What happens if a system or appliance included in the sale of Property fails before settlement?
For example the refrigerator is included in the Agreement of Sale. Before the closing, the refrigerator stops working. Does the seller go buy a new refrigerator for the buyer? Does the buyer purchase a refrigerator and submit the bill to the seller? Does the buyer not get one because the one included in the sale stops working?
PAR's Standard Agreement of Sale has a provision for this. It basically states under Maintenance And Risk Of Loss:
(A) Seller will maintain the Property, grounds, fixtures and personal property specifically listed in the Agreement in its present condition, normal wear and tear excepted.
(B) If any system of appliance included in the sale of Property fails before settlement, Seller will:
1. Repair or replace the failed system of appliance before settlement, OR
2. Provide prompt written notice to Buyer of Seller's decision to:
a. Credit Buyer at settlement for the fair market value of the failed system of appliance, as accetable to the mortgage lender, if any, OR
b. Not repair of replace the failed system of appliance, and not credit Buyer at settlement for the fair market value of the failed system or appliance.
Please notice that it is the fair market value, not a brand new refrigerator. How do you determine the fair market value? One way would be to look on craigslist or the classified section of the newspaper.