Buyer Starting Work On House Before Closing

Dated: 08/12/2016

Views: 187

Q: My mother recently entered into contract to sell her house in Minnesota. She currently lives out of state. The buyer wants to renovate and requested to start work BEFORE closing. My mother's agent had my mom sign an agreement allowing work to begin, however, the agent told us that no work would begin without specific approval. IT also seems unclear that my mother was aware or understood anything she signed. My brother also made it clear to the agent that we did not want any work done without specifics and guarantees on a few occasions before and after this agreement was signed, to which the agent assured my brother no work would happen without approval.My brother, who happens to be in town, stopped by the house yesterday to discover that the carpets, appliances, and fixtures had all been removed! Our agent claims to have only granted access for an appraisal and was stunned and upset. This morning, my brother met with the my mom's agent, the contractors and the buyer at the house. Everyone was apologetic and blamed the miscommunication on the buyer's agent, who is currently out of the country. All parties insist that the sale is still going through.My concerns are:1. The sale won't actually go through, or the price will be lowered2. My mother's agent is incompetent and should be liable for damages regardless of the sale3. The buyer's agent or buyer should be liable for damages regardless of the sale.Any advice out there??

A: Skahdt,This is an ugly situation, for sure, and you should be questioning your mother's agent. This is incompetency at its finest. A few things:

  1. You should never allow work to be done to the home by a buyer prior to closing. The buyer does not own the property and both parties can be harmed. If the work starts and the deal falls apart the buyer has invested money with no recourse and/or the home could be damaged and lose value for the seller with no recourse. Heck, you could take it a step farther - what if the buyer or contractor, in the course of doing work, get hurt? Who will they come after? The owner of the property. Heck, taking a step even farther, a licensed contractor (I am one in the Commonwealth of MA) is supposed to verify the owner because a contract to work on a home isn't valid without the homeowner's signature.

  2. If the agent put together an agreement for your mother to sign, one would question whether the agent was acting as legal counsel... which is illegal without a license.

  3. If the buyer started doing work and your mother's agent says she only gave the code to the appraiser, then how did the buyer gain access? Was the lockbox code provided to the buyer by the buyer's agent? If so, that agent may be liable for damages to the home.

Regardless, this was handled very poorly by all parties. It's easy to blame the buyer's agent, who is out of the country... but if I were to assign blame, your mother's agent has to take some of that blame pie as he/she had your mom sign documentation allowing work to occur... never mind the "not without approval" baloney. 

You should contact both brokerages involved in the transaction and speak with the Principles as both agents apparently require additional real estate training. You should file a complaint with both brokerages to have it on record, imo. If the deal moves forward and no harm comes of this, then I'd probably leave it and allow the broker/owner to deal with each agent as both are liabilities to the brokerage. You could file a complaint with the state board of licensure, which would be your right. It's all a matter of how far you want to take it. 

If, however, the deal falls apart and your mom is financially harmed... then I'd speak with a lawyer ASAP.

Good Luck... and sorry, on behalf of the industry, that you've had to deal with this.

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