Category Archives: Attorney’s

Negotiation beyond the Engineers Inspection

Can a buyer negotiate after signing off on the engineers inspection?

 

Not really…. unless you let them.

 

We just had this happen to one of our Rochester NY For Sale By Owner clients.  The buyer signed off on the engineers inspection, then right before closing they threatened not to close unless the seller agreed to fix something which would have cost the sellers 5 thousand dollars.   We suggested they talk to their attorney, and ask him about suing for what they call…..”Specific Performance.”  Specific Performance basically means that in this case, the buyer would be forced by the court to buy the sellers home.

 

Long story short, the sellers did talk with their attorney and they closed two weeks ago, without having to pay for the repair!  Don’t let buyers push you around, talk to your attorney about any legal questions.

Earnest Money Control

Yesterday I got a call from one of our Rochester, NY For Sale By Owner clients.  He was asking questions about the earnest deposit money that a buyer “traditionally” puts into an escrow account.

He had a situation where there was a buried oil tank on the property and the buyer didn’t want to go through with the purchase, except the buyer had already signed off on the engineers inspection.

So to make a long story short the buyer wants the seller to pay the $4-5K to remove and replace the tank and the seller doesn’t want to nor feels it is part of the contractual agreement.  Chances are the buyer will walk (but could also be in breach of contract) but what happens to the $10k sitting in the escrow account?

First of all, earnest money (Earnest Money) is NEGOTIATED up front!  Where it is kept it is spelled out in the purchase and sale contract!!!!!  Sellers should always take delivery of the down payment and it should be sitting in your attorney’s escrow account! You ask why?  Control You want to have control of that money for situations like this.

In this case the money is sitting in the buyers agent’s escrow, and even though the sellers would have to sign a release for the buyers to get it back, control of the money could be 9/10ths of the law…

1. Always review the contract with us before you sign it.

2. Always have your attorney look at your purchase and sale contract before you sign it!

3. Always make sure you have control over the escrow monies!

Home Warranty Experience

Should a For Sale by Owner offer a Home Warranty? 

A friend of mine who is a real estate attorney bought his home almost one year ago this month.  Along with the purchase of the home came a one year home warranty that the seller had paid for to help sell the property.  The home warranty company was from Home Security of America.

Recently over lunch he said he was going to use the home warranty to get his microwave either fixed or replaced but it is worth noting that he was adamant that the microwave was going to be replaced.  I told him that I had never heard of anyone cashing in on these types of policies, and that if it were me,  I would take the $50. that he was going to have to shell out to get a repairman just to look at it and put it towards a new microwave and be done with it. 

He was adamant that the microwave was going to be replaced, so he spent the money, and sure enough it wasn’t covered. 

I have not heard of any really good experiences with home warranties. If you have… post it here.

Here is the skinny on this home warranty. If the seller were to buy it today it would cost $430 for one year of “coverage.”  Oh, and don’t forget the “set up fee” of $80 to initiate the warranty. 

My attorney friend said that the only one benefiting from this warranty was the warranty company and the agents that sell it. 

So… to answer the above question, only if the buyer specifically asks for it!

Property Condition Disclosure

We would like to acknowledge and thank John Blyth, Esq. for his expertise on this subject.

Many real estate agents will tell you that the Property Condition Disclosure is “required” and you have to fill it out. This is not true. You have options…Please read John’s remarks below… Download here…. Property Condition Disclosure

The New York Property Condition Disclosure Act (the “PCDA”) affecting the sale and puchase of residential property in New York is found in Real Property Law, Sections 460 through 467. It became effective on March 1, 2002.

The PCDA requires the seller to deliver to the residential buyer a 48 question Property Condition Disclosure Statement (PCDS) and provides for actual damages for willful failure to provide truthful answers based on actual knowledge OR a credit of $500.00 at Closing for failure to deliver the PCDS. The provision regarding the $500.00 credit is found in Section 465 of the Act.

Upstate, where the broker usually fills in the blanks in a bar association contract, a PCDS is routinely being delivered. Downstate, where attorneys prepare the contracts and transactions often involve larger prices, the seller often opts to give the $500.00 credit instead of delivering the PCDS.

There is a body of case law developing in New York where sellers have been found liable for willful failure to provide truthful answers based on actual knowledge. Rather than face this potential liability, some sellers have preferred to give the $500.00 credit. The buyer should be encouraged to make its own due diligence investigation by responsible professionals (engineers, etc.) responsible to the buyer.

See Karl B. Holtschue, Responses of the Legislature and the Bar Associations to Court Decisions on Sales of Residences, NYSBA N. Y. Real Property Law Journal, Spring 2005, Vol. 33, No. 2.

John E. Blyth, Esq.
141 Sully’s Trail,
Suite 12
Pittsford, NY 14534
Tel: 585-586-0590
Fax: 585-586-2297

Requirements before Closing

Attorneys in their attorney approvals are requiring certificates of compliance for decks, basement remodeling, additions, pools and fences and more.

If you don’t have these permits or certificates of compliance, and you can’t come up with them you will be opening yourself up for some form of renegotiation.

Be Prepared !

Attorney Approval ( “Form or Content”)

Attorney approval can come in two different ways…. Approval to “Form” or “Content.”

When an attorney approves a contract to “form” they are acknowledging that the contract is in-fact, a legal contract; it meets the “tests” that a contract must meet to be valid. Usually the contract comes to the attorney after it is signed or “executed” so many attorneys believe that they don’t have the power to modify or change the terms and conditions with in and simply approve the contract to “form.”

An approval to “Content” is a whole different ball game. If you don’t “execute” or sign the contract, your attorney can review the terms and conditions with you and has the power to approve or disapprove based on the written word.