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Feb. 25, 2015
The C.A.R. Form titled Wood Destroying Pest Inspection and Allocation of Cost Addendum (WPA) was removed from the C.A.R. Standard Forms library when the revised Residential Purchase Agreement (RPA) was released in November 2014. C.A.R. members who were used to using the WPA have inquired why the change was made and what impact it will have on real estate transactions. This Q&A addresses the most common questions about removal of the WPA as well as makes suggestions for how to proceed in current transactions using the available forms.
Q 1. When a WPA was used previously, what did it do?
A The WPA identified who was going to prepare a registered Structural Pest Control Report (“Report”), who was going to pay for the Report, the scope of the Report, and who was going to pay for repairs recommended by the Report.
Q 2. Why was the WPA removed from the C.A.R. Forms library?
A Those sellers who agreed via the WPA to pay for repairs recommended in an inspection Report that they had not yet seen and for which the inspection was not yet conducted were often surprised at the scope and cost of recommended repairs. This led to increased tension and animosity between the parties and their respective agents. The WPA approach was inconsistent with the balance of the RPA which provided that a property was sold in it’s as-is condition and that a buyer would first get inspections and then ask the seller to pay for repairs or correct defects. Sellers did not agree in advance to pay for repairs, whether the discovery had to do with a roof, pool, foundation, plumbing or any other problem. However, many sellers acquiesced to the WPA because they were led to believe that, with or without the WPA, paying for recommended pest control repairs was either legally or contractually mandated as a condition of selling property.
Q 3. Does a buyer have the right to inspect for wood destroying pests and organism in the absence of the WPA?
A Yes. The buyer has the right to conduct an inspection for wood destroying pests under paragraph 12 of the RPA and choose a provider to conduct the inspection and prepare the Report.
Q 4. Can a buyer use the RPA to ask the seller to pay for the cost of an inspection for wood destroying pests and organisms?
A Yes. Paragraph 7A(2) or (3) of the RPA can be used to ask the seller to pay for the inspection (but not the repairs).
Q 5. Should buyers get an inspection for wood destroying pests and organisms?
A Obtaining inspections for items, such as wood destroying pest and organisms, that have the potential to negatively impact the property is always a good idea.
Q 6. Should sellers get an inspection for wood destroying pests and organisms?
A Many sellers decide to pay for their own inspection of the property for wood destroying pests and organisms prior to a contract being entered into with a buyer. Sellers do so in order to have a better understanding of their property and to anticipate the type of repair requests the seller is likely to receive from any buyer. If an inspection is received, and damage is discovered, the seller must disclose it and should provide the Report obtained to the buyer.
Q 7. Should buyers get an inspection for wood destroying pests and organisms even if provided with such a Report from the seller?
A Whether buyers in such a case choose to rely on the seller’s Report or get another on their own is a matter that depends on many factors such as the reputation and reliability of the provider of the Report, the buyers intended use of the property, and the findings of the Report, to name a few.
Q 8. After a buyer receives a wood destroying pests and organisms Report how can recommendations be negotiated with the seller?
A The buyer can use C.A.R. Form Request for Repairs (RR) which has language specifically added in November 2014 (such as separate paragraphs for Section 1 and Section 2 recommendations) to address inspections for wood destroying pests and organisms. See C.A.R. legal QA titled “Request for Repairs and Use of the RR form” for further information.
Q 9. Can buyers use the RPA to ask the seller to pay for repairs recommended by a Report?
A The C.A.R. Standard Forms Advisory Committee recommends negotiating wood pest repairs through the RR form after a registered structural pest control report has been prepared. If the client or brokerage wants to use the offer to purchase to negotiate these repairs, it is advisable to work with an attorney to draft appropriate language.
Q 10. Where can I obtain additional information about this and related subjects?
A This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit car.org/legal.
Readers who require specific advice should consult an attorney. C.A.R. members requiring legal assistance may contact C.A.R.’s Member Legal Hotline at (213) 739-8282, Monday through Friday, 9 a.m. to 6 p.m. and Saturday, 10 a.m. to 2 p.m. C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at (213) 739-8350 to receive expedited service. Members may also submit online requests to speak with an attorney on the Member Legal Hotline by going to http://www.car.org/legal/legal-hotline-access/. Written correspondence should be addressed to:
CALIFORNIA ASSOCIATION OF REALTORS®
Member Legal Services
525 South Virgil Avenue
Los Angeles, CA 90020
The information contained herein is believed accurate as of February 25, 2015. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney. Writter by Neil Kalin, Esq.
Copyright© 2015 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Permission is granted to C.A.R. members to reprint this material in hardcopy or PDF format only for personal use or with individual clients. This material may not be used or reproduced for commercial purposes. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R Legal Department. All rights reserved.