How Many Inspections Does Your Minneapolis Duplex Need Anyway?

One of the most common misunderstandings among Twin Cities duplex, triplex and fourplex sellers is they don’t need a city inspection in order to sell because they had a rental licensing inspection on the property, or the eventual buyer doesn’t need to have an inspection nor does FHA need to have an “inspection” before moving forward with the purchase because “it was inspected by the city” prior to going on the market.

It is confusing. After all, many of these are looking at similar things, so the redundancy can seem ridiculous. The key to understanding it in part is these are all separate entities and each requires the property to be compared to their standards or code.

So what is the difference?

Rental License: A rental license inspection is done by a municipality to make sure a property is safe and well-maintained for tenants, as well as to ensure they comply with local laws. Among other things, an inspector will check for working smoke and carbon monoxide detectors, that there are proper egress windows in sleeping areas, ample hot water, heat, working plumbing and no roof leaks. The owner of the property is responsible for any repairs in order to obtain a valid rental license.

Truth In Sale Of Housing or Time of Sale Inspection: Many cities mandate inspections of 1 – 2 unit properties prior to them being offered for sale. The purpose is to improve and maintain housing stock, provide would-be buyers with information about the property, and help identify any health and safety risks. In my experience, the most common repair items are smoke and carbon monoxide detectors, missing backflow preventers (anti-siphon devices) on exterior faucets, a grounding wire on the water meter and dishwasher drain hoses not being at a greater height than the sink drain so as to prevent water from being siphoned back in to the dishwasher.

While these reports may be many pages in length, and in Minneapolis, countless items in a home may receive a comment they are below current building code. Most of the time, this is simply because the code has changed since they were first built. They are not required to be retrofitted.

Most of the time it is in the seller’s best interest to address any city-mandated repairs before the property is actively listed on the market or before closing. However, the parties involved may arrange for the buyer to take on the repairs in the course of any negotiations.

Buyer’s Inspection: A buyer may want to have an independent inspector give them an opinion of its condition prior to closing. This will include not only common health and safety items, and likely an inspection of the electrical panel, a determination of the useful life left in major mechanical items like the roof, sewer drain, furnace and water heater. An inspector may comment on the presence of friable (frayed) asbestos, exterior grading around the foundation, or even if the garage is off its foundation. Here too health and safety items are the major concern, and many of the others may just be a heads up as to something the buyer may or may not want to address in the future. Who makes the repairs, or any price concessions, is a matter of negotiation between the buyer and seller.

FHA Appraisal: An appraisal is an opinion of value given to a lender by an independent third party. FHA is a government-sponsored enterprise that insures mortgages with low down payments. That means there’s a higher risk. So FHA appraisers check the property against a list of conditions that must be met before FHA will agree to insure that mortgage. That list includes things like pealing or flaking paint, cracked or broken glass, access area to crawl spaces, and proper and secure handrails. Until they are corrected, a lender will not issue a mortgage.

If you’re thinking or in the process of selling your Twin Cities duplex, triplex or fourplex, know that it’s a normal part of the process to have what may seem to be an abnormal amount of inspections.