When I help my clients purchase a home, one provision that is always included in the agreement is for at least one more visit to the home before closing. Sometimes there are reasons for wanting or needing to see the house you are buying more than one time between when the deal firms up and when you take possession. Sometimes buyers want to do some renovations as soon as possible after the house becomes theirs, and so they would like the opportunity to bring trades people through for estimates and measurements. Sometimes family were unable to be part of the buying process and you want an opportunity to show them the house before you move in. Any and all of these situations need to be anticipated for and written into the agreement.
Typically, though, most purchase agreements include the provision for just one more visit before closing. Usually it is done 24-72 hours before closing. What is the purpose of this visit?
One is a follow up on any home inspection items that the Seller agreed to repair before closing. Were they fixed? Was the work done well? Also, we are looking to see what kind of condition is the house in. Is it more or less in the same shape that it was in when we were looking at it during the purchase and home inspection process? Are the appliances the same? Are all the other chattels included in the agreements there and in good condition? Even if the Sellers are packing, is the house relatively clean? If they have already moved out, has the house been cleaned and made ready for you to move in? Has everything been moved, or have they left behind items you don’t want?
One thing that the final walk through is not, is it is not another home inspection. It is just what it’s name implies, it is a walk through. It usually takes about 20-30 minutes. Sometimes the homeowner will be there. In those situations, the Seller will often point out a few things to keep in mind about the house. Sometimes they will have one or two items that they no longer need. A common question you hear is, “We don’t need it anymore, if you want it we will leave it, otherwise we will get rid of it.”
In the vast majority of purchases, there are no problems. In fact, just the opposite. Most of the time the house is left clean and neat and the Sellers have left packets of owner’s manuals, mailbox keys and instructions for the house. If that is the case, you call your lawyer’s office, tell them you just did the walk through and everything is fine, they can go ahead and release the funds and close the deal.
What if there is a problem? In a situation like this, you will make a call in to your lawyer to discuss what to do. The most common remedy is to do what is called a “withholding.” What will happen is that your lawyer will call the Seller’s lawyer and inform them of the problem. They will allow the deal to go forward, but will withhold an amount sufficient to deal satisfactorily with the problem. I will use an example from my own experience. When I purchased my current residence, it had a central vacuum system and the among the chattels to be included was all the hoses and a “power head.” The power head was missing. The Seller did not know what had happened to it. We made a quick call to a store that sells central vac systems and priced out a replacement. Our lawyer, withheld the amount, we moved in, went and purchased the power head, gave the receipt to our lawyer and he remitted the funds to us. Problem solved.
This type of withholding can be used to cover work that was supposed to be done but was not done or not done satisfactorily. Maybe they moved out but did damage to the house in the process of moving. Maybe an included chattel was missing. The nice thing about a withholding is that it allows the deal to move forward and gives a means to resolve the issue adequately. Sometimes just the threat of a withholding can get action. If the Seller has been dragging their feet on getting repairs done, often just the mention of a withholding gets everything moving.
Thankfully it is a rare thing. The vast majority of deals close smoothly and everyone is delighted. There are those times where a gentle reminder, “My client would hate to have it get to the point where we need to do a withholding,” is enough to resolve the issue. Closing should be a happy, stress free time. Thankfully we have the leverage of the withholding to help smooth the process.