How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Loren Your Own Question
Loren
Loren, Lawyer
Category: Real Estate Law
Satisfied Customers: 32564
Experience:  30 years of real estate practice experience.
17897874
Type Your Real Estate Law Question Here...
Loren is online now
A new question is answered every 9 seconds

I am purchasing a foreclosure in Missouri. I signed a

Customer Question

I am purchasing a foreclosure in Missouri. I signed a Missouri real estate contract, but also signed an "As Is" provision provided by the seller which is a mortgage company. 4 days from closing (scheduled for today), I discovered the laundry room washing machine water faucet had been left on, flooding 3 rooms of the home. When we were able to gain access to the home through our buyer's agent, there was mold growing in the walls, the flooring was soaked, and water was running down the outside foundation. Our contract states the home is to be presented at closing in original condition, but it obviously will not be. My agent is saying we don't have much choice due to the "as is" provision we signed. The listing agent says her client will allow an extension on the closing date, but my agent is telling me if I sign it that means I am required to proceed with the new closing date regardless of if the water damage repairs are adequate. I also found out today that the listing agent has not even informed her client of the damage (she admitted it during a phone call with my agent). What are my options? This has gotten so sticky that my agent isn't even really responding to me.
JA: Since laws vary from place to place, what state is this in? And has any paperwork been filed?
Customer: Missouri. No, just a real estate contract has been signed.
JA: Has anything been filed or reported?
Customer: No
JA: Anything else you want the lawyer to know before I connect you?
Customer: No
Submitted: 10 days ago.
Category: Real Estate Law
Expert:  Loren replied 10 days ago.

I am Loren, a licensed attorney for over 30 yrs. Thank you for your patience as I review the question. I will post my response shortly.

Expert:  Loren replied 10 days ago.

Is there a provision in the contract regarding "Risk of Loss"?

Customer: replied 10 days ago.
there is a Loss; Condemnation provision. Says that if before Closing, all or any part of the Property is destroyed or physically damaged through no fault of the Buyer, then Seller shall promptly provide Notice to Buyer of the event and whether seller intends to restore prior to scheduled closing date (that was today about an hour and a half ago). I've received no such Notice. My agent did send me a text message that said the Seller would fix the issue, but she is now getting no response as to how to damage will be repaired, if we can include an inspection contingency in our extension on the closing date. We are contractually obligated to close by tomorrow.
Expert:  Loren replied 10 days ago.

I am Loren, a licensed attorney for over 30 yrs. Thank you for your patience as I review the question. I will post my response shortly.

Expert:  Loren replied 10 days ago.

Does the provision address what happens if the seller elects to not repair?

Expert:  Loren replied 10 days ago.

Are you online with me?

Customer: replied 10 days ago.
If the property is not to be restored to its prior condition by seller before the scheduled closing date, then seller shall promptly provide buyer with a copy of any policy(ies) of insurance; the name and number of the agent for the policy, and written authorization for buyer to communicate with the insurer. Buyer may then either (1) proceed with the transaction and be entitled to all insurance proceeds as (a) a credit against the Purchase Price payable to the Buyer at closing or (b) a credit to the Buyer at closing, or (2) rescind the contract in which case all parties shall be released from any further liability under this contract and the earnest money shall be returned to the buyer. Buyer shall give notice of buyer's election to proceed to closing to seller within 10 days after buyer has received the notice of property damage (I've not received any formal notice, but I do know that there is damage). The listing agent supposedly has estimates for repairs, but has yet to provide them to me.
Customer: replied 10 days ago.
the property obviously won't be restored prior to the closing date (today), but I have not received any insurance policies, or anything in writing regarding the damage.
Expert:  Loren replied 10 days ago.

You do not have to close. The provision controls and it says you have the option to proceed or not. The timeline starts with the notice and you have not gotten it yet.

By the way, the provision mirrors MO law on the risk of loss. Skelly Oil Co. v. Ashmore, 365 S.W.2d 582 (Mo.1963) (banc), established that in the absence of a contractual risk of loss provision, damage to property during the executory interval falls on the vendor, i.e., the vendor will not be able to enforce the contract against the purchaser at the original contract price. In the instant case, the parties have specifically so provided.

Customer: replied 10 days ago.
They are still required to return my earnest money if we don't proceed, correct?
Expert:  Loren replied 10 days ago.

Correct.

Expert:  Loren replied 10 days ago.

Yes, you have the right to cancel in the contract. So, there should be no penalty.

Expert:  Loren replied 10 days ago.

Did you have further questions? Have I answered your question?

Customer: replied 10 days ago.
No that answers my questions. Thank you.
Expert:  Loren replied 10 days ago.

You are very welcome.

If you have no further questions, and have not yet done so, please remember to leave a favorable rating (click 5 stars in the rating section on this page). It is the only way that I am credited by JustAnswer for answering your question.

There is no additional charge to you for rating me favorably.

A bonus is not expected, but is always appreciated.

Thank you!

Loren

Related Real Estate Law Questions