Bridgeport, CT · Member since 2017 · 116 posts · 19 votes
Dear BP members - My house is closing in one week but the Seller-paid contractor renovation possibly won't finish by the closing date. What should I do? The RE agent said that "we could close(change heating units) and money to pay contractors to be held in escrow until work is completed. Attorney should hold the agreed amount until work is completed and then release it to contractors when they finish." Question: would that be potentially a problem? What if the mortgage bank don't like that idea? Should I postpone the closing date till they complete the work? Please advise. Thank you!
Peace Lily Withold the money 2x the contractor contract. Keep the schedule if bank is ok. Problem solved. If everything goes well, half will go to seller half will go contracor, if contractor charges more take sellers money to pay the extra. Money should be held by an escrow if not separate escrow, where there is neutral ground.
Here is the experience I had with one of my duplexes. A week before closing the basement flooded and killed the boiler. The bank would not close if the heating system was non-functional. I live in the northeast so obviously, a non-functioning heating system was a big deal, but I'll bet that this is the case across the country regardless of climate. Other than that, it's a negotiation. Do the sellers want to close even if the work isn't done and how is that money going to be accounted for?
I would think seller wanted to close as soon as possible. It is the contractor/plumber who caused this delay. They should have been more on schedule. The RE agent said that we could close and money to pay contractors to be held in escrow until work is completed after the closing. Should I go what the RE agent suggested? I am not sure if that is a good idea. What if the contractor comes back and wanted to charge higher amount after closing? What if the bank doesn't like the reno is not completed before closing?
Peace Lily Withold the money 2x the contractor contract. Keep the schedule if bank is ok. Problem solved. If everything goes well, half will go to seller half will go contracor, if contractor charges more take sellers money to pay the extra. Money should be held by an escrow if not separate escrow, where there is neutral ground.
I totally agree with Manolo. We had to hold back money in escrow on our primary residence for a heating system replacement in Massachusetts. It was no problem at all with the closing and we were protected by the funds being held in escrow. In retrospect, I wish we had a timeline clause in there as the contractor too forever to get done but it all worked out in the end.
@Jonas LaPointe Liquidated Damages AND contract/fund termination will motivate them to come and fix it FAST, especially with escrow, they are a neutral company, if its there, they will implement it, you don't have to feel guilty taking their money. hehe.