Retrofit (Code Compliance) Requirements When the Buyer is Responsible for Retrofit Items per the RPA Contract

The intention of code compliance is to make the property safe for the new buyer while at the same time limiting the sellers liability in case of injury or death after the close of escrow. In addition, retrofitting is intended to comply with state mandated low flow water requirements to save water on plumbing fixtures in the state of California.

But what about when the buyer is responsible for code compliance? For example a home that may be in fixer upper condition and the buyer is buying to fix up and rent or flip. Does the buyer need to do all items even though he will be working on these same items once escrow closes? Technically yes but one option is to utilize a waiver.

A waiver, for some or all needed compliance items, may be justified ‘waiving’ any governmental requirements not economically or functionally feasible. Waiver verbiage waiving low flow water requirements is here. A waiver is a simple addenda signed by both parites noting what is and what is not compliant and making clear the buyer is responsible for these items, and not the seller. But it is best to check with your office broker on your company’s policy – some companies do not allow for any type of waiver whatsoever due to their insurance policy. If a waiver is utilized, many times the seller will give the buyer a credit for the cost of items that are needed for compliance.

Bottom line – check with your office broker and your escrow officer on their policy on this issue.

If you have any questions, feel free to call us at 310-800-4418

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