With spring approaching, the termites are multiplying, while new form contract revisions regarding termite expenses affect both buyers and sellers. Costs typically range from a few hundred dollars into the thousands of dollars for termite damage infestation and repairs. Who will pay for the termite inspection and repairs? Beware if you don't stipulate up front because it's no longer included in the Residential Purchase Agreement (RPA).
The California Association of Realtors (CAR) revised the standard RPA and released the new form in November 2014. As part of the revision, CAR removed the Wood Pest Addendum form that was commonly used to allocate responsibility for the termite inspection and payment for the recommended work in the termite report, and the standard RPA does not include any language for allocating the cost of the recommended work. Instead, CAR now suggests that buyers and sellers negotiate the responsibility for the termite work during escrow via the Request for Repairs form.
However, savvy buyers and sellers will realize that negotiations during escrow regarding responsibility for termite work (sometimes amounting to thousands of dollars) are not always smooth or cohesive to a successful escrow. Instead of addressing this tension that will likely occur during escrow, CAR recommends that “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.”
Esquire Real Estate can draft customized and appropriate language for the allocation of responsibility for the termite inspection and payment for the recommended work in the termite report during the contract negotiation phase before the parties have committed to the terms of the transaction and entered escrow. Esquire Real Estate offers customized contract drafting as one of the many services at no added cost that Esquire Real Estate, as an attorney-broker, can provide for your next purchase or sale.