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i got a letter from an agent today and this is what the letter said i can't believe we're back to doing this again but my seller has agreed to make some repairs to the home side note i have been having to change my approach to listing consults to help sellers understand the changing market and that they may have to make some repairs to get a deal done i think that's really interesting because that really wasn't the state of things up until the last few months so the fact that listing agents when they first meet was a seller of a home they're having to explain to them it's not like it was you very well may be hit with some repair requests and you might have to do some of them rather than just saying well if you don't want the house guess what somebody else is in line and i've got a backup offer already and they don't want any repairs that's not the case anymore in fact just in my office in the last month we have been trying to help some people navigate a dispute over whether pool repairs are going to get done the parties agreed that these very expensive think to the tune of 50 000 plus repairs were needed to the pool they identified the contractor and they set aside some money for the repairs to be done but now the parties can't agree on releasing the funds to the contractor for the repairs that's just an example of one of the many situations i'm seeing repair disputes as you know minor disputes over repairs can quickly become major issues and if you don't want to be caught in the middle of disputes like this the best thing to do is to make a plan so that means find out what needs to be fixed who's paying for it and when will they be paying for those repairs in the contract in section 4 d this says that the buyer acknowledges and understands that unless the parties agree otherwise the property is being sold in its current condition seller may but is not required to engage in negotiations for repairs or improvements to the property so what this is saying is that the default is property is sold as is one of the realities of home ownership is that repairs to the home are inevitable but when you discover during your due diligence period as a buyer that there are repairs being needed right then and there who's going to pay for them and how there's a few different options for this let's talk through the pros and cons the pitfalls and some situations that you really may not want to get caught up in all right the first option is you default to what the contract says what is our baseline it is that the property is being sold as is now something interesting here is that if what you discover as a buyer is something that would be a material fact and let's say the seller doesn't know that there's some structural defect but your inspection reveals it and the seller says well i'm not fixing it if the seller goes under contract again they know about this issue now so it becomes a material fact that they have to disclose to future buyers i am not telling you how to negotiate your deals i have seen many many times though that whenever something that's discovered that's a material fact that a buyer will say well you're going to have to disclose this to a future buyer anyway can we work together to try to figure something out because now this is becoming an issue when you put the house back on the market if you don't want to sell to me so that's the first option buy as is but just keeping in mind that if your inspection reveals a material fact then that may give you some more room to talk to the seller about pursuing other paths the next option is that if the seller agrees to make some repairs or they acknowledge that repairs are necessary but they decide they will not be physically making the repairs themselves they could give a lump sum to the buyer at closing at closing not before closing the seller cannot write the buyer a check and just slide them a check either before the closing or at the closing across the table this all has to be accounted for on the closing statement so there are two common ways to do this one is a reduction in purchase price to account for whatever the amount is that the seller is saying yeah there's there's five thousand dollars worth of stuff that needs to be done to this house so we'll drop the purchase price ingly or the seller may give a credit to the buyer for the repairs if the buyer's paying cash that's fine there's no approval needed by anybody but if the buyer is getting a lender the lender has to approve any seller paid closing costs so that lump sums you're gonna have to run it by the lender and make sure that the lender will allow you to use that entire credit if not then what you can do is identify vendors to pay on the invoice say the seller is giving you 10 000 worth of closing costs and your lender says you can only use five thousand well to try to capture the remaining amount that the seller has already agreed to give then try to find the five thousand dollars worth of things to be done in the home and vendors that will complete those repairs get quotes get invoices and have those repairs completed to use up the total amount it's one of those things that if you don't do this and the lender doesn't approve the use of the full credit you lose whatever you don't use between those two approaches i prefer the seller paid closing costs as an attorney provided that the lender has signed off on it and then of course that the buyer understands that if there's any amount the lender doesn't approve that they have options to try to capture the rest of that seller credit if the buyer does not get approval from the lender for this or if they fail to capture the entire credit it's kind of a waste but in terms of capturing the agreement between the parties and the intent then i think that the seller paid closing costs is a cleaner way to go for that this option can also lead to disputes at times and mostly it's when the lender says you cannot use all 10 000 on a seller paid closing costs you can only use 5 000 so the seller says well i want the other 5 000 back or you know they they say in that case then we need to revise the contract or you know buyer decides okay i will try to find vendors for the 5 000 the seller may say well i only agreed to do seller paid closing costs and the lender said you don't have enough closing costs so i'm not paying those vendors well vendors paid on the closing statement are closing costs so a seller can't necessarily claw back money after they've agreed to pay it if the seller agreed to give ten thousand in closing costs and there's ten thousand in closing costs to use that towards they can't say well lender only approved five thousand so i'm not paying you the other five thousand anymore we do sometimes see that as a dispute the way that the parties can agree to seller paid closing costs in north carolina is that due diligence repair and agreement it kind of identifies hey in lieu of the seller physically making the repairs before closing then the seller's going to give this much money to the buyer and a lump sum to be used towards buyers closing costs so that's how you would handle that and what happens if the buyer moves in and finds out that the problem was worse than what they initially thought well once the deed has been recorded the transaction is done so really your remedies after that point depend on what did the seller know did the seller misrepresent anything to the buyer was it a material fact there's a lot more that you need to know before i can say well if you find out that it was worse when you move in then all you got to do is run to the courthouse it is not that simple everything depends on what the seller knew and if the seller had a lot more knowledge what did what were they required to tell you sellers don't have to tell everything they know if you're a licensed broker in north carolina then you are required to disclose material facts even if your seller won't but there are in the residential property disclosures there is an option to make no representation so if the seller made no representation then buyer that is your indication that you need to have really good inspectors out there to make sure that you're getting a good idea of what's actually going on with the property so if you had an inspection and you find out the property is in much worse condition than the inspection revealed then that's almost becoming an inspector issue it just depends on what did the seller know and what was the seller required to disclose to you another option and i've alluded to it a little bit is that the seller just makes the repairs themselves we always encourage that buyers do walk-throughs it's critical to do walk-throughs but especially if you've agreed on repairs and the seller has taken on the responsibility of doing the repairs or engaging their own contractors to get the repairs done before closing walk through is going to be critical for you to determine that the repairs were made in ance with the agreement that you made so if the seller said that they would fix the door but the door is still not working before you close then that gives you an opportunity by seeing that at the walk through to get the seller to fix the door they said they would fix all right the next option is one that is kind of a last-ditch effort to help closings happen on time but they often blow up after the fact is escrowing money for repairs so how they're supposed to work is all right buyer and seller have agreed that this repair needs to be made maybe it's a big repair or maybe they just agreed on it the day of closing and there is not necessarily a way to have the repair done before closing without delaying closing and buyer needs to move in seller needs to move out and get their funds so they can go buy another house so the parties decide we will do an escrow agreement and you hear the term escrow all the time in real estate but in this context it means that a portion of the seller's proceeds usually is what's where the money comes from a portion of the seller's proceeds is set aside in the lawyer's trust account until the repairs are made so this is going to require a separate contract between the parties it's going to have to outline what repairs need to be made who is actually making the repairs what are the conditions under which the money can be released what's the time frame for getting this done so let's say the seller agreed to fix the door they didn't get it done before closing all right we're going to hold 500 in escrow until the seller fixes the door seller has to fix the door within 30 days or buyer gets the 500 so that's how it can work sometimes it's for much bigger projects but that's the general idea and where this goes sideways is if the seller doesn't get something done in time or to buyers satisfaction or let's say the party's already identified a contractor that would do the work and the contractor does the work and then the seller just decides no i'm not paying anymore i feel like you should have strapped around more and gotten a lower quote well that is not usually going to work out for the seller because in that instance the seller has already decided that they're going to pay that amount so you can't then force the buyer to continue to shop around to get lower and lower and lower if you said you were going to pay 500 to fix the door then okay cool if the contractor can do it for 400 great but you can't condition your release of the money to pay the contractor on the buyer shopping and shopping and shopping until you finally get satisfied with the number you were satisfied with the number 500 that's why you entered into that escrow agreement for 500 unfortunately we often see buyers and sellers get into disagreements over whether the fund should be released and this can be a buyer saying well the seller didn't do this to my satisfaction so i don't think they should get the excess money back or it's a seller deciding that they no longer want to pay for the repair and if the parties cannot agree on the release of the funds then the closing attorney that's holding the money is going to have to pay the money to the local county's clerk of court so whatever county the property is located in has a courthouse has a clerk of court has a register of deeds so that closing attorney is going to have to remove the money from their trust account and give it to the clerk of court and the parties are going to have to institute a procedure it's called a special proceeding in which they file an action and they go to the clerk of court and say i believe it should be the money should be given to me as a seller and the buyer says well i believe the money should be given to me as the buyer and this is why and then the clerk of court decides who gets the money so yes that is a court procedure and it costs money for the parties to do it now that's a simplified version of how that goes there's notice requirements there's all sorts of statutes that have to be followed by the closing attorney and the parties but in general if the parties can't agree then you will have to go to court to decide who gets the money so it's much more expeditious it's much less expensive for the parties to agree to release the money and to whom rather than having to have a court tell you who is going to get the money so overall if i had my way about repairs it would be that if the parties engage in repair negotiations and the seller says they're going to do repairs for the sake of the seller and the buyer for goodness sakes just do what you said you would do before closing and then we can avoid the escrow we can avoid the disputes over did the contractor cost too much and maybe you didn't want to pay that much for the repair if you agree to make the repairs do it before closing that is the absolute cleanest way now i understand as a practicing real estate attorney that's not always possible but if you want to know my opinion that's it get it done before closing let everyone have all of their obligations completed before the deed is recorded when it comes to repairs um so my number one tip for sellers if you're going through this process is make sure that you are actually looking at the agreement that you signed when you're making the repairs if you agreed to replace this particular thing and then you decide in the course of replacing it that you think it's too expensive or it's actually not worth it and you do something else you're breaching the agreement that you signed with the buyers for that repair so make sure you're actually holding up your end of the bargain and my number one tip for buyers is to make sure that before you get to the closing table you have completed another walkthrough of the home to make sure any repairs were completed the way that they were set forth in that repair agreement all right there is my take on the way the market is with repairs right now and how can you handle different repairs and different disputes i'm tiffany weber i am a mooresville north carolina real estate attorney at thomas and weber we make videos just like this to educate you on real estate law all the time so make sure you subscribe to the channel and i'll see you in the next video you