Buying a home is a significant financial and emotional investment. From the moment your offer on a property is accepted to the day you take possession, there are a multitude of details to manage. One important consideration is property damage that may occur between offer acceptance and closing. Who is responsible for addressing such issues, and how can you protect yourself as a buyer? Let’s delve into these important questions.

Seller’s Responsibility Until Closing

Until the closing deal is completed, the seller remains responsible for the property. This includes any damage to the property, or the items included in the sale. Whether it’s a major hailstorm that damages the roof or any other unexpected incident, the onus is on the seller to maintain the property’s condition as it was when the offer was accepted.

Even if the property sits vacant for some time before closing, the seller must still maintain home insurance on the property. It’s a safeguard against unforeseen events and damages.

As the buyer, it’s crucial to arrange for your own home insurance to begin on the day of possession. Even if you don’t plan to move in immediately, insuring the property is your responsibility once you take possession.

Handling Damage Between Acceptance and Possession

If property damage occurs during the period between offer acceptance and possession day, you should take specific steps to address the situation:

  1. Communication: Have your real estate agent communicate with the seller’s agent to confirm that the seller is aware of and addressing the damage. Clarity in communication is essential in these situations.
  2. Addendum: If the seller agrees to repair the damage before possession day, consider adding an addendum to your accepted offer. This document should outline the seller’s responsibility to replace or repair the damaged property, ensuring there are no ambiguities.
  3. Holdback Agreement: If there is resistance from the seller or concerns about the repair timeline, you might propose a holdback agreement. This agreement allows you to withhold a portion of the purchase funds until the agreed-upon repairs are completed to your satisfaction. Ensure that any agreements made between you and the seller are documented in writing.

Seek Legal Advice When Needed

If there is any reluctance on the part of the seller to address the damage, whether in terms of repairs or documenting agreements, it’s advisable to consult with a lawyer for legal advice. A legal professional can guide you on your rights and potential courses of action.

In cases where either party wishes to terminate the transaction due to property damage or if the seller refuses to make repairs before possession, legal advice becomes even more critical.

Three Ways to Protect Your Buyer Client

As a buyer’s representative, it’s your duty to protect your client’s interests. Here are three proactive steps you can take to safeguard your buyer from property damage-related issues:

  1. Insert Protective Clauses: In the offer, include protective clauses that address the state of the property and its contents on the completion date. These clauses can require the seller to restore the property to its original condition or compensate the buyer for necessary repairs in the event of substantial changes or damage.

Additionally, consider adding a clause that grants your client a pre-closing visit close to the actual closing day. This visit allows the buyer to confirm that the property remains in the same condition as when they first viewed it and that any agreed-upon

  1. Document Property Contents: Take photographs and document the model and serial numbers of appliances and other items included in the sale. This documentation serves as evidence in case the seller attempts to replace these items with different models.
  2. Negotiate a Holdback: Work with your client’s lawyer to negotiate a holdback agreement with the seller’s lawyer. This holdback, typically ranging from $500 to $1,000, is only released to the seller after closing, once the buyer confirms the property’s condition is satisfactory. This can be particularly valuable if there are concerns that the property won’t be delivered in the agreed-upon condition.

Conclusion

Property damage between offer acceptance and closing can create unexpected challenges for both buyers and sellers. By being proactive, inserting protective clauses, documenting property contents, and considering holdback agreements, you can enhance your professionalism as a real estate agent and ensure your client’s satisfaction throughout the buying process. Buying a home is a significant milestone, and your guidance can make all the difference.