All parties to a real estate transaction involving improvements, especially realtors, should pay particular attention to the options set forth in the standard Agreement to Buy and Sell regarding the due diligence or inspection period. (Lines 154-191) As stated, a buyer shall have an inspection period for a time frame established by the parties. But there is a CATCH! Although the buyers can have an expert perform any number of inspections, their options after reviewing the results of the inspections must be exercised , in writing, during the due diligence period. A buyer can elect to terminate the agreement and receive a refund of the deposit, or they can indicate in writing the nature of the problems and give the Seller the option to repair. However, these options must be exercised during the inspection period! One of the problems we see is that the buyers do not allow a period long enough to have the inspection results completed and reviewed prior to the expiration of the period. Parties should make sure that enough time is allowed, including having time to complete and review the results, depending upon the type of inspection. This may require an addendum to the agreement expanding the period long enough for all results to be completed and reviewed.
If care is not taken, a party desiring to renegotiate or terminate a transaction may lose that right by simply not paying attention to the time period allowed to consider the due diligence options. Even worse, a party may inadvertently subject themselves to a breach of contract suit, including damages of up to 10% of the sales price, if they seek to get out of a contract because of needed repairs discovered after the inspection period has expired.
Let the experience of Prime Title guide you through your next real estate transaction.
