Repair Procedure in SCR310 (commonly used for single family homes).

SCR310 has a repair procedure in Section 8 and is useful for buyers who only want a property where the basic systems are operable.  There is a Section 11 Wood Infestation Report in SCR310 that has a similar procedure for repairs for wood destroying organisms that can operate on a time frame closer to the closing.

Procedure is for the parties to agree upon a repair inspection deadline.

Buyer inspects and requests repairs from the seller with a Repair Request Addendum SCR525 no later than 2 business days after the repair inspection deadline.

Seller then has a pre-agreed number of business days to gather repair cost estimates.  This fill in the blank number can vary by market needs (e.g. hot market may mean that contractors are booked solid and need more time to inspect and provide repair cost estimates).

There are 9 basic repairs that the seller can agree to make and keep the buyer in contract.

Operative condition:  HVAC, electrical systems, plumbing systems, water supply systems, waste water systems…roof free of leaks…address environmental concerns…and make the improvements structurally sound.   Of these, buyers and sellers often dispute if a repair request falls under the “make the improvements structurally sound” category.

If seller refuses to make one of these nine basic repairs for any reason (e.g. seller’s option, seller cannot afford even with proceeds and savings and credit), only then does the buyer have a 2 business day window to decide buy anyway or terminate.  Should buyer take no action, the contract becomes an AS IS contract and this is defined in this same section of the contract.

Note:   Buyer might ask for a repair that does not fit into the 9 basic repair classes, if seller agrees then everyone is happy and moving to closing…if seller refuses, the buyer might be unhappy but is still moving to closing or facing a potential breach of contract lawsuit from the seller.

Note:  Seller cannot escape the contract under this section.  Only the buyer has a timely and proper and limited way to escape the contract under this section.  Buyer might want to buy a property without desired repairs, say the seller refuses repairs and this is the buyer’s dream home or buyer’s decides that the property is a good deal for them even without the repairs.

Note:  If seller agrees to make repairs on SCR525, there are deadlines that the parties agree to in the form.  Failure to timely and properly make the repairs agreed upon can expose the seller to a breach of contract lawsuit.  Per the contract, breach of contract lawsuits are “loser pays” the winner’s attorney fees as well as damages.  Attorneys fees can exceed damages.

Repair procedure is a very basic repair procedure.  Many buyers believe they can ask for a myriad repairs, so buyers should be told about the due diligence addendum (SCR311) alternative.  Repair procedure only lets the buyer escape the contract if the seller refuses to make one of the 9 basic repairs.  All other repairs are the buyer’s responsibility.

Due diligence allows a buyer to terminate in a timely and proper manner only during a pre-agreed upon limited time period for any reason or no reason.  Buyers can negotiate any repairs or terms such as price.  If the buyer timely and properly terminates under due diligence, the buyer pays the seller a pre-agreed upon amount of money (due diligence termination fee).

If you have ever seen a contract with a variation of these words:  “contract is contingent upon buyer’s satisfaction with home inspection” then you have done due diligence with no termination fee and no deadlines except closing.   So the SCR311 due diligence can eliminate two of these problems for the seller, (1) the parties can pre-agree upon a due diligence period and (2) the buyers have to pay the sellers a pre-agreed upon due diligence termination fee.

If you have ever seen a buyer decide not to buy and the seller decides not to sue the buyer, then you know that due diligence can at least get the buyers to make this decision sooner and get the seller paid money.

Buyers enjoy the ability to evaluate the property for a time period and negotiate any sort of repair and terminate for any reason or no reason.

Sellers enjoy the ability to get lukewarm buyers out of the way faster so that sellers can get a serious buyer in the transaction sooner and get paid if a buyer terminates.