Before the closing takes place, it is
customary that the buyer makes a final walk thru inspection of the
property, to make sure that the property itself is in the same condition
as when the buyer initially saw the home? Is the yard the same? These
questions should be answered prior to the actual day of closing, but
oftentimes it is not possible, as the seller may be moving out the
day of closing, and not able to get everything done at the time of
the inspection. What happens when the buyer makes the final inspection
and many items found in an inspection report have not been corrected
or the old boat in the yard has still not be removed? Who is responsible
for making these corrections and should the closing be held up?
The first answer that would come to
mind would be to delay the closing until the seller has repaired or
cleaned up the property, including removing a boat or any other piece
of equipment left in the backyard. This may often not be possible
for several reasons. The buyer may be obtaining a new mortgage on
the property and the interest rate on the buyer's loan may have been
"locked in" by the lender or mortgage broker. This locked
in interest rate may expire on the day of closing. If not closed
on time, the buyers would have to go back to the lender to renegotiate
a new interest rate and they would generally be charged a "redraw"
fee for new loan documents. The seller may have purchased a new property,
and he may need the sales proceeds from his previous house to buy
his new home, so a delay on the sale would delay his new home sale.
The best solution is to try and come up with a compromise at the closing
table.
Some closings may go quite quickly,
but when there is a dispute, the closing can go on for hours. The
longer the buyer and seller dispute the items which need to be corrected,
the more tempers seem to wear thin, all the parties get tired, and
a solution is hard to find. The best remedy in the case where the
property is not in the condition expected by the buyer, is to immediately
start addressing each item in dispute, one by one, and see who would
be willing to do what repair, and under what conditions either party
is willing to accept a compromise. The seller may offer to fix the
shower door, hire a cleaning service for the home, and supply new
springs for the garage door, but the buyer may need these things done
immediately and the seller may not be able to act that quickly. An
old boat or piece of equipment found in the backyard may not be as
easy to remove quickly, so a compromise between buyer and seller is
necessary.
In order to facilitate the closing,
the seller could offer to place money "in escrow" to be released to
him only after the repairs have been completed. Or, the buyer and
seller could agree on a price that the repairs might cost, and the
seller could issue the buyer a check for these repairs. In that case,
the closing agent will draw up a short addendum, outlining what the
buyer and seller have agreed, and that the buyer is willing to accept
the seller's check in lieu of requiring any additional clean up work.
There may be one or two large items that the seller promises to remove,
such as the old boat or sacks of sand, and the buyer may offer to
give him 10-15 days in which to remove the items.
