For Your Review

by James L. Goldsmith
December 2023

Here are two situations for your consideration. The first involves a home inspection that was compromised because the natural gas service to the property was off. The heating system, hot water heater, range and anything reliant on gas could not be properly inspected. The buyer agent notified the listing agent of the problem, and since there were few days left in the inspection period, asked for an extension to the inspection. The listing agent responded that the buyer would have to put the utility in her name as the seller was not in need of gas for the duration of his ownership. The buyer agent was incredulous; why would a buyer open an account with the gas company for this property, not yet owned by her and where settlement was contingent on the inspection!

What to do? The starting place is the agreement of sale, in this case PAR’s standard ASR. A show of hands: what is on point in the agreement? Of course, the provision requiring utilities to be on for inspections. This is the seller’s responsibility but if the buyer wants to take it on (don’t) the agreement could be amended (do it in writing and provide for all the possibilities beginning with who pays related costs and the utility charges if the inspection contingency results in termination).

The better choice is to demand that the seller observe the agreement by restoring the gas service and extending the contingency to provide what the parties had agreed to, an inspection. But what if the seller refuses one or both of these requests? Tell the buyer to consult an attorney! You, my readers, are experts in marketing property and all that goes with representing buyers and sellers. Lawyers are remedy providers.

My legal advice to the buyer and her agent (yes, this is a real situation) was that I inform the listing agent, in writing, of the provision requiring seller to have the utilities on, of the fact that seller’s breach deprived the buyer of her contractual right to conduct an inspection, and that if the gas was not restored and the inspection period not extended for the time necessary to complete the inspection, suit would be filed. A lis pendens, would be filed of record precluding sale to another, thus protecting our buyer’s equitable interest in the property. I’d conclude by advising the seller to consult legal counsel asap.

A word of caution. Don’t be tempted, as buyer’s agent, to take this on. Lis pendens are tricky matters and you don’t want to engage in the unauthorized practice of law. Unburden yourself and dump this on counsel. I know fees will be a concern but that is your buyer’s issue and choice.

By the way, my demand to have the gas restored in the seller’s name and to extend the inspection worked. Did the matter close? I don’t know because as of this writing we haven’t concluded the inspection process.

Situation number two. You folks from eastern Pennsylvania will say “duh” to the advice given here but read on if you like. The situation involved buyers who spent over seven months dragging their agent to anything and everything in their budget, or what they thought was within their budget. They went to a county with not a single traffic light, to an inner city, and everything in between. Offers, six of them, were refused. Finally, one bit resulting in a signed agreement of sale.

It was at this time, specifically when the buyers consulted their intended lender, that the buyer agent learned that the buyers had been through bankruptcy not yet three years previous! Oy! The buyer agent was sure he had asked about the buyers’ financials and even bankruptcy. But what does that matter now?

Easterners are asking, “what did the BFI” say? Others are asking what is the BFI? Your business partner, PAR, publishes a form used to gather financial information entitled Buyers Financial Information. Why this is not universally used, I do not understand. It would have revealed the bankruptcy and spared the buyer agent much toil by suggesting realistic choices.

Yes, buyers can lie on the form, but they usually don’t as they understand that an accurate disclosure is for their benefit. They tend to understand that its use is standard and willingly and honestly complete it. I suppose you may feel reluctant to dig into your client’s financial resources, but as I noted they are generally willing to reveal that they have the ability to purchase, and most are. Ask your brethren in the east who always use this form!

Keep in mind that buyers need only reveal what resources are necessary for their purchase. If cash buyers, that will be the purchase price and estimated costs; less if financing through a lender and then you will have information from the lender by which you can calculate what additional cash will be necessary.

I suggest giving the BFI a trial run. Perhaps you’ll be saved from running all over the place for months on end chasing a pipe dream that will not come true!

Mr. Goldsmith is an attorney with Mette, Evans & Woodside and serves as outside legal counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends Realtors® in disciplinary hearings conducted by the Real Estate Commission. Jim was one of the voices of the PAR Legal Hotline for the first 27 years following its inception in 1992.

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