Negotiate a Pre-possession Walkthrough to Prevent Surprises on Closing Day

Most home buyers are unaware that a pre-possession walkthrough is not a right that is automatically granted in the contract to buyers.  Typically, it is only after the money is released to the seller on the closing date that the buyer gets the keys to property to inspect their new home and ensure it is in the same condition as it was on the day they signed the contract.

Inserting a clause into the purchase and sale contract to give buyers access to walkthrough the property the day before possession can be beneficial to the buyer.  The seller’s may not always agree to a pre-possession walkthrough but it is always worth a try.  The buyer should ensure that the walkthrough is scheduled the day before possession and not the morning of possession, if possible.

Scheduling a walkthrough the morning of possession creates a tight timeline for the buyer’s lawyer as the lawyer has to ensure that the funds to purchase the property are at the seller’s lawyer’s office no later than noon on the possession day.  If the purchase funds are delivered after noon, interest may be payable by the buyer.  It may be difficult for the buyer’s lawyer to ensure timely delivery of the funds if buyers are not walking through the property until 11:00 a.m. on the possession day.

If a problem in discovered at the pre-possession walkthrough, the buyer cannot demand that funds be held back for a minor breach of contract.  However, the buyer is given greater bargaining power if they are made aware of any minor breaches of contract the day before closing and prior to the release of money to the seller.  The buyer’s lawyer can contact seller’s lawyer to advise that an item is missing or the drywall has been damaged, for example, and the lawyers can attempt to negotiate a holdback as funds have not yet been released to seller.  However, there is no guarantee a holdback will be granted if it has not contemplated in the contract.

A pre-possession walkthrough is also beneficial when the seller is required under the contract to repair the property, to have the professionally cleaned, or any other terms that have been added to the contract.  Additional terms should be inserted into the contract for a holdback in the event that cleaning or repairs are not completed by possession day.   There should also be a requirement in the contract for the seller to provide the buyer with invoices for the repairs or professional cleaning in order to provide confirmation that the items have been completed.

In the event that a pre-possession walkthrough is not negotiated in the contract and a problem arises due to minor breach of contract after money has been released to seller than the buyer is in a much less favourable position and, typically, the buyer’s only recourse is to sue the seller for breach of contract.  The cost of suing may be more expensive and time-consuming than worth it but a pre-possession walkthrough may help prevent this.

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