Top Five Items That Buyers and Sellers Disagree On When Buying and Selling a Home in Massachusetts

There is a famous painting hanging in the conference rooms of far too many real estate firms entitled "The Closing." It depicts a room crowded with people, most of whom seem quite unhappy with one another. As cliché as this painting has become, it conveys what happens all too often during the closing process: buyers and sellers fight one another.  

Below is a list of the most frequent topics of dispute that can often be softened with the assistance of a real estate attorney at the appropriate stage of the transaction:

1. Repair Items.

In most residential real estate transactions, the buyer has the opportunity for a home inspection. The findings can range from the identification of major structural defects in the roof or foundation to minor items such as sticking doors and windows. Buyers, who understandably want their new home to be a dream home, often ask that the seller fix everything, or reduce the price so the buyer can complete the work on their own. Sellers, who have known about and lived with the minor problems for years, often take the position that what was good enough for them is good enough for the buyer. In some cases, sellers feel insulted and feel that the buyers are being personally critical of the seller's standards. An experienced real estate attorney can guide the parties through this all-too-common topic of dispute and can usually help both sides find common ground.

2. Holdback of Funds.

In cases where the parties do agree that repairs will be done to the property prior to closing, a frequent issue arises when the closing date arrives and the work is either unfinished or doesn't meet the buyer's expectations. The issue is even more common when the home is newly constructed or renovated, and at the closing date there are unfinished pieces of construction.   In this instance, buyers are likely to request that a portion of the money due to the seller be held in escrow as a sort of insurance policy that the seller will complete the unfinished work, or be made available to the buyer to pay for completion. Sellers, particularly with new construction where the work is warranted, take the position that their obligation is by contract, and a holdback is unnecessary. Parker|Scheer real estate attorneys strongly recommend that in transactions involving repairs or construction, the holdback issue should be clearly and specifically addressed in the purchase and sale agreement, in order to avoid a disagreement at the closing.

3. Appliances and "Built Ins".

This issue has two sides, depending on whether the appliances in the house are updated or tired.   In cases of new or updated appliances, the seller will sometimes want to exclude them from the sale. When they are tired, the buyer will want them removed, and will try to negotiate a price reduction. The rule of thumb is that the stove, dishwasher, and built-in microwave stay; the washing machine and dryer go with the seller, and the refrigerator is subject to a coin toss. The standard form also determines that "built in" items stay with the home. Sellers often try to negotiate to take their favorite lighting fixtures and curtain rods with them.

4. Deposit Amount

The deposit amount may or may not become a topic of dispute. Generally, if the closing date is scheduled within a month or less of the signing of the Purchase and Sale Agreement, it's a fairly minor issue. When the closing isn't scheduled to happen for more than a month, however, a buyer will try to reduce the amount of their money that is held in escrow for the deposit. The seller, however, has an increased incentive to keep the amount of the deposit high (around 5%) because if the closing doesn't occur the damages are limited to the amount of the deposit. The longer the house is off the market without selling, the more a seller stands to lose.

5. Closing Date

There are several factors that create disputes, or at least negotiation, over the closing date. The Seller is often concerned about coordinating the closing of the sale with the closing of their next purchase. Typically, the seller must have access to the funds from their sale to buy their new home. The availability of the funds can sometimes be delayed a few hours or even a day until documents can be recorded. The buyer might be in a similar position; waiting on proceeds to put toward the new purchase. The suggested remedy from the seller's perspective is to reach an agreement where the seller remains in the property for a day or two until the funds clear and they can buy their new home. These agreements, typically called "use and occupancy agreements," are more favorable to sellers than buyers. Parker|Scheer strongly advises a purchaser of new property to speak to a real estate attorney before entering into a use and occupancy agreement.

Another frequent point of contention surrounding the closing date arises when the closing involves new construction. There are many reasons why new construction sometimes takes longer than expected, and seller's of new construction (usually established builders) load their proposed purchase and sale agreements with all sorts of extending provisions to allow them the extra time needed to complete the project. Buyers must be tremendously diligent in these instances to limit extension periods in which such extensions will affect the buyers' interest rate and other important deadlines. Buyers of new construction must have legal representation during the negotiation of a purchase and sale for new construction.

While the fights that arise surrounding closings can result in great war stories for lawyers to tell, the prudent approach is to create an agreement that will govern the rights and obligations of the buyer and seller should the unexpected occur. Please contact Parker | Scheer real estate attorneys to learn more about working with us on your closing.

Contact a Real Estate Lawyer

For more information on buying on selling real estate in Massachusetts, or if you need a real estate lawyer, please contact Rob D. Stewart. If you prefer, you can also telephone our offices in Boston seven days a week at toll free 866-414-0400.

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