A Home Buyer's Responsibility to Disclose, Inspect and Investigate

By K. Michelle Lind

as seen in the Arizona Republic
Posted: July 2002 ~ Reviewed December 2004

Much has been written about a seller's duties to a buyer when selling a home. However, it is not a one-way street; buying a home brings with it certain responsibilities as well. For example, a buyer must act in good faith and deal fairly with the seller. Buyers, like sellers, have a duty to disclose known facts that are important to the transaction. And, because a seller may not know everything about a home that may be important to a buyer, a buyer has a responsibility to inspect and investigate a home being considered for purchase.

A Home Buyer's Disclosure Responsibilities

A buyer cannot present him or herself as a ready, willing, and able buyer if the buyer knows that there is a significant risk that he or she will be unable to perform by purchasing the home. This would violate the buyer's duty to deal fairly. Therefore, buyers have a legal duty to disclose facts to the sellers that are critical to their ability to perform. Buyers using the Arizona Association of REALTORS® ("AAR") Residential Resale Purchase Contract assume a contractual duty to disclose this information. In the AAR contract, the buyer gives the seller a warranty that the buyer has disclosed any important information that could adversely affect the buyer's ability to close escrow or to complete the buyer's obligations under the contract.

When financing is involved, a buyer should obtain a conditional loan approval letter listing all conditions to financing from a reputable lender, if possible before submitting an offer to purchase a home. This conditional loan approval letter should contain all the information that needs to be disclosed to the seller about the buyer's ability to complete the purchase. AAR's Conditional Loan Approval form may also be used for this purpose. Additionally, if there are other factors that may prevent the buyer from performing, i.e., the buyer must sell a home before purchasing another, this information must be disclosed to the seller as well.

A Buyer's Responsibility to Inspect and Investigate the Home

The buyer also has a responsibility to inspect the home and investigate whether the home will be suitable for the buyer's use. The AAR contract allows the buyer ten days (or other specified number of days) after acceptance of the contract to conduct any inspections and investigations. This time period is called the Inspection Period.

During the Inspection Period, if the buyer reasonably disapproves of any aspect of the home, the buyer must give the seller a written notice of what the buyer is disapproving, and state whether the buyer elects to either cancel the contract or provide the seller an opportunity to correct the items disapproved. If the buyer provides the seller an opportunity to correct the items, the buyer should state in the notice how the item must be corrected. For example, if termites are found, must the entire house be treated, or is spot treatment sufficient? If a roof condition is an item disapproved, state the extent of the repair requested or whether only replacement will suffice.

A buyer must also conduct all desired independent investigations of the home before the purchase is final. The buyer should make inquiries about any applicable governmental issues, such as building, zoning, fire, health, and safety codes. The buyer must investigate the swimming pool barrier regulations so that the home can be in compliance when the buyer takes possession. The buyer should also consult lenders, insurance agents and other professionals for any important information about the home. Finally, the buyer must review and investigate the title report and any CC&Rs for issues of concern.

A REALTOR® Can Help

A buyer's agent can help you understand your responsibilities as a buyer. To find a REALTOR® to assist you, ask friends and relatives for referral, or visit "Find a REALTOR®" on the AAR website at www.aaronline.com. The Buyer's Advisory, also available on the AAR website, can help you investigate a home as well. The Buyer's Advisory provides direct links to many home-buying resources and most of the governmental agencies that have information on Arizona homes.