“The seller didn’t sweep the hallway like they said they would!”
“The seller left a bunch of garbage!”
“There are so many holes in the walls!”
You do your final walkthrough of the home 2 weeks before closing. You realize that the home is in disarray, but the seller still has 2 weeks to clean the home and you hope that they commit to keeping their end of the contract. Upon closing, you realize that the home has clear issues that were not there when you first purchased the home.
At McMurter & Associates, we do see transactions where the seller does not leave the home how they said they would.
As a buyer, can you refuse to close?
For a buyer to refuse to close, the level of the issue with the home must be major. In this situation, a major issue would be a flood or a catastrophic fire in the home.
There must be a major issue with the home is so that buyers cannot use minor issues nefariously. For example, a buyer might be having trouble securing lending for their home so they could create a false scenario where it might seem like they are unhappy about the state of the home upon closing but, in reality, they are having financial trouble.
What is a holdback?
Sometimes where there are more minor issues on closing the lawyer for the buyer may be able to negotiate a holdback. A holdback is where some of the funds are held back from the seller so that the seller is motivated to fix the issue, or so the buyer can use the funds to address the issue.
As a buyer, you do not have a unilateral right to a holdback because your contract is between two people – the buyer and the seller. The seller must agree to this holdback.
As a buyer, what can you do?
When it comes to less serious issues with the home, such as garbage or mess left behind, the buyer is expected to close the transaction and pursue the seller after closing for any costs they incur.
It is not a perfect system, but this prevents the buyer from using small issues with the home as a refusal to close. This would likely cause chaos in the buying and selling of homes and the reliability of closing dates, so it is the lesser of two evils.
This article is intended as an informative piece about the subject. It should not be taken as legal advice. We recommend you connect with a real estate lawyer about your specific legal issue.
McMurter & Associates in Whitby has been providing estate planning services throughout the Durham Region for more than 30 years. We have the experience needed to provide you with expert advice for any of your real estate and estate planning needs.