Q: If I am under contract to buy a property, can I report inspection findings to the city?
I am under contract to purchase a rental property currently in the process of receiving a rental liceance from the city. My purchase agreement stipulates that the rental liceance must be granted before the deal is closed. During pre-purchase inspection, several major structural and health issues were discovered that the city inspector in charge of granting the liceance is not aware of.
I would like to report these findinga to the city so they can make a more informed decision about whether the property should be approved for tenant occupancy with these potential hazards present, but doing so might mean that the city requires those repairs be done before granting the liceance, which would benefit me as the purchaser.
Would the seller have a case to sue me if I reported these findings to the city code-enforcement office?
This is taking place in Michigan if that makes a difference.
A:
The purchase agreement that requires the rental license to be granted before closing should also already include a clause for notifying the seller of inspection results and of your satisfaction with said results. If serious issues are found, the seller must either fix them or release the buyer from the agreement.
While the seller must disclose these newly discovered 'known' defects and issues to future buyers, the buyer has no legal duty to report them to the city inspector. However, it raises the question: why buy an investment property with such problems unless planning to fix them before leasing?
Kenneth V Zichi agrees with this answer
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