed through the joint efforts of realtors and attorneys of the Florida Association of Realtors and The Florida Bar. Paragraph N is found on the back page of the form with other paragraphs A through W, which are referred to as "Standards for Real Estate Transactions."

The Standards represent and recite customs as they have developed over the years relating to the purchase and sale of real property. These standards govern the rights and obligations of the Buyer and Seller in the transaction just as forcefully as any other provisions in the contract. If the agreement of the parties is intended to be contrary to any of the Standards, then one or more special clauses must be added in an Addendum in order to supersede the provisions set forth in the Standards.

Standard N allows the Buyer an opportunity to have inspections made on certain items within a specified time. With respect to ceiling, roof, exterior and interior walls, foundations, seawalls and docks, the Seller is warranting that these are free from visible evidence of leaks, water damage or structural damage. The Seller is further warranting that the septic tank, pool, all appliances, mechanical items (e.g., locks, doorknobs, window cranks, etc.), heating, cooling, electrical, plumbing systems and machinery are in working condition.

This is not a warranty against the existence of cosmetic damage, as long as it does not constitute structural damage and/or has not resulted in leaks or water damage. It appears that the intent of Standard N is that "working condition" means the listed items are operating in the manner in which they were designed to operate.

Unless the parties state a different percentage or zero, the Standard limits the Seller’s expense for required repairs to three percent of the purchase price. If the expense exceeds three percent, then either party may cancel unless the other party wants to pay the excess.

While your home inspector may have made good suggestions for items to be done, the Seller will only be obligated for the items provided for in Paragraph N and only up to the agreed upon percentage or amount.

This information is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.

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