Part 2 – WASHINGTON MARCH 2021 REVISIONS TO FORM 35

BUYER INSPECTION CONTINGENCY REPORT

VIDEO SERIES FOR REALTOR HOME BUYER CLIENTS

Realtors in the State of Washington who do their due diligence can help their home buyer clients avoid waiving the buyer inspection contingency. Watch this 5 part Legal Hotline Series, “Don’t Do It”, with Annie Fitzsimmons, the Washington Realtors® legal hotline lawyer; and Ken Sax, the Managing Broker of Professional Realty Services International, as they discuss the best practices to comply with the 2021 revisions to FORM 35 (Inspection Contingency).

Slopeside Home Inspections offers professional home inspection services for buyers and sellers in the greater Vancouver WA and Portland Metro area. Our inspections are thorough and non-invasive, adhering to InterNACHI’s exceptional Standards of Practice.

NOTE: The contents in the YouTube videos, below, do not constitute legal counsel from Washington Realtors® or from Slopeside Home Inspections.

5 Part Series: Part 1 – Part 2 – Part 3 – Part 4 – Part 5

If you prefer reading to watching a video, here below, we have provided the video transcript as an alternative source of information. This video series was added to the Slopeside Home Inspections website with explicit permission from Washington REALTORS®. Below, where we have provided the text transcript, we have made minor edits, only where the spoken word in video does not parlay to a clear understanding when video speech is transcribed into text.

DON’T DO IT – PART 2 – DON’T DELIVER INSPECTION REPORT WITHOUT SELLER’S CONSENT

Text Transcription Of Video Speech

Hi, I’m Annie Fitzsimmons. I’m your Washington REALTORS® legal hotline lawyer and this is video number two in a series that we are crafting around the Form 35 prohibition on buyers delivering the inspection report to sellers, in light of enormous chaos in the industry over this issue. We’ve decided to entitle this video series as “Don’t Do It”, meaning, don’t deliver the inspection report or any portion of the inspection report without the seller’s consent.

In the last video I gave you a little history as to how we got to this prohibition in Form 35. Today I am happy to say I am joined by my friend and fellow educator, Ken Sax. Ken, would you introduce yourself please? Sure, hi folks, Ken Sax here. I’m a managing broker with Professional Realty Services International and I am based in Spokane, Washington.

In the last video I mentioned that in the last couple of weeks, when, that this problem has just reared its ugly head. I have spent spent a lot of time in conversation with brokers, really, all around the state, who are deeply ingrained in this issue, kind of battling their own earnest money fights, if you will, that result from this, from the chaos, uh that’s, that’s, lack that results from the lack of education around this topic, and battling the earnest money issues on both sides, listing broker and buyer brokers sides.

Ken is one of those brokers that I have been involved in deep conversation with and he happens to find himself in Olympia today, so we grabbed him and put him in front of the camera and said, “Please help us educate brokers on this issue.” So, thank you for being here. You bet. The topic in today’s video is, “Buyer brokers, if you can’t include buyer’s inspection report, or any portion of buyer’s inspection report, then how do you draft Form 35R?”

I guess the first point that I want to make is, buyer brokers drafting Form 35R means that you are describing the clear, measurable task that your buyer wants the seller to perform in light of the information buyer learned during their inspection contingency, and that clear, measurable task may be a price concession, it may be paying a portion of buyer’s closing costs, or it might be actually performing some work.

So Ken, what is the first step for a buyer to pursue in determining what it is that the buyer wants the seller to do? Well, yeah, so many things were going through my head, Annie, when you were, when you were making that, that, the opening, uh, comments. So, the first step of a buyer and what they want the seller to do is, what do you want the seller to do if you know what you want the seller to do, is, that is, that’s what you’re getting at? So, I’m sorry, I didn’t ask the question well; but buyers, let’s say buyers done their inspection report. Okay! And, and, there’s, you know the inspector, we all know the inspector calls out. Items all over, all over the place! But buyer says, “I really do want to purchase this property but there’s five things that are really important to me, or three things, or whatever they are”. So you’re the buyer broker, you’re talking to the buyer, the buyer says, “I’m really concerned about that roof. I’m really concerned about the rot in the bathroom floor, and I’m really concerned about whether or not there really is rodent activity in the, in the attic. Okay, those are the three things I care about, roof, bathroom floor, rodent activity.” What do you do, buyer broker? Sure, so what I’m hearing is the inspector has called out certain things and has recommended further investigations, and so we then want to pursue our right to have those secondary inspections, investigations, by a specialist, by an expert, to establish; is there a rodent issue, a black mold issue, or roof issue? That’s exactly right!

So, something that we have covered in a recent video, but let’s touch on it again, is delivering, or, or seeking, not seeking, claiming the additional inspection time. So let’s back up. Remember that based on the revisions in Form 35, the initial inspection period and the additional inspection period, the only distinction between those two time periods is time itself. If you’re not familiar with what I’m saying, then we are linking to a video that just discussed this issue and you should watch that video next. But, remember, the only distinction is time itself, meaning that buyer can bring any, in, any specialist into seller’s home during the inspection period, initial or additional, so…. And the additional requires us to provide just the inspector’s recommendation. Yes. Before we get there though, hang on to that, no, just hang onto that for a second because we want to talk about that, but what I wanted to say was, buyer brokers, utilize every day of every time period. If buyer gets their whole home inspection done on day two or three, something like that, and they know that they need a pest remediation contractor into the attic and it’s going to take 10 days to get them in there and you’ve only got eight days left on your initial inspection period, well get them scheduled now, right? And, if it takes, if it’s, if you’re 10 days out on the scheduling, then use the entirety of your initial inspection period before you deliver the notice of additional inspections that Ken was just talking about, because once you deliver that, you’ve left the initial inspection period behind and you’ve moved on to the additional inspection period. So, if you’ve still got eight days left in your initial inspection period but you deliver the notice of additional inspections, now you’ve only got five days total. Yeah! Eight days is over and you’ve started the clock on your secondary inspection time period.

So Ken, when you’re talking to buyer brokers, or the brokers in your office, how do you counsel them to make sure that they are attentive to those deadlines, not losing the advantage of a single day, but not running the risk of missing the deadline? So, you need to be competent. I mean, let’s back up and maybe attach that video with computation of time and how we count days depending on how many days we have in any given situation. Right! And get your talent, get your calendar, those important deadlines. Absolutely, and don’t, I call it drive off the cliff! Uh, for those that have been in my classes, when you go past that time period, and it happens all the time. It’s happened to me, and on my personal transactions, you drive off the cliff, meaning, you’ve gone past your time period. What’s the status of the inspection contingency? You don’t get it back, okay, right? Right!

So, okay, so utilize every day of the inspection, of the inspection period, both ends of it; because we’re finding that it’s harder and harder to get contractors into homes timely, so you need every day, but then you’ve got to deliver your notice of additional inspections timely.

So Ken, now pick up on what you were about to say. What, what’s required in order to trigger the additional inspections? The language in the form says we must attach inspectors recommendation. So for example, inspector recommends further evaluation of the roof, of the electrical panel, etc. That’s it. We just need to attach that. That constitutes the inspector’s recommendation. Not the rest of the page on page 12 of the inspection report. That’s not the inspector’s recommendation. It’s in there, so cover everything else up, just attach that recommendation. He’s 100% right, of course. I just, I see it all the time. And i’m going to take it one step further.

I have had brokers provide to me what inspectors have given them and I, and I think the inspectors are trying to be helpful because they have revised the report somewhat to include a separate section that says, “Recommended Additional Inspections” and then on that page, of, well, on those pages of recommended additional inspections, the inspector includes pictures of the, you know, dry rot infected area, they include pictures of the spot that needs whatever the remediation is, they talk about what their analysis was to determine that there’s a problem, they talk about their opinion of how bad the problem really is or is not, and then they give, like, five words that say, “recommend additional inspection by a pest contractor”, “recommend additional inspection by a painting contractor” and then, but, and then the question to me is, “So, since this is all set forth on the bro…, on the inspectors… list of additional or recommendation of additional inspections can I just provide that, you know, those 10 pages?” And the answer is, no! It’s what Ken just said. You’ve got to redact, black out all of the pictures, all of the opinions, all of the descriptions of the problem. You want the five words, is it! Recommend additional inspection by a painting contractor. Maybe that’s more than five words, but you get the point. That’s it. That’s, everything else gets redacted. That’s it. That’s right. So, what the form says.

Okay, I thought we were going to cover more in this video, but but I do want to call it here, and then, in the next video, since, is there, let me actually, actually ask you this. Is there anything else we need to talk about before the buyer broker sits down with a Form 35R in front of them, other than claiming additional inspections? They sit down with the Form 35R in front of them, to seek seller’s concessions. Anything else before then? No, we’re just on that portion. Okay, so we’re going to come back in the next video and talk about buyer brokers. What you do when you’re sitting down with a Form 35R in front of you, and you need to ask for seller’s concessions without violating the prohibition on delivering any portion of the inspection report. Uh, if you have questions on anything we’ve talked about so far, or anything else, send an email to me, legal hotline at warrealtor.org.

Thank you for being a Washington REALTORS® member.