Last week Amy and I had the honor of being part of an Attorney Panel with Carnegie Title at Keller Williams Valley Realty in Woodcliff Lake, New Jersey. It was so great to be there in person to answer questions and have a discussion about all things real estate.
We get questions all of the time from clients and agents regarding various real estate contract issues and the issues we discussed last week were very common – we thought we would bring you some of the questions and answers here.
What does the home inspection contingency really mean? The home inspection clause is one of the most important clauses in a real estate contract. The meaning of the inspection clause can vary and is different in New York and New Jersey. In New York, the inspection is typically done before the contract is signed and we can negotiate any issues that arise, including them in the contract, if necessary. In New Jersey, the contract is signed first, and following the conclusion of attorney review, the Buyer can conduct its home inspections. Depending on what the parties agree to when signing the contract, the inspection contingency can be modified so that the repair requests made by the Buyers are limited, such as to structural and environmental defects only, or the inspection contingency can be waived so that any inspections are for informational purposes only. But what does that mean? The issue we discussed is the confusion that arises when sellers do not believe they have any obligation to repair or deal with issues that arise during a structural inspection. Buyers believe that if an issue arises during an inspection, the seller is required to repair it. What is the answer? It depends! The more clearly you can define in the contract what the obligations of each party are, the better. It might make sense in certain circumstances to specify the parameters of what the seller will agree to repair or replace, if anything. The more specific you can be prior to the inspection, the better.
Is there any flexibility in the term “As Is” and what does it really mean? Amy addressed this issue in our blog post from last week. It comes up a lot. As Amy stated last week, when the contract states that the Seller is selling the property “as is,” it simply means that the Seller will not agree to remedy, repair, or replace any defects that could exist on or in the property. The Seller is listing the property for sale in its current condition, and that is what is being offered for sale with no affirmative requirement by the Seller to address, repair, improve, or issue credits for any defects found in the property by the Buyer. However, if an issue arises after the contract is signed, but before closing, that would change the condition of the property, Seller would be required to repair or remedy the issue so that the property is in the same condition as it was when the contract was signed (unless the parties negotiated something different).
What actions by realtors help us through the process? We have spoken a lot here about the TEAM of professionals that it takes to bring a transaction to the closing table. Each professional plays a specific, important role. For us, we appreciate when the realtors provide us the relevant information up front (purchase offer, MLS listing, etc.) and any inspection issues that will assist us in drafting the contract and making sure our client is properly protected. We always have and encourage an open line of communication with all of the professionals involved.
Amy and I are really enjoying building our real estate practice and the relationships that we are building as a result of it. We are thankful for every opportunity to assist clients, as well as share information that might be helpful with other professionals!
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.
