Home Buying in 27858>Question Details

Foster, Home Buyer in 27858

? Radon test is performed before end of due dilligence period, but the tests from the lab come back after exp. can buyer still get get all fees back?

Asked by Foster, 27858 Sat May 26, 2012

Can buyer continue to add due dilligence repair requests to initial due dilligence repair requests before due dilligence original expiration.

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The NC real estate contract's due diligence period has been in effect for just a few years and is a major change to the way real estate transactions were conducted prior to this change. The agents in North Carolina are still getting used to it and it is interesting how it is being implemented differently in different locations. The main differences are how long the due diligence period is, how much money is collected for the option fee, how much money for earnest money and when is the earnest money collected. The contract doesn't dictate what the times or money amounts are; they are negotiable. The contract does dictate that the buyer must make up their mind whether to procede with the purchase before 5pm on the due diligence date. If the buyer needs more time to make up his or her mind, they need to negotiate with the seller and have a SIGNED AGREEMENT before 5pm on the due diligence date. If the buyer does not notify the seller in writing before 5pm on the due diligence date that they are withdrawing from the contract, the contract remains in force and it is assumed that you have decided to go forward with the purchase. If you past that date and decide to back out of the contract, you are not entitled to the return of any earnest money.

The contract says by way of explanation that you should have all your inspections done prior to the end of due diligence -- that is advice, it doesn't make the contract depend on the completion of any inspection, so the fact that you didn't have the radon results doesn't affect the contract and your responsibility to make a decision prior to the due diligence date.

You should also get your inspections done ASAP because if you want repairs done based on the findings during inspection, you need to negotiate and reach agreement with the seller about those before the end of the due diligence date. If the seller doesn't agree to fix things that's one of the things you weigh in your decision to move forward.

You proposing an addendum about the radon results was okay, but you needed to have the seller agree to it before the end of due diligence.

You can ask for more repairs within the due diligence period. However, if the repairs are not completed within the due diligence period, I don't think you have any recourse. In other words if you are past the due diligence date, I think you would lose your earnest money if you are unhappy over repairs and don't want to complete the purchase. Also, just because you can technically ask for more repairs, sellers have feelings and I think making several requests might be counter productive.

So how did this transaction turn out? Hopefully, you are in your new home and enjoying it!
0 votes Thank Flag Link Tue Sep 11, 2012
It appears that your radon test produced an unacceptable result. Since your result did not come in during the "due diligence period," I suggest that you ask your Buyer's Agent to negotiate with the Seller's Agent for you and the Seller to split the cost of the radon mitigation equipment.
0 votes Thank Flag Link Tue Sep 11, 2012
During the due diligence period the buyer needs perform all due diligence. If radon is a concern for the area you are purchasing in and the test results are not back before your due diligence date ends, I recommend you negotiate with the seller to extend the due diligence date. Most sellers would be willing to extend the date and some may charge a fee.
Buyers do not get back fees they spend to perform due diligence such as inspections fees and an appraisal. Only earnest money is refundable is a buyer terminates a contract before the due diligence period ends.
0 votes Thank Flag Link Tue Sep 11, 2012
Hi Jesse, the inspection was complete but the results weren't back.
So, I guess the arguement is was the inspection complete but results weren't in or was the inspection not complete?

So, in my defense the inspections were done but this one report was pending.
Unknowing what a court of law would rule in worst case situation, I contacted my agent prior to the expiration of the due dilligence and had an addendum drafted that stated I could back out of the home if RADON reports were poor past due diligence period. Seller did not get report until after the fact.

There, In my opinion, I protected myself. However, the addendum wasn't acknowledged before expiration of initial due diligence but the request was made prior to the date by us.

So, for a wrap:
1. Radon results were not in prior to Due Dilligence. Inspection was done however.
2. Prior to Due dilligence expiration, I had my agent draft an addendum to cover me under original due dilligence period even though results were not known.-if radon level was high.
3. Addendum was not seen by seller's agent until after the expiration of the due dilligence period.

Thanks to all who are participating in this discussion. In my opinion, you are likely the best agents in your field to tackle this not so clear situation. That's for your dedication.
0 votes Thank Flag Link Sat May 26, 2012
All inspections need to be completed before the due dilligence period! The buyer can always ask for an extension but both parties must agree. This is why eveyone needs a good "Buyers Agent" to help with the purchase of a home. To find out more info on the home buying process please visit me at http://www.JesseAllenHomes.com
0 votes Thank Flag Link Sat May 26, 2012
What I meant regarding risk is that the Buyer should decide if they're willing to accept the risk of paying for Radon Mitigation, if the results come back excessive after the Due Dilligence date. You certainly can buy a home with radon and mitigate it yourself so the Buyers may decide they want the home and are willing to accept the risk of high results in which case they let Due Dilligence pass.
As for tying up the Seller's home, if both Buyer and Seller understand that the Buyer has every intention of buying the home, but that the cost of mitigation will need to get negotiated, and if the Seller understands that they would have to disclose the knowledge of radon if the test comes back high and the Buyer walks, the Seller should be willing to extend the Due Dilligence period.
Hope this helps.
0 votes Thank Flag Link Sat May 26, 2012
Thanks for your input. If I understand your view , you are suggesting that if results from Radon aren't back before expiration of Due Diligence date, buyer should cancel contract if concerned about any potential risk of Radon and can't have the results to protect their interests before hand.

It again raises the question of whether it was the buyer's responsiblity to guarantee results before end of DD or if if was the company perfomring the test. Buyer can't control result status. Perhaps DD date should be lenghtened but then you concern seller with tying up their property too long if contract fails. Not a black and white question for sure. I look forward to seeing other takes on this from REAL ESTATE professionals. Regards,
0 votes Thank Flag Link Sat May 26, 2012
In CO all inspction requests must be submitted prior to the Objection Deadline. If the lab results don't come in until after the Deadline, I'd ask for an extention of the Dealine date to protect the Buyer's earnest money. If an extention of the Deadline can't be done or if the Seller won't allow it, the Buyers need to decide if they're willing to take on the risk. Typically around here Radon Mitigation runs around $1,800 - $2,000 which is probably less than the earnest money. Call your local Radon Mitigator and get an estimate so you can weigh the options and financial risk.
0 votes Thank Flag Link Sat May 26, 2012
Thanks. Interesting.
Anxious to see if other's agree with their interpretation of this law concerning a radon result that is learned past DD date and if additional addendums to the original due dilligence requests can be made up to the final moments of expiration date.
0 votes Thank Flag Link Sat May 26, 2012
Nope. Our stupid Due Diligence rules require everything to be done by the end of the DD period. It is so stupid! Even the loan approval must be done prior to the end of the DD period or the buyer will not get back the earnest money if they are turned down after the DD period. For these reasons we are writing the DD period to end the day before the closing to protect the buyers earnest money. The NC RE commission really needs to fix this and allow the loan approval, and other things, to live outside of the DD period. Luckily we do not have radon here and never do tests for it so we do not deal with that one.
0 votes Thank Flag Link Sat May 26, 2012
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