Archive » November 23, 2006
REAL ESTATE VIEW
By Mark Schneidman
Holding an Escrow Together
A recent car advertisement read: “Back on market, sale fell through.” Perhaps it was a realtor selling the car because I’ve never seen an automobile advertised that way. If a house falls out of escrow the agent-to-agent communiqué is, “Back on market” invariably followed by “through no fault of the property.” Why do properties fall out of escrow and what can people do to avoid such a fate? The short answer is that sometimes exigent circumstances occur that lead the buyer to cancel escrow. The long answer is that there are steps to take to avoid falling out of escrow for the wrong reasons.
Sellers, “to facilitate your transaction and allow a purchaser to review and approve various reports and disclosures in a timely and efficient manner,” says manager Bob Ruccione, you should order reports that you are contractually obligated to supply and complete property disclosures before the buyer submits an offer to purchase your property.
One might point out that the buyer may have 14 days after acceptance to remove their inspection contingency, so why worry about getting them all of the information on day one. True, but the sooner the buyer has all of the pertinent information on the property, the sooner they are in a position to approve, disapprove or, perhaps most importantly, have time for further discovery in order to satisfy their inspection contingency. It sure beats having to grant the buyer an extension because information came late.
There are times when certain reports and disclosures are included in the seller’s counteroffer before the contract is perfected and the escrow is even opened. During the multiple-offer-season it wasn’t uncommon to ask the buyer to approve certain items during the contract negotiation. Who needs 14 days? Actually, certain statutes preclude the seller from demanding the buyer to approve certain reports without a designated time period. On rare occasions you saw buyers buying without a physical inspection contingency – not something for the faint of heart, nor something some real estate office managers like to see.
Understand that the California Association of Realtors real estate purchase contract is designed so that the seller is not obligated to make repairs or warrant the systems of the house (plumbing, electrical, roof, etc). Hence, adding the term “as is” became redundant with the removal of the warranty clause several years back. Sellers, however, should remember that even though they are selling “as is” and without warranty, they are selling “as was,” a term I use. It means that, per the contract, the property must be maintained in substantially the same condition as “it was” on the day the buyer saw and purchased it. So, during escrow if that water heater breaks or the seller’s 9-year-old son Jake breaks a window with a baseball, the seller makes the repairs.
The lack of the warranty clause does not preclude the buyer from requesting that the seller make repairs or credit money to the buyer so that repairs can be made after close of escrow. Is that fair? It might be if something inordinate and extraordinary is discovered. This is where an escrow might fall apart and where you want a realtor orchestrating an equitable resolution of disputes.
Sometimes rumors circulate that a house is in escrow when in fact it is not. Another Realtor lexicon is employed to reassure the rest of us that the property is available. It is never simply “available.” It’s always “very much” available. We realtors do not want to be misunderstood.
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