Many people would argue that the Tallahassee Board of REALTORS® Contract for Sale and Purchase is the best document of its type in use in the State of Florida. While many housing markets in Florida use a different contract for the purpose of selling real estate, ours if considered the cream of the crop (at least by us Tallahasseans!).
When looking at the contract used to buy and sell real estate in Tallahassee, one paragraph in particular demonstrates the effectiveness of the form versus all other rivals, and that is the paragraph dedicated to Wood Destroying Organisms (formerly called the "Termite" paragraph).
Sometimes we find that home buyers and home sellers are a little confused about how Wood Destroying Organisms (WDO) are handled when found in a home inspection, so I thought I would write about that and create a handy resource for as long as we continue to use the language in this real estate sales contract.
Two areas of the Tallahassee Board of REALTORS® Contract for Sale and Purchase reference Wood Destroying Organisms, and both need to utilized. The first is paragraph 5, and the next is paragraph 11.
Who Pays For Wood Destroying Organisms Inspection
Paragraph 5 (pictured below) shows who pays for the WDO inspection and how treatments will be handled. Note, this is very important:
Line 59. is used to identify the cost limitation of the inspection. This commits the seller to have the inspection performed, but only to the extent that meets the amount specified in the cost of the inspection. But line 60 is the culprit in most problems that stem from Wood Destroying Organisms.
Both home buyers and home sellers alike need to understand the importance of the contract paragraph pictured above. Each box should be "x'd" like you see, and the blank that I have circled should be left blank! Any amount put in that blank circumvents the super-effectiveness of Clause #11 (discussed below).
Often times, ignorant real estate sales people advise/allow the home seller to "limit their exposure" to wood destroying organism by placing a dollar amount in that blank. This is stupid! Let paragraph 11. handle this.
The home seller needs to understand that any buyer buying the home will expect the home to be clean and free of all infestation, so limiting this amount will rarely, if ever, actually save the seller any money. But I have seen it cause many a home seller to lose the buyer for their home.
Wood Destroying Organisms Inspection
The meat of this issue is handled in paragraph 11. of the Tallahassee Board of REALTORS® Contract for Sale and Purchase. The contract does an excellent job of defining roles and controls, and ultimately saves many a real estate contract from going void.
The first part of the Wood Destroying Organisms paragraph identifies what will be inspected, stating:
A Wood Destroying Organism (WDO) Inspection Report certified to BUYER and SELLER, will be performed within 30 days prior to Closing by a state licensed pest control firm showing all buildings on the premises except ________________________________________ to be visibly free of infestation and/or damage by termites, any wood destroying insects and/or wood destroying organisms (sometimes referred to, but not limited to, wood rot). Fences are excluded. Decks are included unless excepted above. SELLER will provide BUYER copies of all WDO Inspections within 5 days of SELLER’S receipt.
That means all buildings and things attached to the buildings will be inspected, while wood fences will not. Anything identified in the "blank" will also be excluded. Often times, wooden sheds in the back yard are excluded from a WDO guarantee by the seller.
Contract Controls For Wood Destroying Organism Treatment Costs
The Tallahassee Board of REALTORS® Contract for Sale and Purchase does an excellent job defining how the results of the WDO report will be received by both Buyer and Seller. When I teach this portion of the contract to my Tallahassee real estate agents, I tell them to remember the word "Control." Sub-paragraphs A through C define who has control of the decision making process after the WDO report has been received.
This means that the contract "controls" the WDO treatment, as both parties have agreed that if the cost to remedy the WDO damage is less than 2% of the purchase price of the home, the Buyer and Seller have already agreed that the Seller will pay for the treatment and repairs. The next part switches "control" from the contract to the Seller. If the repairs cost more than expected, but less than 3% of the purchase price, the Seller has the option to go ahead and treat and repair them, and the Buyer must close on the home. The key here is that if the Seller chooses to repair the problem, the Buyer has no say in the issue and the contract is still valid. But, if the Seller says "no" to the additional costs, "control" switches to the Buyer. The Buyer can decide to pay for the additional costs, or can choose to void the contract. Finally, if the costs are greater than 3%, "control" switches directly to Buyer first. Even if the Seller is willing to treat all repairs, Buyer can deem the contract void. Sometimes, home buyers just don't want to buy a home that has seen that much damage due to wood destroying organisms, and the contract gives them the right to do so.
A . If report shows infestation and/or damage, SELLER shall treat the infestation and/or repair the damage up to the amount provided in Clause #5, or if none stipulated, up to 2% of purchase price; or
Ultimately, the "control" issues are well handled by the contract. It clearly defines all points at which a decision is to be made and by whom it shall be made. It also specifies that Buyer can choose to buy the home regardless of what Seller is willing to do.
B. If the amount required for treatment and/or repairs is in excess of amount provided in Clause #5, and SELLER agrees to remedy and/or repair, BUYER agrees to complete purchase. However, if the amount required for treatment and/or repairs is in excess of 3% of purchase price, and even if SELLER is willing to make treatment and/or repairs, BUYER may void Contract within 5 days of receipt of WDO report and repair estimate, by notifying SELLER, in writing, on the Tallahassee Board of REALTORS® Termination Form and BUYER will receive a refund of Deposit upon signing of the Termination Form.
If the amount required for treatment and/or repairs is in excess of the amount provided and SELLER will not remedy and/or repair, BUYER will have the right to accept the Property without regard to infestation and/or damage with SELLER paying toward treatment and/or repairs up to amount provided in Clause #5; or BUYER may void Contract by notifying SELLER, in writing, on the Tallahassee Board of Realtors Termination Form and BUYER will receive a refund of Deposit upon signing of the Termination Form.
I hope this helped clarify how we treat Wood Destroying Organisms in Tallahassee. If you have any horror stories, or even good, positive stories, please add them below in the comments section!
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Joe Manausa is a real estate blogger, a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.