Is a seller’s failure to properly complete agreed-upon repairs a breach of contract?

QUESTION: I have a buyer client who requested a number of substantial repairs using standard form 310-T. She included a requirement that the repairs be performed by licensed contractors. The seller agreed to my client’s request and signed the Due Diligence Request and Agreement. Last week, the listing agent told us the repairs were complete. However, the seller has refused to identify the contractors who performed those repairs. And when my client and I conducted our pre-closing walk-through, it was obvious that all of the repairs were made in a shoddy and inadequate manner. Does my client have the right to claim a breach of contract and demand the return of her earnest money deposit, due diligence fee and reasonable costs?

ANSWER: If the seller has failed to complete the agreed-upon repairs in a good and workmanlike manner prior to the settlement date (including any delay in settlement requested by the seller), and the failure is material, then yes, that failure would constitute a breach of contract that would entitle the buyer to the remedies set forth in paragraph 23 of the Offer to Purchase and Contract.

Keep in mind that not every breach of contract is material. If you have a question about whether the seller’s breach was material, you should suggest that your client seek formal legal advice.

There are several contract provisions that mandate this result. First, paragraph 4(d) of Form 2-T states: “Any agreement that the parties may reach with respect to repairs/improvements is an addition to this Contract that must be in writing and signed by the parties in accordance with Paragraph 19.” Also, paragraph 8 of Form 2-T sets forth the seller’s contractual obligations. Paragraph 8(n) states: “Negotiated repairs/improvements shall be made in a good and workmanlike manner and Buyer shall have the right to verify same prior to Settlement.” Paragraph 1 of Form 310-T contains similar language: “In the event the parties have agreed to any adjustment in the condition of the Property, then such adjustment shall be completed prior to Settlement in a good and workmanlike manner. Seller shall notify Buyer upon completion of the above and provide Buyer with documentation thereof. Buyer shall have the right to verify that the items above have been completed in a good and workmanlike manner.”

Seller’s material failure to complete agreed-upon repairs in a good and workmanlike fashion prior to the settlement date constitutes a breach of both paragraph 8(n) of Form 2-T AND paragraph 1 of Form 310-T.

Release Date: 05/30/2024