Hello BP members,
I am in need of some advice on a property that I'm in the process of buying. We are past the option period and the loan is already underwritten and approved by my bank. All addendums have been signed by the seller and I.
One of the items on the addendum was the seller agreeing to complete all items on a city inspection that was done before the property was placed on the market. All items are to be addressed prior to closing with follow up city inspection.
The property needs about $60k in repairs or replacements of items such as driveway, windows, heating units, side walk etc based on inspections and estimates. This does not include smaller items inside the property. We initially signed a contract for asking price on the property and I subsequently asked for $20k break on the price based on the inspection results, which I thought was a fair ask and the seller signed the addendum accordingly.
Now the seller is asking me for another $6k to cover costs of heating unit replacements (after further inspections done by the seller as required by the city) since the units are over 50 years old and cannot be brought up to city inspection requirements. The other option he is presenting is for me to fix all the items on the city inspector list after I close.
What would you all do in such a scenario? Have any of you faced this in the past and if so, what was the outcome? What are the legal consequences to the seller if he backs out of the deal?
As you can imagine, I have spent considerable time and money on this deal. Thanks in advance.
Talk to your lawyer and go back to the contract and the addendum. From what you've presented, you have no obligation to cover the seller's costs, and he's required to bring the items up to code prior to sale.
Taking his option to replace the heating units after close might be a possibility, but I would think that's the much harder option. You'd need an independent cost analysis on the replacement (I'd get three estimates), permission from the city to close as a variance to their permitting process (likely the sticking point) and a new addendum for this additional agreement. Hard to do in a short period before close. If you go down that path, however, I would definitely make sure your replacement cost is locked down - I'd be shocked if the $6K is actually sufficient for the work.
@Shawn Q. Thanks for the quick reply. I agree with your assessment and would rather have the seller take care of all items prior to closing even if I have to delay the closing. I am hoping to reach an amicable outcome as I do not want to loose the property or have to settle in arbitration or the court.
I'd say it depends on the deal and your market. Is it a great deal? If you let it go, will the seller have any trouble finding another buyer? Is the seller not interested in starting all over and putting the property on the market? If you have some leverage, you can just say no, the deal stands as is. I'd guess at the very least you'd get a counter offer of some kind. It's doubtful that the seller would be willing to start all over for $6k.
I have asked myself the same questions. It is a good deal, not a great one. I am in a competitive market so I don't think the seller will have trouble finding another buyer. Thank you for your input. I will be posting a reply regarding the outcome of this fiasco.
You mentioned you dont want to go to arbitration or court....almost no one does as the cost of doing so far outweighs what anyone typically has to gain in suing for specific performance. You would end up blowing $10 or $15k to try to force a $6k issue.
@Russell Brazil you are spot on!
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