Andrew Wetzel's Musings

August 11, 2017

Your property has settled. Is that the end?

Filed under: Uncategorized — awetzel @ 5:34 PM

Technically speaking, settlement (or “close of escrow” as some areas call it) concludes the process of transferring ownership of real property from one owner (“the seller”) to a new owner (“the buyer”).  Does that really end the seller’s responsibility?  I am not a lawyer but I will quote what many have said in response to such a direct question:  it depends!

In most cases, a new chapter has begun and both parties move along their new paths.  However, I have seen situations that linger like gastric distress from a past meal.  I have asked the following question several times:  when does THIS buyer accept responsibility for their house?  Some act like tenants expecting someone else to handle whatever pops up.

As a Buyer’s agent I have not had any problems with any of my buyer-clients thinking that the person who sold them their house still bears responsibility for what happened after settlement.  However, as a Listing/ Seller’s agent, I have received several calls over the years, some well past settlement, from Buyers’ agents saying that their client had an issue and believed that my seller was responsible.  Please note that I am NOT referring to situations where a seller may have shall I say “overlooked” something on their property disclosure statement.  Whether the result of a mistake or outright fraud, that type of issue certainly merits attention.

On a related note, I feel that a seller is not responsible when a property inspector does not do their job or an agent/ buyer fail to do their “due diligence” such as when an inspector states that something merits further investigation and none takes place.  Our property disclosure law in PA is much better than in many states (some have none!) and most sellers are honest but simply do not know what lurks behind walls, floor and ceilings.  While many do “preventive” maintenance, too many only react and respond when there is a problem.

Let me offer a couple of my experiences.

I once received a call from a buyer’s agent more than 2 years after settlement.  They told me that a house I sold to his client had developed a roof leak.  He was upfront, acknowledging that he knew a long time had passed, telling me that he was calling me because his past client wanted him to.  The buyer/ now owner wanted to verify that my sellers had done the roof repairs they agreed to do.  I called my past clients and was told that they had done what was asked and provided receipts at the time.  In reviewing the sales file I was reminded that this had been an FHA sale which required a two-year roof certification which involved a minor repair.  After talking to the sellers, I called the buyer agent and reminded him about the details and stated that it was several months past the 2-year point.  While I felt badly that there was a roof leak, it was not related to anything my clients did.  Stuff happens when you own a home which is why some prefer to rent despite the never-ending rent payments.

Once I received a call several months after closing.  I sold a house in late spring and it was now mid-fall and the temperature had fallen so the new owner tried to turn on the heat in their house.  It did not come on.  They went into the basement to check the heater and found the side panel off and leaning against the wall.  Their agent called me to see what I could tell them so I called my past client.  The house had been an investment property which the sellers never lived in and they had no idea why the heater did not work.  I reviewed the file and found what had apparently taken place.

The sale included a typical settlement time-frame.  The inspections had been completed, a repair list agreed to and the buyer’s financing was in place.  For whatever reason, the buyer agent called to see if we could settle sooner than planned.  My clients agreed but mentioned that they had not yet completed all of the repairs.  The buyer agent said that that was fine, that the buyers would take a credit for whatever remained.  Both sides agreed to a credit amount and we settled early.  In reviewing the file I found THE now-obvious problem.  When their inspector was at the property they could not get the heater to turn on so they suggested that the buyer ask the seller to have the heating system cleaned and CERTIFIED to be operational.  The sellers got proposals for the work requested and they gave the buyers the amount on the proposal, including the cost of the cleaning/ certification.  Neither the buyer nor their agent realized that there was no protection in the event that the heater needed a repair or replacement.  Frankly, neither did my sellers or me but that was not our job to point out.  I told the agent that they should talk to their broker and explain the situation.  I told them that the buyer found the heater in the same condition their inspector had left it.  I had to assume that the buyers did not use the credit to address the repairs they had asked for and, presumably, never looked at the heater during the several months between their property inspection and that cold fall night.

There are other stories I could tell but they essentially involve similar circumstances.  Ideally there is a euphoria when buyers are shopping for their first or next home.  Sellers probably feel the same emotion.  I often like to remind my clients that selling or buying a home is a business transaction.  Despite all of the “human” aspects, it is probably the largest purchase someone will ever make and one that can get costlier if the process is not respected for what it is.  Sure, stuff happens but much of what I have seen or heard is avoidable.  The inspection process must be looked at for what it is:  a major opportunity for BOTH sides to re-evaluate their agreement.  I think that a buyer agent MUST attend the property inspection to best protect the interests of their client and no stone should be left unturned to ensure that there is nothing or very little missed.  The reports must be reviewed in detail and questioned.  While lender appraisals and pre-settlement walk-throughs will support the process, the property inspection, especially if it includes wood infestation, radon and other specifics, is the major point of analysis and typically the last chance for a buyer to express any concerns.

While I am sure that some buyers will refer to the property disclosure statement when a problem arises, the form is not perfect and a buyer has the “burden of proof” if they think something is amiss.  It is certainly not an expert opinion.  Hopefully a buyer does not try to save a few hundred dollars by waiving the option of having a property inspection, thinking themselves capable of assessing the true condition of a house.  That can prove BOTH co$tly and foolish!

Sadly, no matter how euphoric a purchase or sale may have been at the time, no Realtor likes to receive a post-settlement call about a problem.  Our service does not end at closing and hopefully we have not contributed to or caused the issue.  Regardless, those conversations are not the way to remember a sale.  As I said before, much of what I have seen is avoidable.  This is why I end every post with ….

HIRE WISELY!

Thank you for reading.  See my others articles at WhyAndrewWetzel.com!

 

 

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: