Concern with structural issue on a house under-contract, what I should do?

Question

I currently have a house under contract, and during the termite inspection, live termites were found, along with substantial damage to the sill plates in the basement. We also suspect there may be damage to the joists, but they were initially covered with plywood. The seller explained that the plywood was part of an unfinished basement renovation, which I found suspicious—especially since finishing a basement ceiling with plywood is unusual.

For context, the seller is a known property flipper in the area. Given the findings and the seller’s explanation, I’m concerned that important issues may have been concealed. At this point, I’m strongly considering backing out of the contract due to what I believe may be deceptive practices. But the seller refuses to let us out.

My attorney advised that we must wait for the full inspection report before proceeding. Once we receive the report, we can submit a list of Qualifying Deficiencies. If the seller does not agree to repair all of the deficiencies we request, we’ll have the option to void the contract.

We asked the seller to remove the plywood prior to the inspection, and now that the joists are visible, my contractor has expressed concern that the repairs were not done properly. My question is:

• Will the home inspector typically comment in the report on whether the joists were repaired correctly and how they should be repaired? 
• Or is it necessary to hire a specialist, such as a structural engineer, for that level of evaluation?

I’d appreciate your guidance on what steps I should take next to protect myself.

Ned Carey · Answer

A good inspector will give you an idea of what is needed and possibly the cost. Contract contingencies are often very specific as to what can and can not be done after and inspection. So the specific clause is important.

Assuming you can simply walk, you can choose to walk to give you more negotiating time.

"But the seller refuses to let us out."

Not the sellers option if the contract gives you an out. The wording of the contract rules the day. Your lawyer should be able to handle and explain

George Skidis · Answer

I am not an attorney and do not play one on TV. When submitting an offer only you can look after you. The c

• Mortgage contingency: This clause specifies a window of time in which the buyer must obtain financing to purchase the home. If the buyer doesn’t obtain a mortgage by that deadline, they can withdraw from the deal without penalty and the seller can find a different buyer. Buyers should always include this contingency in their purchase agreement. Even on a cash deal
• 
• Title contingency: This “provides the purchaser the right to obtain a title search and raise any objections to the status of the title to the property, which must be cleared by the seller in order for the purchaser to close on the transfer of title. This ensures that you’re going to purchase a property that has marketable title without defects.
• 
• Home inspection contingency: This clause involves the window of time the buyer has to get the property professionally inspected. The Inspection helps ensure there are no serious issues, such as a leaky roof, a faulty electrical system or structural defects.  When the property has defects, and the seller elects not to repair or remediate the issues which are raised by the buyer, the buyer can terminate the contract.
• 
• Sale of a prior home contingency: This protects buyers who can't make two home payments
• If the buyer needs to sell their current home by the deadline indicated in the contract, but they cannot find a buyer, they can escape the contract,”
• 
• Appraisal contingency: This safeguards the buyer by stipulating that the property must appraise for the indicated sale price, at minimum, or the contract can be nullified. This is because banks don’t like to loan money to borrowers for a house that costs more than it’s worth. This clause may also indicate that the seller can opt to reduce the price to the appraised value.
• 
• Insurance contingency: This clause stipulates that the buyer must apply for and obtain property insurance on the property. If they can’t get the necessary insurance, either party can withdraw from the contract. This is often requested by either the seller or the mortgage lender.

You can also make up your own clauses. Just get them reviewed by your attorney.

Jin Ye Cheng · Answer

Unfortunately, it’s a cash sale.

We asked around but can’t seem to find a structural engineer that inspect residential houses in the area.

Christian Maluo · Answer

Are you getting a loan? In my state, a lender  like ask for a clear pest and dry rot report. The home may not be financeable otherwise. Where's the paragraph with that situation defined? That the home isn't financeable.

in my state, we can also extend our professional inspection period when needed. If you did want to pay for a structural engineer to come out.

Jin Ye Cheng · Answer

This property is in Illinois. While my attorney handles closings, I’m not sure he has much experience with clients backing out of contracts.

During the inspection, some issues were found. There was damage to the sill plates and joists—nothing severe enough to require replacement, but one weight-bearing beam is rotten and does need to be replaced. But some part of the joists are still covered by plywood so can’t be determined. Also he found dry rot and mold in the crawl space beneath the two bathrooms, which appears to be causing the bathroom floor to slope. Additionally, we noticed water coming in through a basement window during today’s rain.

My real estate agent suggested we consult my attorney to explore whether we can declare the inspection finds unacceptable and withdraw from the contract. We’re willing to forfeit the $1,000 earnest money.

I understand the sellers may threaten legal action, but at this point, I would rather risk being sued than proceed with the purchase of this house. Especially I think I have a valid reason to back out.

What do you think I should do? Do you think they will sue?

Very stressful…

Ned Carey · Answer

Wow that is a tough contract for buyers. What state are you in? Is your attorney a real estate attorney familiar with the contract used?

It seems you can ask for the repairs. It may be a non issue or might be significant. Hopefully you had a good inspector and his guidance can give you an idea how hard to push the issue.

Jin Ye Cheng · Answer

But my attorney said I can’t simply walk away, that the current MLS residential sales contract makes it harder for buyer to back out. The only way out of the contract now is if the seller didn’t agreed to repair all Qualifying Deficiencies as requested by us after the inspection. Here’s the section of the contract regarding Qualifying Deficiencies.

Caleb Brown · Answer

I would walk, make sure you stay within your timeframe. Seller can't negate the contract, he can be angry but if you are within the contingencies you are fine. Live termites is something that is hard to get a good idea until you start in on the project. Mix in the improper repairs I would be concerned.

Jin Ye Cheng · Answer

Inspection is in a day and we have send the list of repairs to the seller in 3 day. So we might not be able to hire a structural engineer in time...

Concern with structural issue on a house under-contract, what I should do?

Most Popular Reply