Realtor® Legal Tip – Have you used the new Resolution of Due Diligence Addendum?
October 9, 2017
Author: Curtis Bullock
In an effort to help buyers and buyer agents better handle how to resolve objections during the Due Diligence, the UAR has recently created the Resolution of Due Diligence Addendum to the REPC. This form replaces the Seller Repair Addendum. It was updated on 9.21.17.
To resolve objections as noted in section 8.1(b) of the REPC, the buyer may ask the seller to (1) pay for closing costs, (2) do a purchase price reduction, or (3) may ask the seller to make repairs. A combination of all three options could also be negotiated.
*Note – if in the initial offer the buyer had asked the seller to pay for closing costs, any reference to closing costs in this addendum will be in addition to what was already agreed upon (assuming you have the most current version of this addendum which was updated 9.21.17 to clarify this issue).
If by the Settlement deadline the seller fails to complete the repairs, the buyer and seller will have previously agreed upon a remedy in section 3 of the addendum.
The first buyer remedy is to escrow funds to complete the repairs (if approved by the lender). If the escrow period is short and the funds are sent directly to a third party (not the buyer), lenders will often approve an escrow.
In the event an escrow is not possible, the buyer can select whether (a) to cancel the REPC and receive a sum equal to the earnest money, or (b) close the deal and try to recover monetary damages after closing.
The final point to this addendum is that it provides finality to the entire process. Unless box 4(A) is checked, once the buyer and seller sign the Resolution Addendum, the buyers Due Diligence is deemed resolved.
There are a lot of different issues that you may have to deal with during this negotiation process as a buyer agent so be sure to use this form to make it a little easier.