Repair Negotiations – So how to repair negotiations, the fact that so sellers temporary lease back, that’s what we’re going to discuss right now with local real estate celebrity Shana Acquisto and luxury real estate broker. She just happens to know quite a few things. And this is a sticky situation right now. So it is extremely sticky because we have a repair negotiation and that goes on during the contract. And then a lot of times right now, we’re getting this temporary lease back that’s going on. And how do these two things affect one another?
Well, in the seller’s temporary lease agreement, the by the now tenant who was the seller is responsible for the repairs, whether they caused them, whether they didn’t. It clearly states that in the lease back. So whether we like that or not or whether someone else says that’s not how it is, that’s how it reads. And, you know, we go by what the contract says. So here’s a situation very simple. You have say you are in the midst of a contract during your option period, and you the buyer discovers that your Vasey. Right. Let’s just use that as an example is really old and it’s not really functioning as it should per the inspector.
Ok, so that’s kind of common. I mean, it could be one of those things.
So you guys decide, you know what we understand? We’re going to give you a credit in lieu of the visit. We’re going to give you a little bit of credit. You came in way above. We’re going to be nice. We’re going to give you like ten thousand dollars.
Ok, again, seems extremely logical.
So two things. One of two things either comes off the price or you apply it towards closing costs. OK, so either way, we know when we negotiate or repair in lieu or a credit in some way, shape or form in lieu of repairs. It’s typically just shown as a dollar amount, either off the price or credit. Right. So. What happens is we do that because once you submit that to the lender in an amendment that this is in lieu of repairs, the lender now is like, what repairs we want to know.
There’s something wrong with the home or something. It’s not that
Repairs, are they? I need to see the inspection and it just unravels from there. So let’s fast forward. We get to closing. Cellar is now in a temporary lease back. Mm hmm. So they become the tenant in day three of their 30 day lease back. Kaput. The whole HBC just fails. It can’t be repaired. What happens? Well, according to the way the contract reads, they’re responsible for it.
So if they go back and they’re like, you know, we gave you that credit, OK, well, where does it say that in the contract? Well, I sent you a text or I sent you an email. You can’t rely on that guy’s what you have to do is think of this, so when you negotiate any repairs in the contract or if you know that something is maybe questionable, then when you are creating that seller’s temporary lease in number 11 modifications you need to outline.
A couple of these things are tenants not responsible for Vaisse repairs or whatever it may be, just identify it, keep it simple. We’re not practicing law. We’re just stating of actual fact and negotiate that in OK, because the last thing you want is for that to happen because it’s not fun and people are going to get very emotional and upset over the situation. So we have to be careful with all the repairs. We’ve talked about this before about how the tenant is responsible for all the repairs. And it clearly states that in the in the contract.
So from my perspective, there’s a Texas property code that applies in residential leases. OK, and that is something that is identified in the property code. But they don’t mention that in the seller’s leaseback. So we can’t assume or give our opinion in this process. What we have to do is protect our seller. Who becomes the tenant on the flip side, the buyer.
OK, you also want to you know. Protect them, too. So just think of these repairs and the condition of the property, so if you have someone that has tons of stuff in their home. And, you know, they’re going to have to move it out. You should probably collect a deposit and a lot of times people do not do this because they think, well, you know, this person’s lived in it this whole time. No big deal. Mm hmm.
And sometimes I see a two hundred dollar deposit to fifty deposit. Is that enough? Collect the deposit because the deposit is outlined in how it gets returned in the lease agreement. So they have 30 days. The new buyer has 30 days to release their deposit after they have submitted their forwarding address. So they have to do that and then it gets they can’t just keep it.
And I think that’s where a lot of people think, wow, I’m not going to give a deposit. All they’re going to do is just try to keep my money. Well, no, there’s rules in place that they can’t just do it. They have to have a written item, an itemized statement of why they’re collecting it.
So another point of this is if you’re in your home and you’re going to move out, you’ve given a deposit, you know, and there’s a certain condition of the home that was addressed in the buyer is clearly aware of. We have scratches on the floor over here. No big deal. We’re going to replace our floors, identify that in your lease back, because they could come back and say, you scratch the floors and I want your thousand dollars. So you see where I’m going with this or different scenarios that could come into play here.
And you have to protect your client and do this during contract negotiations because once it’s passed, you can’t really expect somebody to be amendable to come back and and, you know, agree to something like that after the fact, like not doing that. And then what it does is it kind of puts a red flag up of, oh, well, I could do that if it goes bad, so.
You get my point, please be careful with these repair amendments, they’re they’re a little scary to me. I think they weren’t right. And I think they serve the purpose of allowing someone not to have to move twice, but consider the condition of the home and the inspection. And is it really worth it? It could be worth moving out temporarily not to have to go through this. So just depends on the situation.
Yeah. So may or just make the repairs. And then you’re all good instead of cash in lieu of and they can’t be repaired, I mean, they really can sew them, you know, that was a little extreme. The fact that the HVC goes out and cannot be repaired, they can normally be repaired, may not be up to a certain standard of the new buyer. But all you’re doing is making sure it’s running as it should for the age of the home as it was when you sold the home.
So very good, Shana. That was a really good topic and super in-depth you even knew was point number 11 in there. That’s what makes you so amazing. There you go, is it? It certainly is.