Can buyers allow a seller to complete repairs post-closing?

QUESTION: I represent a couple who signed a contract to purchase a new home. During the due diligence period, my clients hired a home inspector who discovered some  defects in the home including some defective insulation in the crawl space. We presented a Due Diligence Request and Agreement (form 310-T) to the listing agent. The  seller signed it agreeing to our list of repairs which included the replacement of some defective insulation. Settlement is scheduled for later this week. The listing agent just  called me and said that the seller would be unable to replace the defective insulation prior to settlement but was willing to complete that work after closing. What should I do?

ANSWER: A transaction with these same facts is the subject of an unpublished opinion issued by the North Carolina Court of Appeals on July 15, 2014. In that case, the  sellers made some agreed-upon repairs post-closing but allegedly failed to complete them “in a good and workmanlike manner”. When the seller refused to perform any more work, the buyers filed suit to recover the cost of completing the repairs. The Court of Appeals ruled in favor of the seller! Their decision was based in part on the fact that the  agreement to complete repairs post-closing was not in writing. This decision makes it clear that buyers in this situation must take some very specific steps in order to preserve their right to insist on adequate post-closing repairs.

Buyers in this situation should take particular note of paragraph 4(h) of the Offer to Purchase and Contract (form 2-T). It states, in capital letters and bold print: “CLOSING  SHALL CONSTITUTE ACCEPTANCE OF THE PROPERTY IN ITS THEN EXISTING CONDITION UNLESS PROVISION IS OTHERWISE MADE IN WRITING.”

The key language here is the last seven words. If your buyers want to close on time, and also preserve their right to insist on complete and adequate repairs by the seller,  they should be sure that seller’s agreement to complete post-closing repairs is in writing. Because some specific provisions must be included in such an agreement to ensure  that it is legally enforceable, the drafting should be handled by an attorney.

The agreement should state that it is a modification of the existing contract between the parties, and that it is supported by adequate consideration. The agreement should  specify the repairs to be made, should state that they shall be completed in a good and workmanlike manner, and should set forth a date by which they will be completed.  Finally, the agreement should state that the closing of the transaction shall not constitute acceptance of that portion of the property that is the subject of the post-closing  repairs.