Real Estate Help Library BINSR Repairs Buying, Selling

Important Note:

AAR owns these forms and as such I cannot display them on my website. You can go get the document to see it ahead of time from AAR Sample Forms here, then click “BINSR”.

What is and is not required

When the buyer and seller have agreed to a list of repairs on the BINSR, it is then the job of the seller to make repairs prior to 3 days to close of escrow (unless changed on the blank line) according to the Purchase Contract.

“If Seller agrees in writing to correct items disapproved, Seller shall correct the items, complete any repairs in a workmanlike manner and deliver any paid receipts evidencing the corrections and repairs to Buyer three (3) days or ___ days prior to the COE Date.”

section 6j, lines 278-280 of the Purchase Contract

Licensed Contractor or not?

 

A lot of questions arise right away as to whether or not a licensed contractor has to be used for the work completed. According to the contract noted above, all work simply has to be done in a “workmanlike manner”.

However, if the buyer has specifically asked for a licensed contractor to do any or all repairs, then obviously you must do what you have agreed to.

Otherwise, Arizona statutes regarding home repairs are what dictate whether or not a contractor is required. Specifically, what is commonly referred to as the handyman exemption.

Handyman exemption
Arizona law stipulates that all work done on a residence must be done by a licensed contractor, unless the work is “of a casual and minor nature” and the aggregate of all work in the contract being performed is less than $1000. “Any person other than a licensed contractor engaging in any work or operation on one undertaking or project by one or more contracts, for which the aggregate contract price, including labor, materials and all other items… is less than one thousand dollars. “Furthermore, if the work requires a local building permit, a licensed contractor must be used regardless of the contract price.

See A.R.S. § 32-1121(A)(14)(a).”

What this means is:

If the work being performed totals more than $1,000, which includes all labor and materials, then a licensed contractor must be used. Sometimes a contractor splits labor and materials to bypass this law, or splits the contract into multiple sections, this is against regulations as outlined above.

What is casual or minor?

 

Obviously this is a bit of a grey area. I’m not qualified to answer the question and am not a licensed contractor, but a rule of thumb for me is:

If it touches any of the systems in the house such as electrical, plumbing, roofing, appliances, or any other system which could cause major damage if done incorrectly, go ahead and use a licensed contractor.

Examples of fixes that might be “casual” enough to use a handyman.

  • minor drywall problems
  • minor painting
  • minor landscaping
  • caulking around appliances, sinks, tubs
  • replacing the sink stopper
  • fixing a small piece of trim
  • changing a lock

Examples of things that should probably be handled by contractors:

  • Anything regarding roofing
  • replacing any plumbing
  • fixing appliances
  • anything electrical, even simple things like outlets and fans
  • fixing pool pumps
  • pool fences

Neither of these lists is comprehenseive or definitive, since the definitions are kind of vague. I’m just trying to give you a sense of things I would personally consider minor, versus things I would not personally consider as minor.

Maintaining the home during escrow

According to section 5a of the contract:

"Seller shall maintain and repair the Premises so that at the earlier of possession or COE: (i) the Premises, including all personal property included in the sale, will be in substantially the same condition as on the date of Contract acceptance; and (ii) all personal property not included in the sale and debris will be removed from the Premises.”

Purchase Contract Section 5a lines 193-195

It is also noted than anything that happens to the home during escrow is the responsibility of the seller (except for damages caused by inspections), and that they must notify the buyer right away.

Seller shall immediately notify Buyer of any changes in the Premises or disclosures made herein, in the SPDS, or otherwise. Such notice shall be considered an update of the SPDS. Unless Seller is already obligated by this Contract or any amendments hereto, to correct or repair the changed item disclosed, Buyer shall be allowed five (5) days after delivery of such notice to provide notice of disapproval to Seller.”

Purchase Contract Section 4f lines 187-190

Also, the seller must make the home available for any and all inspections, as well as keep all utilities on during the entire escrow period.

Seller shall make the Premises available for all inspections and walkthrough(s) upon reasonable notice by Buyer. Seller shall, at Seller’s expense, have all utilities on, including any propane, until COE to enable Buyer to conduct these inspections and walkthrough(s).

Purchase Contract Section 6m lines 302-304

Even if there is a tenant, the seller must make the home available for inspections upon “reasonable notice). The Arizona Landlord Tenant Act, says that 2 days notice need to be given (not 48 hours as commonly stated) to tenants before an inspection. This means Monday afternoon notice can be given for a Wednesday morning inspection.

If tenants do not allow inspectors in the home, it may be necessary to evict them according to the terms of the Landlord Tenant Act which I will not be going over, however the seller is in breach of the contract for not allowing inspections into the home and the buyer may be entitled to cancel the contract and receive earnest money back.

If the property for sale is occupied by tenants, it is best to check before listing the home for sale to make sure they will not cause undue problems during the escrow and inspection periods of the home, and it is often easier just to wait until after the tenants have vacated the property.

Keep your receipts

At the end of the process, prior to 3 days to close of escrow, the buyer is going to do a Pre-Closing Walkthrough, as outlined in this article.

At that time, they will be checking for 2 things:

1) Is the house in substantially the same condition as when they made the offer?

This means that the house hasn’t had any significant changes or damages since the time they made the offer. Minor dings cause by moving furniture or weeds in the yard are not enough to cancel the contract, although in order to avoid problems, and just to be nice to the buyers, we recommend fixing every little problem that may have been caused since the day they made the offer.

2) Have all repairs been completed?

In order to make this question easier for the buyer to check, it is customary to provide the buyer (or their agent) with all receipts for all work done, anything purchased, and/or photos of all work that was completed that may be difficult to inspect, especially roof work or anything done in the attic, since it is difficult to get up to those places to check, and even then the work may not be visible if it was under tiles, inside of the furnace or air conditioner, or behind drywall that is now patched up.

Summary

Now you know what you should have done after the BINSR and before the pre-closing walkthrough, which means that the buyers should now conduct their Pre-Closing Walkthrough.

 

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