Last-Minute Repair Requests
QUESTION: I represent a seller who entered into a contract to sell his property using the Offer to Purchase and Contract (form 2-T). The contract specified that the Due Diligence Period would expire at 5:00 p.m. on May 10. On the evening of May 9, the buyer’s agent sent me standard form 310-T setting forth the buyer’s request for several repairs. I sent the form to my client on May 10 and asked him to let me know if he would agree to make the requested repairs. He called me back on May 11 and said he was unwilling to make any of the repairs. I immediately notified the buyer’s agent. The buyer’s agent stated that, under the circumstances, her buyer client wanted to terminate the contract. Can the buyer terminate the contract without forfeiting her earnest money deposit?
ANSWER: No. Under the Offer to Purchase and Contract, it is not enough for the buyer to simply submit a repair request to the seller prior to the termination of the Due Diligence Period. The seller is under no obligation to make repairs, or to even respond to the repair request prior to the end of the Due Diligence Period.
There is an explicit “Warning” in paragraph 4 of the Contract that states: “If Buyer is not satisfied with the results or progress of Buyer’s Due Diligence, Buyer should terminate the Contract, prior to the expiration of the Due Diligence Period, unless Buyer can obtain a written extension from Seller. SELLER IS NOT OBLIGATED TO GRANT AN EXTENSION.” In paragraph 4(c), buyers are given specific advice regarding the timing of requests for repairs: “Buyer is advised to make any repair request in sufficient time to allow repair negotiations to be concluded prior to the expiration of the Due Diligence Period.” Here, the buyer and her agent did not heed that advice. They then compounded their mistake by not either obtaining a written extension of the Due Diligence Period or terminating the Contract prior to the expiration of that period. Once the Due Diligence Period expires, the buyer must either close, or forfeit the earnest money deposit as liquidated damages in the definition of “Earnest Money Deposit” unless the buyer has a right to terminate for another reason permitted under the Contract or North Carolina law.
Release Date: 5/11/2011
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