As real estate lawyers in Mobile, Alabama we assist clients with their real estate transactions by providing various services throughout the transaction. One of those services is advising our clients on pre-closing inspections. Any real estate transaction can present a wide variety of inspection requirements. These can include structural inspections, soil inspections, storm water runoff studies, flood zone location, perk tests, and environmental studies to name a few. This blog entry covers some of the basic issues we help our clients deal with regarding pre-closing inspection/cooperation.
The purchase agreement needs to clearly identify the time period that the Buyer will be allowed to conduct such inspection studies. The purchase agreement should addresses liability associated with inspections. Often times indemnity and hold harmless agreements are included to cover damages or injury which might arise from testing. Reasonable access to the property, records, equipment, personal property and items to be inspected should be negotiated and agreed to by the buyer. These inspections will require a reasonable time to be completed which likewise should be included in the purchase agreement.
The sellers also have several issues with respect to some of these studies. Confidentiality agreements may need to be included in the purchase agreement so that information concerning the property is not published by third parties. Additionally, there could be liability issues related to these studies. If an environmental study is conducted which reveals certain contamination and the seller is provided a copy of the study, then it can trigger certain reporting duties under a number of environmental statutes.
The professionals involved in pre-closing inspections need to be identified and retained far in advance of closing. The professional needs to be retained with a schedule agreed upon that allows some flexibility to complete certain tasks within the due diligence period and to avoid delaying the closing.