Real Estate Contracts Answer Buyer And Seller Questions

Q: Within a 10-day period, we hired two home inspectors to look at a home we were buying. The seller responded to our first request of repairs based on the first inspection report but they refused to fix some problems regarding safety issues.

We rejected their letter and made an additional request for repairs that our second inspector marked as major defects. Our agent, who is helping the seller, told us that the seller’s agent did not receive our fax and therefore assumed that we accepted their response. We do have the fax confirmation report of our rejection of their initial letter and our request for additional repairs.

What can we do now to walk away from the contract? What can we do to prevent our agent suing us? Do you know where to look for good attorney? Our mortgage officer asked us whether he should hold up on doing the appraisal of the home and we told him to wait. He said that the hold would not delay us in closing if we had to.

Do you think our agent or seller can use this against us because of the delay of appraisal?

A: In order for you to know what your rights are and whether you can walk from the deal, you have to know the terms of the real estate contract. Some contracts state that a notice of deficiencies arising from an inspection is not sufficient to kill a deal unless you specifically tell the seller you are killing the deal and want your earnest money back. Other contract forms allow the parties to negotiate to resolve differences and if these differences are unresolved after a certain time period, the contract is deemed to have terminated.

Without the contract, it’s unclear if you have a right to terminate the contract or not. You are not working with an attorney and if you had been, it would be up to your attorney to give proper notice to the seller.

If your contract permits you to notify the seller by fax and you did so as provided in the contract, and if your letter is sufficient to terminate the contract, you may be okay and can walk from the deal. At this point, it’s unclear if you have that right.

As you have already figured out, you need to hire an attorney to help you wade through this mess.

You should be able to find an attorney to help you by contacting the local bar association in your city or region. You can ask friends or relatives for recommendations. You can even ask your mortgage lender, if the company is a local lender, for a recommendation.

Real estate agents have recommendations, but since you have a difference of opinion with your agent over this issue, you’re probably better off skipping this source of referrals.

When you start talking to real estate attorneys, make sure they do a fair amount of real estate – at least thirty closings per year.

At this point holding up the appraisal is not the issue, particularly if the hold would not delay the closing. Unfortunately, if your notice of the deficiencies did not terminate the contract, you will have to proceed and close, but the seller would be obligated to make the repairs they agreed to.

Here’s another thought: the seller can’t generally assume that a buyer has accepted the terms offered by a seller unless the parties have agreed to the terms in writing. Once again, the contract terms will dictate how the process would work. If your letter terminated the contract, the deal is dead. If your letter did not terminate the contract and you are forced to close, the seller’s letter indicating that they would make certain repairs may or may not be binding on them if you did not accept their terms.

Finally, if the issues raised by the inspector are critical to the home and the seller was aware of these problems, the seller may have other and bigger issues to deal with than trying to force you to close on the sale.

In many states, the seller is required to disclose material defects that affect the home. If the seller knew of these defects and failed to disclose them to you, you may have a right to sue the seller for their breach of the disclosure documents. In essence, you can force the seller to make the repairs – even after the contract is signed – where the seller should have disclosed these repairs to you prior to your signing the contract.

While the remedies vary from state to state, you would be well advised to look into the disclosure requirements of your state to determine whether they disclosed major defects in the home to you. Keep in mind that major defects are really major items pertaining to the home, a broken disposal is probably not major enough to count, but failure to disclose high levels of radon in a home, failure to disclose repeated roof leaks, or major plumbing problems generally would count and a seller should disclose them to you.

Oct. 17, 2005.


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