Real Estate Help Library Pre-closing walkthrough Buying, Paperwork, Selling

Important Note:

AAR owns these forms and as such I cannot display them on my website. You can go get the form if you want to see it ahead of time from:

AAR Sample Forms here, then click “Pre-Closing Walkthrough”.

Any information contained in this article should not be considered to be legal advice, and if you need legal advice, you should get it from a lawyer.

Pre-closing walkthrough

This walkthrough has only 2 functions according to the purchase contract:

Seller grants Buyer and Buyer’s inspector(s) reasonable access to conduct walkthrough(s) of the Premises for the purpose of satisfying Buyer that any corrections or repairs agreed to by Seller have been completed, and the Premises are in substantially the same condition as of the date of Contract acceptance. If Buyer does not conduct such walkthrough(s), Buyer releases Seller and Broker(s) from liability for any defects that could have been discovered.”

Purchase Contract section 6l lines 298-301

The two functions are:

  1.  Premises are in substantially the same condition
  2.  All repairs have been completed

Although the contract states that this walkthrough should be done, it also says that buyers can skip it of they want to, though they release sellers and brokers from liability if they choose to do so.

Since brokers don’t like possible liability issues, they usually require that this form is filled out, even if the walkthrough is not being completed.

As stated in the article on BINSR Repairs, the seller should provide proof and/or receipts for all work that was completed. The buyer will use these documents to check that the work was done in a “workmanlike manner” as stated in the purchase contract.

Option 1 – Accceptable

Everything is in substantially the same condition and all repairs have been completed

Option 2- Unacceptable

Something is not ok. Maybe a repair was not completed, or not completed according to the terms of the contract, or there is some damage to the home that was not there when you made the offer.

Regardless of what it is, you list it here.

Listing something in this section is the same as delivering a cure notice.

The seller has 3 days to fix it, or else they will be in breach of contract and the buyer will be able to cancel the contract and will likely get their earnest money back.

Note: I say “likely” because it is up to the title company’s sole discretion where the earnest money goes if the contract is cancelled. If the issue listed here is legitimate, and the seller is unwilling or unable to fix it, then the buyer should get their earnest money back. If it is too minor or the the title company deems it not to be enough to be a breach of the contract, they may consider the buyer to be in breach of contract for not closing and taking possession, and decide to give the earnest money to the seller.

Example: A tree branch falls on the house and causes damage to the roof. The seller doesn’t even know about it since they are moved out. Buyer discovers during the pre-closing walkthrough. Seller is unable to fix within the cure notice period.

Result: Buyer should receive earnest money back after cancelling the contract.

Example 2: Buyer notices a few weeds in the yard and small ding in a doorway caused when moving a couch out. Buyer issues cure notice and seller is unwilling to fix saying it is too minor to warrant cancellation.

Result: Title company will probably agree with the seller, since neither problem is really “substantially different”.

Now, in the case above, in my opinion, the seller should take care of it. The problems are easy to fix, and why not just play nice and take care of all damage caused and clean up the weeds in the yard so the buyer doesn’t have to do it when they move in. Still, the title company is likely going to say this is not enough of a problem to hold up closing, and the buyer will be required to continue with the contract or else potentially be in breach of the contract and risk losing their earnest money.

Option 3: No Walkthrough

This is the option I mentioned when I said that the brokers will likely require this form to be filled out even if the walkthrough is not performed. You will need just to check the box saying you know you should and/or could do a walkthrough, but you will not be doing it.

Note: Not doing a walkthrough means accepting the premises. Since you should be doing a walkthrough, if you choose to skip it, you choose to give up your right to inspect the repairs done on the BINSR.

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