Negotiating Repairs on Texas Residential Contracts

Always ask an attorney if you are ever in doubt regarding a contract issue. However, did you know that repairs are not required to be done by either party unless agreed to in writing?

Once there is a secured contract to purchase a property, there is generally an option period agreed to between the buyer and the seller. This time is wisely used to have the property inspected, get homeowner insurance quotes, and negotiate repairs. If there is a repair the buyer feels is an absolute must for them to continue with the purchase of the home; their REALTOR® should be prudent with negotiating this repair prior to the expiration of the option period. If the seller refuses to do the repair, the buyer would be wise to terminate the contract and know they will lose the amount they put down for the option (which is the right to terminate) as well as the cost of the inspection. If the seller agrees to do the repair, this should be put in writing and signed by all parties.

Unfortunately, our Texas contracts do not obligate either party to do any “lender” required repairs – unless agreed to in writing; this means that even treatment for wood destroying insects does not have to be done by either party. In this case, the contract would be terminated and the earnest money would be returned to the buyer (One to Four Family Residential Contract TAR 1601 Paragraph E).

Another important issue to note is that any repairs agreed to on a property that is for sale must be done prior to the close date. Repairs and treatments must also be done by licensed individuals or individuals authorized by law (TAR 1601, Paragraph F).

So, what if lender required repairs don’t get done by either party? Remember, the property has to meet the “underwriting requirements” of the lender. A lender will not want to issue a loan on a property that may not hold the value of loan, and therefore, the bank will not be willing to take the risk. Bottom line… the bank will not lend the money. It would behoove the owner to work with the buyer in ensuring repairs get done in order to make it a win-win. The property gets sold, and the buyer gets a place they can call home! The likely hood is high that the same issues will creep up again with another buyer, so why shoot yourself in the foot?

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