Seller Obligation to Pay Utility Connection Costs
QUESTION: I am listing a home for sale for a brother and sister. The home was previously owned by their parents, both of whom have passed away. My clients have told me that the home has not had power or water for over a year. If I list the home, will my clients be required to turn on the power and water once the property goes under contract?
ANSWER: If your clients sign a contract that is written on Standard Form 2-T, and that contract is not amended in some way, the answer is yes.
Paragraph 8 of Form 2-T itemizes a number of seller obligations. Paragraph 8(c), entitled “Access to Property,” states that seller shall provide reasonable access to the subject property, through the earlier of closing or possession by the buyer. Paragraph 8(c) concludes as follows: “Seller’s obligation includes providing existing utilities operating at Seller’s cost, including any connections and de-winterizing.” This language was added in 2019 to clarify that the seller’s obligation to provide working existing utilities includes the obligation to pay for the costs associated with providing those utilities.
The fact that the word “connections” is used makes clear that the term “existing utilities” includes utilities that are available but not connected. Conversely, the term “existing utilities” does not include utilities that were not even available at the time the property went under contract.
Parties do have the ability to modify their contractual obligations. If a seller client does not want to pay for utility connections, one possibility might be for that seller to cross out the last sentence in paragraph 8(c). While this deletion would imply that the seller is not agreeing to provide existing utilities operating at the sellers’ cost, a better alternative would be for the seller to require that an attorney-drafted addendum be included in the contract stating explicitly that the parties have agreed that the seller has no obligation to pay the cost of connecting any existing utilities. If either of these contract amendments is contemplated, we would encourage the listing agent to include in their MLS listing a statement that buyers will be required to pay the cost of connecting any existing utilities.
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