Like so many other northerners, Mr. and Mrs. Elf had enough of the never-ending winters, material shortages on everything from candy canes to syrup, and being forced to build their toys remotely after the latest cocoa-19 outbreak.  It was finally time for the Elfs to live their retirement dream and trade in their tights and pointy snow boots for bathing suits and flip flops. So they packed up their sleigh, gave their notice to Santa, and trudged off to their beautiful new home in the Florida sunshine complete with a 3 sleigh garage, toy workshop, and — best of all — a natural gas powered chocolate fountain! It was truly a dream come true for the Elfs, and they were set to close and move in on Christmas Eve; just in time to celebrate every elf’s favorite day of the year! When the Elfs finally arrived at their soon-to-be new home to conduct a walk though inspection prior to closing pursuant to Section 12(b) of both FAR/BAR contracts (the “Contracts”), they could hardly contain their excitement as they ran straight for their favorite part of the new house — the chocolate fountain!

Sugary tears streamed from the Elfs eyes as they quickly discovered that the chocolate fountain was no longer a fountain at all, because the gas heater which melted the chocolate had gone as cold as Rudolph’s nose and could no longer melt the chocolate. Seeing her dreams melt away like a snowman on the beach, Mrs. Elf burst out “if I don’t get a chocolate fountain, I don’t want this house!” “What a nightmare,” Mr. Elf said to himself. In an attempt to console Mrs. Elf, Mr. Elf assured her that something would be done in order to preserve their dream home and move in by Christmas. But how!? Mr. Elf retrieved his Candy Apple MacBook from a box in the sleigh and found the contract they had signed weeks earlier. What Mr. Elf discovered is that Section 11 of the Contracts provides that Sellers “shall maintain the Property… in the condition existing as of the Effective Date.” Mr. Elf was overjoyed at this discovery as he thought back to the day they signed the contract and memories of flowing chocolate. But the closing was scheduled to close the next day! How could this nightmare possibly be resolved in time? Fortunately, the Elfs consulted with a local real estate attorney and were presented with a few practical solutions to turn this nightmare before Christmas into a Christmas miracle!

  • The Elfs may seek to delay closing until the Seller returns the chocolate fountain to the condition it was as of the Effective Date. As stated above, Sellers do have an obligation to maintain the property, including appliances, in the condition it was as of the Effective Date.
  • The Elfs could insist on a credit from the Seller in the amount necessary to either fix or replace the chocolate fountain themselves after closing. This solution might also be appealing to the Seller, as they would not have to go through the trouble of scrambling to find someone to fix the fountain prior to closing.
  • If an estimate to fix or replace the fountain cannot be obtained prior to the closing, the Elfs could request a certain amount of funds be held in escrow after closing, which the Elfs could then use to pay for any necessary repairs or replacement costs. Any funds remaining in escrow after the repairs or replacement costs have been paid, would be returned to the Seller. This option may not be available when buyers are obtaining financing.

Because the Elfs wished to be in their new home by Christmas, option number three was right for them. The Elfs closed as scheduled on Christmas Eve with funds held in escrow, which they used to hire an emergency 24-7 chocolate fountain fixer, and the Elfs spent their favorite day in chocolate induced bliss and lived happily ever after.

If you have any questions regarding walk through issues, or any other real estate related legal questions, please don’t hesitate to contact your trusted local real estate attorney.

Happy Holidays,

Andrew J. Conaboy, Esq. aconaboy@berlinpatten.com
Berlin Patten Ebling

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