Lender demands inspection, upgrades
Q: We were ready to close escrow on the vacation home we were buying when the mortgage lender stalled the deal. They said the gas fireplace is not an adequate heat source and that a new heating system must be installed. What's more, they're requiring us to hire a home inspector, even though we waived that contingency. A home inspection, we feel, is an optional service, available for our peace of mind, if we so choose. Can lenders make these kinds of demands regarding heating and home inspection?
A: The lender's preference for a more conventional heating system may be overreaching, depending upon whether the gas fireplace meets the minimum standards for a residential heater. According to the International Residential Code, "… every dwelling unit shall be provided with heating facilities capable of maintaining a room temperature of 68 degrees Fahrenheit at a point 3 feet above the floor and 2 feet from habitable walls in all habitable rooms …" It is unlikely that the lender applied these esoteric standards. However, because their money is being ventured in the transaction, it is their prerogative to set lending standards consistent with their comfort level, regardless of whether those standards seem reasonable.
As for the home inspection, you should thank the lender for forcing you to take steps to protect your financial interests, as well as theirs. Buying a home without a professional inspection is one of the riskiest gambles any homebuyer can make. A qualified home inspector will nearly always disclose defects that could be costly or hazardous. In most cases, the seller can be persuaded to repair some of these conditions. Regardless of the position taken by the lender, you shouldn't even consider buying a home without a detailed home inspection by a qualified professional.
Q: We are buying our first home, and our home inspector reported some cracks (¼ inch wide) in the foundation. How serious could this problem be, and should we cancel the deal if the sellers are not willing to take care of it?
A: The standard recommendation for unusual foundation cracks is "further evaluation by a licensed structural engineer." This is necessary to determine the cause, extent and prognosis of the problem. In some cases, such as with very old homes, ¼-inch foundation cracks might be regarded as normal and not a cause for major concern. In most instances, however, especially where there are accompanying symptoms, such as misaligned doors and windows, sloped floors or cracked walls, further evaluation is definitely warranted.
You should consult your home inspector as to whether an engineering evaluation is needed, but consider the experiential level of your inspector in determining the reliability of that opinion.
If a structural engineer advises foundation repairs or upgrades, the question of proceeding with the purchase or canceling it should then be considered. If you choose to proceed, requests for remedial work by qualified contractors can then be submitted to the sellers.
• To write to Barry Stone, visit him on the web at www.housedetective.com, or write AMG, 1776 Jami Lee Court, Suite 218, San Luis Obispo, CA 94301.
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