The Final Walk Thru Inspection
Who is going to remove the boat?
Before the closing takes place, it is customary that the buyer makes a final walk thru inspection of the property. Is the property 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.
It is always best to try and arrive at an equitable compromise between the buyer and seller. The seller may be moving only a few blocks away and returning to the neighborhood hood to visit old friends, so whenever possible it is best to not make an enemy out of your buyer or seller but do whatever is necessary to make both parties happy.
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What is the Seller required to disclose in an “As Is” contract?
State laws vary and an “as is” clause may not limit the responsibilities of the Seller to disclose certain defects of the property to the Buyer. Many states require Sellers to disclose any known problems with the house, including structural, mechanical and legal, in a form referred to as a “Real Estate Disclosure Transfer Statement” which includes a disclosure relating to lead paint, if the home was built prior to 1978.
Additional disclosure documents could include a smoke detector statement of compliance, a statement regarding state responsibility areas for property located in rural areas, special studies showing zones of geological hazards, such as earthquakes and landslides, reporting of ordnance location hazards such as old military training facilities, if known, environmental hazard disclosures for chemical or asbestos, radon gas, or similar hazardous substances, special flood hazard area and FEMA responsibility locations, and energy conservation retrofit and thermal insulation disclosure.[/div]