Here are a few good hotline questions for the start of the new year. Perhaps you have asked some of these very questions.
Q. How long does a listing broker have to return a buyer’s deposit after notice of termination?
A. I am tempted to answer with “it depends,” but will refrain! I will assume, however, that the notice of termination was properly submitted as would be the case if a buyer timely terminates the agreement based upon the results of a home inspection.
A good place to start is with the agreement of sale. Unfortunately, PAR’s Standard Agreement does not indicate a period of time within which the deposit must be returned in this situation.
We next turn to the law, but unfortunately there is no statute (e.g., the Real Estate Licensing and Registration Act) nor regulation (e.g., the Rules and Regulations of the State Real Estate Commission) that dictates how quickly a deposit is to be returned. I am not familiar with an appellate decision in Pennsylvania on this issue and therefore have no guidance from the courts.
In the absence of specific guidance, the courts will impose a reasonable standard; that is to say that the court would require the return of a deposit to take place within a “reasonable time” from the event triggering the requirement to return the deposit. What constitutes a “reasonable time” is certainly up in the air and one that might be decided differently by different courts. Rarely, however, are suits filed over the timeliness of a return of deposit. And I suppose that is good thing. When suits are filed, they usually involve questions of entitlement rather than how quickly it is to be returned.
The bigger threat to brokers who hold money too long, is a complaint to the Real Estate Commission. Complaints are filed without cost to the complainant and the Commission has little tolerance for improperly handled escrow.
Q. At the pre-settlement walkthrough the buyer became very upset to find numerous nail holes in walls where pictures were once hanging. Is the seller obligated to patch the walls? Paint?
A. A good place to start with questions like these is in the agreement of sale (it seems I have said that recently). PAR’s Standard Agreement has several provisions that are on point. Paragraph 17, MAINTENANCE AND RISK OF LOSS, provides that the seller will maintain the property “in its present condition, normal wear and tear accepted.” Paragraph 22, REPRESENTATIONS, says, in pertinent part, that “unless otherwise stated” buyer “agrees to purchase the property in its present condition” subject to the elected inspection contingencies.
Assuming the pictures were hanging and the nail holes already were there when the buyer submitted her offer, it stands to reason they would be there when she takes title. If buyers don’t want to purchase a home with nail holes and the outlines of pictures and mirrors, then the buyer should endeavor to negotiate having the seller patch and paint walls as part of the terms of sale. Otherwise, it is a project for post-settlement!
Q. Does the buyer agent have a right to be with the sellers when the offer is presented?
A. No. I know the practice in many areas is for buyer agents to attend the presentation of their clients’ offers to the seller. I suppose the policy, where practiced, took hold in the early days of buyer agency when buyer agents were suspicious that their offers were not presented! You would think that even then listing agents would love nothing more than interested buyers, but for reasons now hard to fathom, there was, in some markets, ample mistrust between buyer agents and traditional seller agents/subagents. And while I can understand that a buyer agent would want to be present when his clients’ offer is unveiled, I can understand why a listing agent would prefer to unveil the offer in private. Unwitting sellers can give away their hand in their facial expressions alone. Regardless, the answer lies with the listing agent and seller who have the right to determine how the offer will be received and who will be present.
Q. If the seller “reserves” the chandelier, does he have to replace it by settlement?
A. It depends. What does the agreement say? In the FIXTURES AND PERSONAL PROPERTY clause, it provides that all “lighting fixtures (including chandeliers and ceiling fans)” are included in the sale. Presumably the parties amended this by noting the chandelier as an excluded item, one not included in the sale. But did the parties add a provision to the agreement calling for replacement of the chandelier? If not, the buyer should not expect to receive a lighting fixture in its place. According to our Standard Agreement, property is sold in its present condition unless otherwise stated. The only modification made by the parties was that the chandelier would be taken and not that it would be replaced. Agreements of sale work best when matters aren’t left to presumption, but rather are covered in detail. If you want a replacement chandelier, say so in the terms of the agreement.
Closing is scheduled for tomorrow morning and everyone is excited to finalize the deal. You suddenly get a frantic call from your seller who explains they were about to leave the house with the last few boxes when a torrential downpour blew through the area and they now have an inch of standing water in the basement. Now what do you do about the closing in the morning?
Agents understand the importance of obtaining certificates of resale limit the buyer’s opportunity to terminate, and thus the emphasis has been on obtaining and delivering the appropriate documents. Many, however, fail to appreciate the reason behind the law’s requirement.