Question: We purchased a house four months ago. Because there was a lot of interest in the property, we were advised by our real estate agent not to include a contingency for a home inspection. The agent felt that such a contingency would lessen our chances of entering into a contract with the seller.

We submitted a clean contract. Indeed, we offered $12,000 more than the listing price, and were the successful bidders. However, after we went to closing, we discovered a number of problems. The roof leaks, the electrical system is not strong enough to run a new air conditioning system which we want to install, and there appears to be mold in the basement.

Incidentally, again on the advice of our real estate broker, the contract stated that we purchased the property in its "as is" condition.

Do we have any recourse against the seller or our real estate agent? We estimate that we will have to spend upwards of $15,000 to correct the problems.

Answer: Why do potential buyers buy a house without having it inspected? When we buy a car, we take it for a test drive; we kick the tires and read as many consumer reports about the automobile as we can find. But when we are buying a house -- which is usually the most expensive purchase we will make in our lifetime -- we just sign a contract and hope for the best.

You signed a contract which did not contain a contingency for a home inspection. That was a big mistake on your part. I know that you were anxious to find a house, and probably had been looking for some time. Indeed, you probably were unable to get a contact on several other houses, since you were outbid by other anxious buyers. Thus, when you found the house you finally purchased, you were frustrated, and afraid that you would lose yet another house.

Accordingly, it certainly was reasonable for you to rely on your real estate agent’s recommendation that you submit a clean contract, without any inspection contingency.

But while it may have been reasonable, in my opinion, it was a foolish -- and costly -- mistake.

A home inspection contingency, in my opinion, should be mandatory for every residential real estate contract. Such a contingency simply means that you have a number of days after you sign the sales contract -- usually three to seven -- in which to obtain the services of an independent home inspection contractor who will carefully inspect and review every aspect of the house you plan to purchase. If the inspector finds problems, you have the right to either cancel the contract and get your earnest money deposit immediately returned to you, or negotiate with the seller to fix up some or all of the problem areas.

But your contract did not contain any such contingency. In fact, as you have stated, you opted to purchase the property in its "as is" condition. That means that at settlement, the house must be in the same condition as it was when the contact was signed.

And I suspect that it was.

If you can somehow prove that the roof was not leaking at the time you signed the contract, you may have a case against your seller. If you can determine that there was no mold in the basement when you entered into your sales contract, you may be able to get the seller to remediate. But how will you get this proof? You did not have any outside, independent inspector look at the house, and if you take your seller to court, that is the kind of proof that a judge will require in order to give you a judgment against your seller.

I recently read a case where the Judge stated:

There is a body of case law holding that a plaintiff has an obligation to inspect real estate before ... the purchase.

Citing Taglient v Himmer, 949 F.2d 1 (lst Cir. 1991)

In your situation, you unfortunately brought the problems onto yourselves. You had the right to inspect the house, but were so anxious not to lose it, that you gave up this right. Clearly, the seller cannot be responsible for your mistakes.

However, does your state require sellers to provide you with a "Disclosure Statement"? Many states have, in recent years, enacted legislation requiring a seller to disclose the conditions of many aspects of their home -- such as roof leaks, environmental problems, or boundary disputes.

If you received such a disclosure from your seller, read it carefully. Does it indicate that the roof is in good condition? If so, you may have a case against your seller -- but once again, you will have to prove that the seller knew about the problems and misrepresented them to you. Litigation is both time consuming and expensive. I often counsel clients that they are better off spending their money on making the repairs, rather than paying their attorney to file a lawsuit.

You also asked whether your real estate agent has any liability for advising you not to include an inspection contingency in your sales contract. While I think that real estate agents have a responsibility to properly represent -- and protect -- their clients, I do not believe there is any liability on their part in your case. Your agent merely advised you that the market was hot, and that a clean contract would be looked on more favorably by the seller than a contract which contains many contingencies.

The agent merely made a recommendation; you made the final decision and you can only blame yourself.

I personally believe that every potential purchaser must insist on having an inspection contingency contained in their purchase and sales agreement. I would rather lose the house than discover (after settlement) that I have to pay thousands of dollars more to correct repairs which should have been obvious to me in the first place had I done my homework.