Negative Inspection Reports: Is ignorance really bliss?

Q: I represent a seller who has a pending purchase contract on his property that includes an inspection contingency. He has told me that if the buyer is unsatisfied with the inspection report that he will release the buyer from the contract with “no questions asked.” Moreover, he has instructed me to notify the buyer’s agent not to give me  a copy of the report or to communicate in any way what the issues are with the property. By doing this, the seller believes he won’t be faced with the problem of having to disclose findings that are contained in the inspection report to other potential purchasers. Is this OK? What if the buyer’s agent sends me the report anyway or tells me what defects were included in the report? Will I still need to disclose this information to subsequent buyers if the property goes back on the market?

A: Such instructions from sellers regarding inspection issues are occurring more frequently. And in some cases the listing agent is actually the one recommending this practice to their sellers. The rationale for this approach is that you can’t disclose what you don’t know. And while this may be is true, that doesn’t mean this is a good idea. And in some cases this approach of “no see , no hear, no speak” could actually create a potential risk for both the seller and agent.

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