Real Estate Property Law and Family Law Blog(Vol I.4)

by Craig Franklin Chambers, Esq. The Littleton Lawyer.

In my role as a real estate and divorce attorney in Littleton, Highlands Ranch, Denver and the surrounding areas, there are real estate terms I think could be better explained. "Certification" is one of them.

The Colorado Real Estate Commission-approved  contract for the purchase of a home allows the buyer to conduct a home inspection. Under the residential real estate contract, a buyer can have as many types of inspections as the buyer feels are appropriate given the age and condition of the home.

In a residential real estate transaction, it is important to know what you are buying. A professional, experienced, and detached set of eyes is useful in determining if the buyer should proceed with the transaction. If the home fails inspection, the buyer's recourse is to terminate the contract, waive the inspection defect, or renegotiate the real estate transaction.

If there is doubt as to the condition and the future longevity  of a component of a home--usually the roof or the furnace--a home inspector will suggest --or a lender, as a condition of the appraisal--will require--a  five year "certification" of that component.  The five year certification requirement is the general practice of lenders to require that a roof or a furnace have five years of life remaining in order to give the buyer a loan.

Licensed contractors charge to inspect either the roof or the furnace and certify that it has five years of life remaining.  The problem is that buyers are often misled to believe the certification is a warranty. While the buyer believes the "cert" is a warranty, the lender and the real estate brokers treat the certification as just another form for the file.

A certification is not a warranty. It is an opinion by a licensed contractor for a fee that the component is functioning properly on the day of inspection. Although the "certification" is for five years, the buyer has no recourse against the contractor should the component fail within five years.

The buyer should be aware that if a certification is required or suggested, the component is likely towards the end of its lifespan; the roof or furnace is probable, if not certain, to fail in the near future. The five year rule is merely a lender guideline.  A buyer is certainly free to re-negotiate with the seller for a new roof or furnace regardless of whether a contractor opines the roof has a remaining life of five years.

At the very least, the buyer should conduct further investigation and not rely on the certification as any type of warranty. And the buyer should go into a residential real estate transaction eyes open, fulling understanding all the terms of the real estate transaction.