This week I am back on the topic of escrow, in particular I am looking at the escrow process from the seller's perspective. Recently I have been assisting with the coordination of an escrow on a beautiful property. Now do you recall that escrow is a process in which the contract is given to a 3rd party, so that they may conduct the terms that were agreed to by the buyer and seller? Conduction of the terms of a purchase contract, like many plans, can have its setbacks. These setbacks could also be both minor and major. In the case of a major setback it is not uncommon that the contract be terminated. Minor setbacks occur commonly and oftentimes can be navigated via communication.
What is a minor setback you ask? It can come in the form of an inconvenience to the time table of the transaction that is brought about at no fault of either the buyer or seller. For example, the contract states that the termite inspection is due within 10 days of agreement of the purchase contract. This is all fine and dandy until the selected termite inspection company has zero availability to even send someone out to the property for the next two weeks. Now what do we do?
There is no reason for this to be a deal breaker, while yes technically in this instance this failure to meet the date set within the agreed upon terms would make the current purchase contract voidable as it is currently written. There is no need to do that however, as long as the buyer still wants the property and the seller still wants to sell there are alternative options that can be taken to move this transaction forward. The best option in my opinion is what is legally known as an addenda. For practical reasons, think of an addenda as an add-on to the contract that was originally agreed upon. The addenda gives us the ability to now take the agreed upon 10 days and add an extension. Making the new date the termite report is due after the newly agreed upon date. Now the transaction can be conducted forward and everyone may continue the transaction happily. In this case the buyer got a full termite report and inspection prior to closing, which in Hawaii I would HIGHLY recommend having done, or without terminating the contract. The seller got an extension from the buyer inorder to deliver the inspection at a date that is achievable for the seller.
When such large sums of money are being transacted upon such as in a home it is very common for both buyers and sellers to get nervous, thinking the other half of the deal is trying to “get one over on them”. For this reason, having a real estate professional by your side is incredibly helpful. If you as a buyer/seller were to run into this sort of a situation with a termite report and you were not represented by a real estate professional, one could easily be overwhelmed by the apparent complexity of the situation and void the contract entirely. When there was a rather easy option as I explained earlier. Just communicate.
I speak for our firm in particular when I say that in the instanceof one of our transactions running into these types of setbacks, we go at them head on both legally and effectively. Acting as a direct communication/advisory channel for our clients to make the best decision in their interest. As your representative, we also communicate directly with the other side of the deal. If the other side of the deal also has a representing agent, then we communicate directly with the agent. If the other side of the deal is self represented we work directly in contact with them. We handle most of the complexities of the contract and escrow coordination while our clients are able to sit back and relax, as long as they are able to give us the proper documentation that we need according to the contract at hand; sellers disclosures, warranties, preferred inspection companies, land stakings/ surveys, etc.
There is a lot that goes on behind the scenes in an escrow. As real estate professionals, it is our job to filter through all of that stuff so that you as the affected transactor only need to worry about what you need to worry about, like your life, family, what's for dinner, you name it.