Q: We have a contract on a short sale home. We were supposed to close on July 30th, but the upstairs of the home caught fire. Amazingly, the owners had insurance on the property.
The owners are divorced and the husband got the job from the insurance company to fix the repairs. We extended our contract until October 30th for them to make the repairs.
Here’s the problem: We’ve been in the house and seen some of the work that has been done, and it is not correct. My husband has experience as a carpenter and knows the basics. He said the work that has been completed is pretty sketchy.
Our agent says we cannot get out of the contract now because we extended it. Their is no building code for our county, so there is no one checking his work to see if it is done correctly. What can we do to get out of the contract if the work actually gets done on time?
A: It is amazing that the owners had insurance on the property and it was still valid. It’s unfortunate that the work that was done to fix the property is substandard. While it’s hard to imagine that the insurance company hired the owner to do the carpentry work, this may play into your ability to walk away from the deal depending on what the contract says.
When bidding for a short sale, it’s always helpful to have a knowledgeable real estate attorney go through the documents and assist in the negotiations. If you had an attorney assist you, please call him or her and discuss the situation. If you negotiated this with an agent only, please call a good real estate attorney to find out what protections are included in your contract.
In general, I don’t believe that the fact that you extended the closing date means you cannot cancel the contract for a legitimate reason — such as the work completed is substandard. I would hope that you would have negotiated an inspection clause into the language of the extension to protect yourself.
Furthermore, after your discussions with the real estate attorney, you may find out that the work completed by the seller must be performed in workmanlike manner. That means that the seller can’t just claim the work has been done if it’s been done poorly. While you may not have a building code where you live, there are recommended building codes for most trades. These codes are sometimes available at bookstores and even on the Internet.
If you have a specific issue with something the seller has done, you might be able to get a copy of the document that sets basic standards for certain trades. If the work the seller completed does not meet with that standard, you might be able to argue that the seller has not satisfied the provision in the contract to make the necessary repairs to the home after the fire.
Consider hiring a professional home inspector to view the repairs and construction and to help document your case that the work is substandard. (Photos and video might be helpful as well.) Your real estate attorney can help with these, and other, issues.
Oct. 3, 2008.