Navigate Your Home Purchase with Confidence in Ohio

Ideally, postpone the closing until the repairs are complete. That is the simplest and cleanest thing to do. Unfortunately, it is not always feasible.

If the closing can’t be postponed, one option is to have the seller provide the buyer a credit at closing against the purchase price or pay a portion of the buyer’s closing costs to compensate for the incomplete repair.

If necessary, have the title company hold enough funds in escrow to pay for the repair. The escrowed funds will not be disbursed until the repair is made. The escrowed funds may need to substantially exceed the cost of the repairs if the cost is an estimate. Under these circumstances, I prefer to have the buyer make the repair, and have the escrowed funds paid to the buyer when the repairs are complete, but many buyers will not want to take on this responsibility. The title company and lender will have to agree to the escrow. It is easy to see how this “escrow resolution” can become very messy.

As a last resort, the buyer can terminate the contract. But be careful and seek legal advice—if the repair at issue is minor, the buyer could be found to have breached the contract by improperly terminating it.

Try not to let emotions cloud your decision—this is business, and large sums are at stake.

Generally, the form of a communication doesn’t matter, so long as it is a “writing”—a text or email is considered a writing. Don’t negotiate without putting your communication in writing, even if the message has already been provided orally.

The language of a communication determines whether it is a counterclaim or request. For example, saying “would you consider $$300,000” is probably a request, and “I will pay $300,000” is clearly a counteroffer. Word your communications carefully and clearly—the best thing is to be completely unambiguous: if you’re making a counteroffer say “I counter at $300,000.”

Note that if you’re going back and forth, your latest counteroffer takes the other party’s offer or counteroffer off the table. If the last offer was $300,000, and you counter at $320,000, and an hour later you change your mind and let them know you want to accept the $300,000, they are not obligated to accept it—your $320,000 counteroffer extinguished their $300,000 offer.

You will have to file an eviction. That is the only way you can get possession of the property. An eviction can take as little as a month or as long as a year or more, so be careful upfront.

There is nothing wrong with allowing the seller to stay beyond the closing date, and often there is no other way to make the deal work, but it is a risk. They can fail to move out, and they can damage the property. I recommend entering into a lease even if it’s just for a few days. The lease should provide, at minimum, that the sellers, who are now your tenants, retain full maintenance and repair responsibility, keep the utilities in their name, establish a definite move-out date, provide for the buyer to hold a substantial security deposit, a penalty for not vacating on time, and an additional daily rent amount if they overstay. Consult with your insurance agent and make sure you have the right insurance coverage for the time you’re renting it out. And have that rental mentality—you are renting it out, and you are a landlord for that period of time.

Seek legal counsel in this situation. It is complex and the answer depends on the circumstances: did the owner know and fail to disclose the defect, did neither party know, is the defect open to view and obvious, is it hidden from view, and how major is it? 

First, if the defect is one that could or should have been discovered upon a reasonable inspection, you probably cannot terminate the contract. It is likely blocked by the legal doctrine of caveat emptor (buyer beware).

If the seller knew about the defect, and failed to disclose it, and the defect was not discoverable upon reasonable inspection, that would constitute fraud, and you can terminate the contract. However, although I’ve seen many sellers commit fraud, I’ve never seen one admit it, and you will probably be in for a fight.

If neither party knew about the defect, it was not discoverable upon reasonable inspection, and it is sufficiently major, such as a major structural defect hidden by drywall, you might be able to terminate the contract based upon the legal doctrine of “mutual mistake.” The law school example is when both parties think the cow is a girl, but it turns out to be a boy. Here one can argue that both parties thought the house was structurally sound, and it is not, and that misunderstanding is so fundamental that the contract should be voided.