I ran into a Realtor who did not understand the “Risk of loss” clause in the standard purchase agreement. If the property is damaged after the final acceptance date on the contract but before the closing, the buyer has the option of canceling the contract. The buyer must do so in writing and the buyer and seller must sign a cancellation and earnest monies are refunded to the buyer.
Damage can occur after a severe storm or maybe an accident. Some home repairs fail eventually, siding, roofs, furnaces, and water heaters wear out or malfunction.
There isn’t anything in the contract that would require the owner to make repairs either. Homebuyers should do a final walkthrough of the
home before the closing. If something in the home has been damaged or is broken it should be addressed before closing.
Closing dates can be changed as needed with an agreement from both parties.
The risk of loss clause doesn’t specify the amount of damage that has to have happened to the property. If a home burns to the ground after an offer has been accepted but before the closing, the buyer does not have to proceed with the purchase.
If the roof develops a leak before the closing there are all kinds of remedies. One remedy is to put money in escrow for repairs. The seller can get a bid and have that amount of money withheld from the proceeds of the sale. The money can be held by the title company.
There is a myth out there that money held in escrow must be 1.5 times the amount needed to make the repairs. That is only true in some cases where the buyer’s lender asks that money be put in escrow to pay for repairs.
When choosing a real estate agent it is a good idea to find someone who has some experience. The unexpected can happen at any point in a real estate transaction. A good real estate agent can find solutions to any problem that arises. Having experience really helps. There are times though when the buyer or seller should consult an attorney.