[LEGAL Q&A] Modifying an existing contract requires the agreement of both parties. A party may certainly request a change in the contract, and the other party may or may not agree to the change. If they do, the change must be in writing and signed or initialed by the parties. But if they don’t agree on the change being requested, the original contract still remains in effect. Thus, in my opinion, the seller is not in a position to refuse to make the repairs agreed to in the original Due Diligence Request and Agreement. GOMEZ: What if the seller doesn’t make the repairs he’s already agreed to? FORMS GUY: It would be a breach of contract by the seller. See paragraph 8(k) of the contract, which requires the seller to make negotiated repairs in a good and workmanlike manner.
Damaged roof
REPAIR THIS!
Plumbing leaks
Faulty wiring
Inadequate insulation and ventilation in attic
Windows
Foundation issues
FIX IT
Not in working condition!
GOMEZ: What if the seller refuses to make the additional repair to the foundation that the buyers have requested? FORMS GUY: That is the seller’s choice, just as it is the buyers’ choice to terminate the contract if the seller refuses to make the additional repair. GOMEZ: Well, the due diligence period is just about over. If the seller hasn’t responded to the additional request by the deadline, the buyers can still terminate if the seller won’t agree since they made the request before the end of the due diligence period, right? FORMS GUY: No! See the warning in paragraph 4(f) of the contract: “If Buyer is not satisfied with the results or progress of Buyer’s Due Diligence, Buyer should terminate this Contract, prior to the end of the Due Diligence Period, unless Buyer can obtain a written extension from Seller.” GOMEZ: Okay, I understand. Let’s say the seller agrees to the additional repair. Does my agent still need to ask for an extension so the repairs can be completed during the the due diligence period? FORMS GUY: That is not necessary. As I noted previously, once repairs are agreed
on, they become a part of the contract. The seller’s inability or refusal to make the repairs properly would be a breach of contract that would excuse the buyer from completing the transaction. GOMEZ: Would it be better for the parties to negotiate a credit for the estimated cost of repairs rather than the seller making the repairs? FORMS GUY: It would be great, in my view, if buyers and sellers could negotiate their contracts in such a way that the seller was not responsible for making repairs. It would eliminate potential disagreements about whether agreed-upon repairs have been timely and properly made. However, that doesn’t seem to be practical in many cases. Loan underwriting guidelines sometimes won’t permit the buyer to take a credit in lieu of the repairs being made, and sometimes the buyer wants the seller to make the repairs because the buyer doesn’t have the money to make them. GOMEZ: One last question: Was it a bad idea for my agent to submit more than one repair request?
FORMS GUY: I guess in a perfect world a buyer would make a single request that included everything they wanted the seller to do. It’s understandable that a seller might get upset if he or she thinks that the repair negotiation is over and then the buyer comes back asking for something else. But sometimes the circumstances are such that a single repair negotiation might not be possible, and as I said earlier, I agree with the idea of handling repair negotiations earlier rather than later. Good listing agents should keep their sellers’ expectations in check by reminding them that the due diligence period ain’t over ‘til it’s over, as the saying goes. GOMEZ: Thanks, Forms Guy. FORMS GUY: You’re welcome, Gomez. I hope the transaction works out.
Contact Will Martin at wmartin@ncrealtors.org if you have a suggested discussion topic for Forms Guy. ncrealtors.org • INSIGHT 29