If you are purchasing a newly constructed home that has been listed for sale by the builder, you should consider requiring the seller to add written warranties to the standard form agreement. Most houses listed for sale are used homes but a portion of them are houses that have just been built by the seller. If you were purchasing a typical used home, your agreement would normally indicate that you are purchasing the property as is. It’s the way almost all standard agreements are written. It’s analagous to purchasing a new vehicle. The seller cannot control what problems might be with the home and they don’t want any ties or potential liabilities with the house once it is sold. Of course they must still fulfill their legal duty to disclose known defects that cannot be reasonably discovered by the purchaser on an inspection of the property. (See my article on disclosure of defects under the realestate page of my website.) However, if the house listed for sale is new and the seller is the builder, the situation can be different.
If you are purchasing a newly constructed home from a builder, the builder should be prepared to offer additional warranties to the purchaser. If the builder does a lot of sales, they may already have a warranty plan if you ask for it. Otherwise you’ll need to discuss it with them and reduce it to writing. Have it incorporated as a schedule to your offer to purchase/sale agreement. Specify what is warranted and what is not. Ask for a warranty with a long enough life to give the house time to settle and for you to find out if there are construction deficiencies. Consider asking the builder for a warranty under the National New Home Warranty Plan as well.
Time is of the Essence
You often see the phrase “time is of the essence” in contracts. You’ll find it in my standard office to purchase form and most realtor forms. It means that whenever there is a deadline for something to be done, everyone will be held strictly to those dates and times. This is especially important for you to remember if you are buying or selling a home without a realtor as no one will be monitoring deadlines for you. For example, if your offer to purchase states that the buyer must have approval of financing by a certain date, it is not sufficient if the financing is approved early the following morning. Similarly, if a buyer or seller does not tender the money (buyer) or transfer (seller) on the possession day, they are in breach of the contract and could possibly lose their deal. There are some exceptions to the “time is of the essence” rule, though. For example, there are cases saying if you do something to let the other party believe that you won’t be strictly holding them to the date to meet their conditions or if you appear to be giving them additional time to come up with their money or transfer on closing, then you have taken “time is of the essence” off the table. In short, one side’s actions may lead the other party to reasonably believe they aren’t going to be held to those timelines. The key is whether the belief was reasonable based on the other side’s actions. If so, the court might not say they have lost their bargain over that. If time is no longer of the essence, you need to put the deadlines back into play again. You will need to make it clear to the other side that time is again of the essence and that you will hold them to their deadlines. If the deadline had already gone by or is about to expire, you may need to be reasonable about the new deadline you impose. What is reasonable depends on all the surrounding circumstances. It is best to give this to the other party in writing to ensure there is no misunderstanding.
Naturally, if you are in this situation, it can leave you feeling anxious and uncertain about whether you have a deal or not. The best policy is to never let a deadline go by unless you have a written extension signed by the other side. Make a checklist and diarize your deadlines. If you are the seller, don’t lull the buyer into believing that the date to meet their financing and other conditions is only a technicality. It may only encourage the other side to not take things seriously, leading to undertainty and possibly disappointment for everyone.
My website has evolved quite a bit since 1999. It’s now time to ask for your input about what you would like to see on my real estate page. Do you have any suggestions? Here are some possibilities:
- Are there any other generic realestate forms that you think would be useful.
- Would you like the option to fill in textboxes, check off some options and then click submit to generate a customized offer to purchase or other type of form?
- Is there an article that you think would be helpful?
Let me know if you have any suggestions. Note: If you post a suggestion, you only have to click submit once. The page will blink so you’ll know it worked. The textbox reappears but only if you want to submit a further comment.
