Termite Damage, CL-100, and Seller Obligation in Charleston, SC.

Termite Damage, CL-100, and Seller Obligation in Charleston, SC.

Member since 2023 · 3 posts · 0 votes

Hey guys, 

First time homebuyer and Biggerpockets fan here. I have a newly ratified contract on a Hanahan home that I believe to be significantly below market value. The home inspection was performed today and found an active termite infestation along with significant termite damage in the crawl space to the point of causing much of the living room floor to sag.  The rest of the house is in good condition. The offer included a contingency period and the seller has expressed that they do not wish to perform any repairs. They also had a second offer "As-Is" which they turned down in favor of mine for a small increase in price. 

It may seem that the solution is to either bite the bullet for repair costs or back out, however there are specific terms in the contract (and I believe SC law) which apply to termites and termite damage above and beyond any contingencies or "as-is" agreements. Namely,

"If the wood infestation report reveals the presence or indication of or damages by termite infestation or other wood destroying
organisms, Seller shall remedy such deficiencies and shall furnish the Buyer with a CL100 wood infestation report"

and 

"If the Seller does not make the repairs and treatment, the Buyer shall have the option to
(1) accept the Property in its present condition, (2) negotiate with the Seller for the payment of these repairs and treatment, or
(3) terminate this Contract by Delivering Notice of Termination to the Seller."

What I don't see here is what to do if the seller refuses to make repairs and refuses to negotiate any concessions in the sale price. This seems to be a specific carve out that requires the seller to fix this specific type of damage, whereas other types of damage could be put on the buyer to fix. So in essence they are bound to sell to me, and bound to repair the damage, but it also seems like they could choose to ignore the damage and refuse to negotiate, forcing me to back out and then sell to someone else. That seems to defeat the purpose of this specific legal requirement. Why say, "Seller shall remedy," when they can just force the buyer to fix by not negotiating?

I am not asking anyone to legally parse the language here, only providing context for those who have possibly worked in the region or dealt with similar situations. However this turns out I hope to meet any realtors or investors in the area going foreword! Thanks!

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Charleston, SC · Member since 2013 · 380 posts · 157 votes
3y

@Ben Richey, Your answer is in the second paragraph of the text you quoted.  If the seller chooses to not do any repairs and won't renegotiate the price to the buyer's satisfaction, then the buyer can walk away without losing their earnest money... >>*IF*<< the CL100 was accepted as a contingency on the contract by the seller.   It's an either/or situation.  

This is assuming you're using the standard SCAR contract (which I'm guessing based on the quoted text).

Note that legally, the seller would now need to disclose that known termite damage and active termites to any prospective buyers going forward.  Not that they all do that of course...

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  • Charleston, SC · Member since 2013 · 380 posts · 157 votes
    3y

    @Ben Richey, Your answer is in the second paragraph of the text you quoted.  If the seller chooses to not do any repairs and won't renegotiate the price to the buyer's satisfaction, then the buyer can walk away without losing their earnest money... >>*IF*<< the CL100 was accepted as a contingency on the contract by the seller.   It's an either/or situation.  

    This is assuming you're using the standard SCAR contract (which I'm guessing based on the quoted text).

    Note that legally, the seller would now need to disclose that known termite damage and active termites to any prospective buyers going forward.  Not that they all do that of course...

  • Member since 2023 · 3 posts · 0 votes
    3y

    I was afraid of that.. but thank you. Given that you know the area, would you say a 4b/2.5b 1500sqft house near Hanahan Middle School for 245K would still be a good get assuming 20k repair? If you don't mind speculating. Being glued to listings it seems that way to me. But then again I'm new. Thanks for your time.  

  • Charleston, SC · Member since 2013 · 380 posts · 157 votes
    3y
    Quote from @Ben Richey:

    I was afraid of that.. but thank you. Given that you know the area, would you say a 4b/2.5b 1500sqft house near Hanahan Middle School for 245K would still be a good get assuming 20k repair? If you don't mind speculating. Being glued to listings it seems that way to me. But then again I'm new. Thanks for your time.  

    I'd have to know a lot more about the house/property to take a stab at that.  Do you have a Realtor?  If so I wouldn't want to be stepping on his/her toes with my opinions.
  • Investor · Mt Pleasant, SC · Member since 2018 · 57 posts · 46 votes
    3y

    Ben, just be cautious about your termite repair budget. We've done these before and some work out to be cheaper than first thought and others grow and grow as you peel back layers of damage. You have to comfortable with the risk.  Good luck

  • Charleston, SC · Member since 2013 · 380 posts · 157 votes
    3y
    Quote from @Charlie Tunstall:

    Ben, just be cautious about your termite repair budget. We've done these before and some work out to be cheaper than first thought and others grow and grow as you peel back layers of damage. You have to comfortable with the risk.  Good luck


     +1 on that thought.  Termite damage is often hard to evaluate before you open things up.

  • Investor · Charleston , SC · Member since 2014 · 160 posts · 142 votes
    3y

    @Ben Richey General Contractor here. There is no way replacing a floor system is going to be 20K. Granted I work on more expensive stuff...but...20K to replace a floor system is just not realistic. More likely you are looking at 60K. Happy to chat on the phone if you want to DM me.  

  • Member since 2023 · 3 posts · 0 votes
    3y

    Thanks to all who helped out. In the end I chose to walk away, as sad as it was I couldn't risk my first property being a money pit. One crazy thought.. Is there anything I can do with this pricy inspection report? I'd imagine a buyer might like to buy it and save a few bucks, but not sure if that is a thing or how to go about it.  

  • Investor · Mt Pleasant, SC · Member since 2018 · 57 posts · 46 votes
    3y

    Ben,

    I've never successfully resold an inspection report. I do consider it "tuition" however and, although it cost you hundreds, it may have saved you thousands.

  • Charleston, SC · Member since 2013 · 380 posts · 157 votes
    3y
    Quote from @Ben Richey:

    Thanks to all who helped out. In the end I chose to walk away, as sad as it was I couldn't risk my first property being a money pit. One crazy thought.. Is there anything I can do with this pricy inspection report? I'd imagine a buyer might like to buy it and save a few bucks, but not sure if that is a thing or how to go about it.  


     Probably the last thing that seller wants is an inspection report that documents all of the issues with his house.  If you know the other buyer who was interested, yes they might want the report but they'll probably just follow your lead and walk away.  As Charlie said above, tuition.

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