July 11th, 2022 at 1:16 pm
A. Yes.
B. Yes, if the buyer has an appraisal contingency.
C. Yes, if the buyer is getting an FHA or VA loan.
D. No.
Answer: Answer A is wrong. It is true that a buyer must generally give the seller copies of all investigation reports, such as home inspection reports and termite reports, under paragraph 12D(ii) of the RPA. But there’s an exception to that requirement for appraisal reports (as discussed below).
Answer B is not the best answer. According to the RPA, the buyer’s delivery of investigation reports excludes “any appraisal, except an appraisal received in connection with an FHA or VA loan.”
Answer C is the best answer. As background, when a buyer seeks FHA or VA financing, the buyer’s lender will ask the seller to sign an FHA/VA Amendatory Clause (FVAC). In the FVAC, the seller agrees that the buyer can cancel and keep the deposit if the appraisal comes in low, regardless of any contrary provision in the parties’ contract. Given that right to cancel, the RPA requires FHA/VA buyers, but not other buyers, to give copies of their appraisals to their sellers.
-Thank you to Kyle Kemp (Santa Barbara Manager) for suggesting this week’s legal tip!
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