Articles by Doug Tingvall Attorney at Law

Who performs building inspections?

Building inspectors typically have backgrounds in construction, engineering, and/or architecture. There are differences of opinion as to which background best qualifies an inspector. In Washington, there is no licensing, certification or registration requirement for building inspectors, other than pest inspectors. Thus, unlike most other professions, there are no education or experience requirements, no examinations, no bonding or insurance requirements, no agency supervision or enforcement, and no uniform format for inspection reports. As a result, there is a great disparity in the practices and competency of building inspectors.

How much does a building inspection cost?

The cost of a building inspecton varies greatly from inspector to inspector, but typically runs from $250 to $600 for an average house. The cost also varies depending on the size and type of the house, and the scope of the items covered in the inspection.

What is a pre-purchase building inspection?

The scope of a building inspection varies from inspector to inspector, but typically includes the structural, mechanical, plumbing, electrical, heating, ventilating, and air conditioning components, systems and fixtures, and built-in appliances. In Western Washington, the most common major problems discovered through a building inspection relate to water leakage and seepage, pest infestation, and dry-rot. Building inspections generally do not include potentially harmful materials, such as asbestos, urea-formaldehyde, radon, or lead-based paint. The scope of the inspection is also limited by the lack of accessibility to hidden areas and the inspector's own expertise. Pre-purchase building inspections are limited to visible areas of the improvements, and do not include destruction or intrusive testing. As a result, building inspections sometimes only reveal the symptoms of a problem, but its source. Likewise, building inspections do not always reveal the symptoms, but not its source. Likewise, building inspections do not always reveal the extent of a problem. If a building inspector discovers a problem beyond the scope of the inspection or the inspector's expertise, the inspector will often recommend that the purchaser consult a specialist, such as an engineer, roofer, pest inspector, or testing laboratory.

Why obtain a pre-purchase building inspection?

The primary purpose of a building inspection is to obtain information concerning defects and/or deferred maintenance that may not be visible to a layperson or known to the seller or real estate broker. Prospective purchasers should not rely upon city or county building permit inspections, the purpose of which is to assure minimum compliance with building codes. Likewise, prospective purchase should not rely upon the lender to require desired inspections, since the lender is only concerned with make sure that it has adequate collateral as security for its loan. if a prospective purchaser has any concerns about the condition of the improvements, the purchase should obtain a building inspection.

When should a building inspection be obtained?

There is no legal requirement that a seller provide or pay for a building inspection. If a prospective purchaser wants a building inspection, then an inspection contingency should be inclued in the earnest money agreement as part of the purchaser's offer. Customarily, the purchaser selects and pays the Inspector. Most commonly-used contingencies give the purchaser a certain number of days within which to obtain the desired inspections. If the purchaser objects to any of the conditions identified by the inspector, which the inspector recommends be corrected, then the purchaser must give the seller an opportunity to agree to make the corrections. If the seller is not willing to make the corrections recommended by the inspector, then the purchaser may withdraw from the transaction without liability and the earnest money is refunded to the purchaser.

Courtesy of:

Doug Tingvall
Attorney at Law

Unused underground residential heating oli tanks becoming a matter of concern. 

Unused underground residential heating oil tanks ("UURHOT's") are increasingly becoming a matter of environmental concern. There are thousands of UURHOT's in Washington, many of which still contain heating oil. They are typically 200-300 gallons in size and are constructed of bare 12-gauge steel (about 1/8 thick). After 20 to 30 years in the ground, corrosion makes them prone to leakage and collapse.

Presently, there are no regulations specifically covering UURHOT's, other than the fire code requirement that a UURHOT taken out of service longer than one year must be removed or closed in a manner approved by the local fire department. However, lenders are increasingly requiring UURHOT's to be removed or closed as a condition of making a loan.

The Department of Ecology ("DOE") recommends the following actions for UURHOT owners:

1. Determine whether any heating oil remains in the tank.
2. Remove any remaining heating oil from the tank. Removing the oil ensures against future leakage and contamination, for which the owner could be liable. Oil recycling companies (Listed in the yellow pages under "Oil--Waste") will usually pump the tank for les than $100.
3. Clean and inert the inside of the tank. After removing the remaining oil, there will likely be a sludge left on the bottom of tank from foreign matter that has gotten into the tank and matter that has settled out of the heating oil. Companies that pump the tanks will often clean and inert them (remove the vapors) for an additional fee of about $400.
4. Unearth and remove the tank. The DOE recommends removal of UURHOT's as the most complete solution to the problem. The cost for removing and disposing of an UURHOT varies widely depending on location and accessibility, but is usually between $1,000 and $4,000.Once the tank is removed, any soil contamination from leaking or spilling must also be cleaned up. Again, professional assistance is highly recommended.
5. Fill the tank in place with an inert solid material. A less expensive alternative to removing an UURHOT, the tank could be pumped, cleaned, and filled with an inert solid material (typically sand, gravel, or concrete). The purpose of filling UURHOT's with inert material is to prevent the tank from shifting, floating, or collapsing, and to prevent harmful vapors from accumulating. The primary disadvantages of filing the tank are the increased costs of future removal and the potential for unknown soil contamination, which cause many lenders to require removal, rather than filling. Unless the UURHOT is either removed or closed in a manner approved by the local fire department, and any soil contamination is cleaned up, the existence of the UURHOT on the property should be disclosed to the purchaser. Of course, a real estate agent is not an expert on UURHOT's, and interested parties should contact the DOE, local fire department, and qualified professionals for additional information and assistance.

This article contains general information only, and should not be used or relied upon as a substitute for competent legal advice in specific situations.

RE LAW Bulletin No. 016 Page 1 of 1 Revised 4/1/92

Courtesy of:

Dougas S. Tingvall
Attorney at Law

Agents need to be able to recognize red flags.

Agents need to be able to recognize and handle red flags in real estate transactions. A “red flag” is a fact 
or circumstance alerting the agent to a potential defect or discrepancy. Common examples of red flags in 
real estate transactions include: evidence of drainage problems, flooding or standing water, leakage or 
seepage, pest infestation or dry rot, mislocated boundaries, and discrepancies in lot size or living area. 

Red flags can appear anywhere – the Seller Disclosure Statement, the agent’s personal observation, a 
listing, flyer or advertisement, City or County records, an appraisal or inspection report, or a neighbor. 
Sometimes the red flag is merely a rumor or suspicion originated by an overzealous inspector, a 
disgruntled neighbor, or a disappointed buyer or another agent. 

The relevant legal duties are found in the Law of Real Estate Agency. Licensees owe a duty to: exercise 
reasonable skill and care, disclose known existing material facts not apparent or readily ascertainable to 
the buyer, and take no action adverse or detrimental to the client. On the other hand, licensees owe no 
duty to: inspect the property or investigate information obtained from a reasonably reliable source, unless 
the licensee agrees otherwise, or disclose past defects the licensee reasonably believes have been 
corrected. 

Regardless of its source, once a red flag is spotted, there are three simple steps in dealing with it: 

Refute (or confirm), 

Eliminate (correct), or 

Disclose the potential defect or discrepancy. 

The specific steps necessary to refute or eliminate the potential defect or discrepancy depend on the 
nature of the red flag. Some red flags are simple to refute or eliminate (e.g., whether the house is served 
by cable TV) – others are difficult and/or expensive (e.g., boundary disputes, land use and environmental 
issues, or soil stability concerns). Some can be addressed with specific and timely disclosures and 
disclaimers (e.g., seller disclosure statement) – others can be addressed with contingencies in the 
purchase and sale agreement shifting the responsibility to the buyer (e.g., inspection and feasibility study 
contingencies). Sometimes such risks can be shifted to third parties (e.g., through home warranties, 
preventative maintenance contracts or extended coverage title insurance). 

Whether the agent should assume the responsibility for taking these steps depends on the risk and cost 
involved. If the agent does agree to investigate an issue, common sources of information the agent could 
consult include: City or County records, a title company, the utility district (water, sewer, electricity, gas, 
cable TV), the seller personally, prior owners or occupants, neighbors, an inspector, a surveyor, an 
appraiser, a contractor or an architect. 

Although real estate agents are not required to inspect the property or verify information obtained from 
reliable sources, agents must be alert for red flags. 

This article contains general information only, and should not be used or relied upon as a substitute for competent 
legal advice in specific situations. 

RE LAW Bulletin No. 036 Page 1 of 1 Revised 9/1/02 

Courtesy of:

Doug Tingvall
Attorney at Law

The home buying process can be simultaneously intimidating and exhilarating. From the first steps of qualifying for a mortgage and deciding what's important in a home, to making a strong offer, coordination appraisals and inspections and getting to the settlement table, every transaction is as unique as the people and properties involved. Buyer's agents specialize in representing the particular interests of home buyers.

"The home buying process is not only complex, but also riddled with potential pitfalls, " said Adorna Carroll, a 2005 National Association of Realtors vice-president and Accredited Buyer Representative with the Real Estate Buyer's Agent Council.

"Having the right buyer's agent can make al the difference. Home buyers today are empowered to interview and select a Realtor to represent them so that they can receive the advice and guidance they deserve. A buyer's agent provides options and alternatives to home buyers so that they can make educated and informed decisions regarding one of the most important investments of their lives," Carroll said.

Many home buyers already realize the benefits of working with a buyer's agent. Last year, according to NAR research, 64 percent of consumers worked with a buyer's agent when they purchased a home. In addition, 95 percent of home buyers say they highly value real estate agent knowledge, and 84 percent of home buyers who used an agent would "definitely" or "probably" use that agent again.

REBAC, an NAR affiliate since 1996, was founded in 1988 to promote superior buyer representation skills and services. REBAC awards the ABR designation to Realtors who have demonstrated a commitment to serving home buyers, both through education and experience.

To earn the ABR designation, Realtors must successfully complete a two-day designation course that covers agency, service delivery, marketing and promotion, and negotiation and risk management; take an approved elective course, such as buyer representation in new homes, second homes, or relocation; and have completed five transactions in which he or she acted solely as a buyer representative. Today, 38,000 Realtors hold the ABR designation, and 12,000 more are working toward it.

"Buyer Agency is sometimes misunderstood but a vital relationship in today's increasingly complex real estate transactions", said Janet Branton, NAR vice-president of business specialties and spokesperson for REBAC. "You're not just buying a home; you're investing in your future. It's important for home buyers to work with a Realtor who has the expertise and know-how to represent the buyer's best interests".

Note: 99.13% of Our Buyers are satisfied or extremely satisfied with our service.

Traditionally, earnest money demonstrates the purchaser's good faith in making an offer and serves as security for the purchaser's performance under an earnest money agreement. However, there recently have been significant changes in the law concerning forfeitures of earnest money deposits.

Generally, if a purchaser defaults under an earnest money agreement, the seller may elect to retain the earnest money as liquidated damages (i.e. forfeiture of the earnest money), to seek actual damages, or to enforce the agreement. In order for a liquidated damages clause to be enforceable, (1) the amount fixed must be a reasonable forecast of just compensation for the harm that is caused by the breach, and (2) the harm must be such that it is incapable or very difficult of ascertainment. Historically, the test of reasonableness of a liquidated damages clause looks to the time that the agreement was entered, without regard to subsequent events. However, in Lind Building Corp v. Pacific Bellevue Developments, 55 Wn. App. 70 (1989(, the court considered the fact that the seller sold the property to another purchaser at a substantial profit and held that a liquidated damages clause in an earnest money agreement is unenforceable if (1) the amount of liquidated damages does not represent an effort by the parties to make a reasonable forecast of anticipated damages, (2) the amount of liquidated damages is unreasonable in light of the anticipated or actual loss, or (3) the calculation of actual damages is not difficult of ascertainment or proof. The Lind decision created terrible uncertainty and resulted in many disputes over earnest money forfeitures.

In 1991, the Legislature enacted the "safe harbor" statute (RCW 64.04.005) in direct response to the Lind decision. Under the safe harbor statute, the forfeiture of an earnest money deposit as the seller's sole and exclusive remedy if the purchaser fails, without legal excuse, to complete the purchase, is valid and enforceable, regardless of whether the seller incurs any actual damages, provided, that (1) the total earnest money deposit to be forfeited does not exceed five percent (5%) of the purchase price; and (2) the agreement includes an express provision in substantially the following form:

"In the event the purchaser fails, without legal excuse, to complete the purchase of the property, the earnest money deposit made by the purchaser shall be forfeited to the seller as the sole and exclusive remedy available to the seller for such failure."

If the property is being purchased for the purchaser's personal use, then the above provision must be separately initialed by both parties. The safe harbor statute is not mandatory; it simply does not apply if the agreement does not satisfy the above requirements. Likewise, the statue does not either prohibit or authorize forfeitures of earnest money deposits exceeding the 5% safe harbor.

Less than four years after the Lind decision, the same court (but with different judges) expressly declined to follow the Lind decision and held that a liquidated damages clause in an earnest money agreement is enforceable if the amount was, at the time of the agreement was entered into, a reasonable estimate of just compensation for the purchaser's default. Watson v. Ingram, 70 Wn, App.45 (1993).

In Watson, the purchaser sued to recover a $15,000 earnest money deposit made on the purchase of a $355,000 house. The purchaser's original offer had included a contingency for the sale of the purchaser's condominium, but the seller would not accept a contingent offer. The seller made a counteroffer containing neither a house sale nor financing contingency, which counteroffer was accepted by the purchaser. The earnest money agreement was entered into before the safe harbor statue was enacted, and provided that "[i]n the event of default by Buyer, earnest money shall be forfeited to Seller as liquidated damages, unless Seller elects to seek actual damages or specific performances." The agreement also included the representation that "Buyer has sufficient funds available to close this sale in accordance with this agreement, and is not relying on any contingent source of funds unless otherwise set forth in this agreement."

The purchaser was unsuccessful in selling his condominium by the closing date, and tried several financing alternatives. In the meantime, the seller accepted a back-up offer at a price $25,000 higher than the pending sale. The purchaser requested an extension to continue trying to obtain financing, but the seller refused. Unfortunately for the seller, the back-up offer also failed to close, and the seller finally sold the house ten months later for the same price that the first purchaser had agreed to pay. The purchaser sued to recover the earnest money under the Lind case, claiming that the seller had suffered not actual damages, such that forfeiture of the earnest money would constitute an unenforceable penalty.

The Watson court cited the safe harbor statute as a "legislative determination that 5 percent of the purchase price is a reasonable amount of liquidated damages in a real estate transaction," and expressly declined to follow the Lind decision.

"[I]n the context of real estate agreements, a requirement that damages be difficult to prove at trial would encourage litigation in virtually every case in which the sale did not close, regardless of whether the earnest money deposit was a reasonable estimate of the seller's damages. This result is directly contrary to the policy reasons for favoring liquidated damages provisions in agreements between parties with equal bargaining power: certainly, assurance that the contract will be performed, and avoidance of litigation."

70 Wn.App. at 56-57.

The court went on to hold that the liquidated damages clause was enforceable, and the earnest money deposit of $15,000 was reasonable, "particularly in light of the fact that the deposit was less than 5 percent of the purchaser price." In effect, the court has created a "judicial safe harbor" based upon the statutory safe harbor.

The result from a seller's perspective is that the safe harbor statute no longer offers any benefits over the case law, such that the safe harbor clause is no longer in the seller's best interest. However, because the Watson court relied heavily upon the safe harbor statute, the 5 percent limitation should still be used as a guideline for the maximum amount of earnest money that can safely be retained by a seller without proving actual damages.

From the purchaser's perspective, the safe harbor statute still protects the purchaser from personal liability for actual damages and limits the seller's recourse to retaining the earnest money. However, the same benefit can be obtained more easily (without the separate initialing requirement) by including a contractual limitations of remedies. In other words, there never has been a legal barrier to limiting the seller's remedy to retaining the earnest money by contract. The safe harbor statute simply is no longer needed.

Courtesy of:

Doug Tingvall
Attorney at Law