Is ‘I Want to Close Quickly’ a Realistic Timeline Goal?
ORLANDO, Fla. – When multiple buyers compete for a contract on the same property, some find themselves seeking ways to make their offer more attractive than the competition. The simplest way to do this is, of course, to offer more money. Another method is to negotiate short timelines that may look more appealing to a seller.
But both sides should consider whether these timelines are realistic. If they aren’t, both sides may be disgruntled with the outcome. Here are a few different scenarios we’ve heard on the Florida Realtors Legal Hotline.
A short inspection period
The most common contract used these days is the Florida Realtors/Florida Bar “AS IS” Residential Contract for Sale and Purchase. If the parties enter that contract with a short inspection period (weekends and national holidays are included in the time calculation – see Standard F), there may not be enough time for a home inspector to view the property and issue a report. Further, if the general inspection reveals the need for additional inspections, the timeframe could also be too short. This could put the buyer in a position where they must beg the seller for more time.
If the seller doesn’t want to give more time, then the safe option would be for the buyer to terminate the contract since the contract provides “Unless Buyer exercises the right to terminate granted herein, Buyer accepts the physical condition of the Property and any violation of governmental, building, environmental, and safety codes, restrictions, or requirements, but subject to Seller’s continuing AS IS Maintenance Requirement, and Buyer shall be responsible for any and all repairs and improvements required by Buyer’s lender.”
We’ve also heard of some buyers signing an AS IS contract with a zero-day inspection period. In that case, the buyer is just gambling that they won’t find any nasty surprises that make the deal worse than they believed at the start.
If the parties use a Residential Contract for Sale and Purchase instead of the “AS IS” version, the situation could be equally bad for the buyer. If they can’t get a list of repair items to the seller by the deadline, the buyer will lose out on the opportunity to have seller make repairs, since “If Buyer fails to timely deliver to Seller a written notice or report required by (b), (c), or (d) below, then, except for Seller’s continuing Maintenance Requirement, Buyer shall have waived Seller’s obligation(s) to repair, replace, treat or remedy the matters not inspected and timely reported.”
Short loan approval deadline
If the buyer is still waiting to hear whether their lender will approve the loan, it will be a similar situation to the short inspection period. If the seller isn’t willing to grant the buyer more time, the safe answer is for the buyer to terminate the contract.
If the deadline expires before a buyer has loan approval (sometimes called conditional loan approval or loan commitment), then the “Loan Approval shall be deemed waived, in which event this Contract will continue as if Loan Approval has been obtained …” Therefore, if the buyer is later denied, the deposit will be in jeopardy.
Short closing date
This one is less common, although we have heard about cash transactions with a very short time before closing. If the buyer is still scrambling to deliver funds to the closing agent, the buyer could be completely at the seller’s mercy. After all, both versions of the Florida Realtors/Florida Bar residential contract require that the balance to close be delivered as collected funds, defined as “any checks tendered or received, including Deposits, have become actually and finally collected and deposited in the account of Escrow Agent or Closing Agent.”
Joel Maxson is Associate General Counsel
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