After the Home Inspection: Renegotiating Price, Credits and Repairs in BC

Your offer was accepted subject to inspection, and the report has arrived. Between now and your subject removal deadline, you can accept the home as it is, ask for a lower price, a credit or repairs, or let the subject go. This guide explains how each option works in BC, how to put it in writing, and what the seller on the other side is weighing.

The short version

Sort the report before you respond

An inspection report lists everything from a loose handrail to a failing roof, and not every item deserves the same weight. Sort the findings into two groups:

• Big items. Safety hazards, structure, water getting in, and major systems such as the roof, wiring, plumbing, heating and drainage.
• Everything else. Maintenance and cosmetic items that come with any home, especially an older one.

For each big item, get a specialist's opinion and a written quote before the deadline: a camera scope of the sewer line, an electrician, a roofer, or an oil tank scan for an older house. I explain what a general inspection covers in home inspections in BC and the usual trouble spots in buying an older home. If quotes won't arrive in time, ask for an extension early. The Legally Speaking column published by the BC Real Estate Association (BCREA) notes that the subject removal date can be changed by agreement before subjects are removed, in a written amendment signed by all parties.

Your options before the deadline

• Remove the subject as is. You accept the home and the findings, and plan and pay for the work yourself.
• Ask for a lower price. An amendment sets a new purchase price.
• Ask for a credit. The price stays the same, and the seller credits you an agreed amount at completion.
• Ask the seller to repair. The seller has agreed work done before completion.
• Agree on a holdback. Part of the price is held in trust until a repair is finished.
• Let the subject go. If you don't give written notice removing it by the deadline, the contract ends.

A lower price or a credit lets you choose your own contractor after you move in. A seller repair gets the work done first, but the seller picks the trades and you judge the result.

A lower price or a credit

A lower price changes the figure your mortgage and down payment are based on. A credit leaves the contract price alone and shows up on the statement of adjustments, the document that sets out what each side pays at completion, where it reduces the amount you need to close.

Either way, your lender needs to know. BCFSA, which regulates real estate and mortgage professionals, warns about cash back schemes, where a buyer pays an inflated price and the seller later returns part of it: lenders generally treat cash back as a reduction in the purchase price, and hiding it can amount to mortgage fraud. BCFSA says arrangements written into the contract and disclosed to the lender are different, so put any credit in the amendment. Before you sign, ask your mortgage professional how your lender handles a credit and whether it must approve the change, and tell your lawyer or notary so the paperwork matches the deal.

Repairs and holdbacks

The standard contract says the home will be in substantially the same condition at possession as when you viewed it, so any repair the seller agrees to has to be spelled out in the amendment:

• Scope. The work, materials and standard, ideally tied to a contractor's written quote.
• Trades and permits. Electrical and gas work generally needs a permit before it starts, usually pulled by a licensed contractor. Technical Safety BC issues these permits in most of BC, while some cities, including Vancouver and Burnaby, issue their own. Structural repairs can need a building permit from the city.
• Proof. Invoices, permits with final inspections, and warranties transferred to you where possible.
• Access. A right for you or your inspector to see the finished work before completion, on notice.

A holdback covers work that can't be finished in time. Buyer and seller agree in writing to have the buyer's lawyer or notary hold part of the price in trust until the work is done. The lawyers or notaries work out the mechanics, and lenders can have conditions, so raise it early.

Putting it in writing

Any change needs a written amendment that buyer and seller both sign; until then, the original contract stands, deadline included. The seller can accept, counter or refuse, as I explain in counteroffers and backup offers, and I cover how conditions work in subject clauses in BC.

• Act in good faith. BCFSA says subject clauses are not escape clauses and that buyers must use every reasonable effort to satisfy them. BCREA's column notes that a party can refuse to remove a subject only for a reason tied to the clause's wording, so tie your request to the report.
• Read your clause. One BCFSA template turns on whether you are satisfied with the report; another, on whether the cost to fix defects exceeds an agreed amount.
• Show your reasons. The seller isn't automatically entitled to your report unless the contract says so, but the relevant pages and quotes help the seller weigh your request.
• Check for backup offers. BCREA's column warns that changing the accepted contract can trigger a backup offer, so a seller with one should get advice first.

The seller's side

A request after inspection is a proposal, not an order. Before you answer:

• Get your own quotes. Compare the buyer's numbers with a contractor you choose.
• Weigh repair against price. Doing the work means managing trades, permits and a deadline, and the buyer will judge the result. A price change or credit is settled at completion.
• Think about the next buyer. BCFSA's guidance says a material latent defect, a serious defect that a reasonable inspection wouldn't reveal, must be disclosed to later buyers once your agent knows about it, including when it came to light in the inspection of a buyer who didn't proceed. Under the Real Estate Services Rules, that can include defects that would cost a great deal to fix and missing permits. A disclosure statement completed before you knew may need updating; see the Property Disclosure Statement.

If the deal ends

If the subject isn't removed in time, the contract ends. Your deposit is usually held in trust by a brokerage as a stakeholder, for both sides, and BCFSA says it can be released only when buyer and seller both sign an agreement; if they disagree, the brokerage keeps holding it or applies to pay it into court, and both should get legal advice. The Home Buyer Rescission Period is separate: it lets a buyer cancel within three business days, starting the next business day after acceptance, runs at the same time as your subjects, and costs 0.25% of the price. More in when a home sale falls through.

Condos and townhouses

For a strata home, your inspector can check the unit, but ask how much of the common property they can and will examine. The building's condition comes mostly from the strata's records: the Form B information certificate, the depreciation report, at least two years of minutes and any engineering reports. Under the Strata Property Act, the strata corporation repairs and maintains common property, apart from parts a bylaw makes owners responsible for, so a seller can't simply promise to fix the roof or the building envelope. Start with the strata documents to read first.

Questions buyers and sellers often ask me

Can I ask for a lower price after the inspection?

Yes. Before you remove the subject, you can propose an amendment with a new price. The seller can accept, counter or refuse, so tie the request to what the inspection found and support it with quotes.

Is a credit better than a lower price?

Neither is better in every case. A lower price reduces the figure your financing is based on. A credit cuts the cash due at completion, but your lender may count it as a lower price and lend less. Your lender must know about either, so check with your mortgage professional and your lawyer or notary first.

Does the seller get a copy of my inspection report?

Not automatically. BCFSA says a seller is entitled to it only if the contract provides for it. Sharing the relevant pages can support your request, but if the sale collapses, a serious hidden defect the seller's agent learns about may have to be disclosed to future buyers.

Can I use the rescission period after a bad inspection?

Only if it hasn't ended. It runs for three business days starting the next business day after acceptance, alongside your subjects, and costs 0.25% of the price. Some sales are excluded, including leasehold, auction and court-ordered sales.

What if the seller's repairs aren't finished by completion?

It depends on what your amendment says. A holdback, an agreed amount held in trust until the work is done, is one answer; moving the completion date is another. Both need written agreement from buyer and seller, so talk to your lawyer or notary well before completion day.

Selling soon? Read about pre-listing inspections, which can surface problems before a buyer's inspector does, and whether to fix it first or sell as is.

This article is general information, not legal advice. The details come from BCFSA, BCREA's Legally Speaking column, Technical Safety BC, People's Law School, the Real Estate Services Rules and the Strata Property Act, and were current at the time of writing; the wording of your own contract governs, so ask your lawyer or notary about your situation. For BCFSA's guidance on offers, subjects and deposits, see BCFSA's guide to making an offer.