real estate

Who pays to fix furnace: seller or buyer?

Steve McLindenQuestionDear Real Estate Adviser,
We are selling our home and are due to close soon, but the furnace just died. Who is responsible for replacing it, the buyer or seller?
-- Steve G.

AnswerDear Steve,
That question will be answered by the language in your sales contract. Your deal is not sealed, so I can tell you the onus probably will fall on you to fix or replace the furnace. This is unless you sold the house "as is," whereupon you are not responsible for repairs. Of course, a buyer in such an as-is scenario might be quite upset about this turn of events and ask for some relief. The buyer would not be entitled to any relief, at least legally.

But if I read you right, you are selling the house conventionally with seller disclosures. And there's probably a section in the sales agreement that says you must deliver the home in the same or better condition than it was when it went under contract, which would not be with a broken furnace. So I would not advise you to just leave the furnace as is, even if the buyer's own home inspector gave it a seal of approval during due diligence.

There are a few possible outs. In the somewhat unlikely event you bought a homeowners warranty that went into effect before the sale (some sellers buy them for buyers to provide peace of mind that a home's major systems won't conk out soon after move-in), a major expense such as that may be covered. A drawback is there will often be a hefty co-pay. Read the fine print carefully. In case that warranty is in your name, it may state that you aren't covered for major heating, ventilation and air conditioning, or HVAC, repairs if you left the house vacant for more than a set time such as 60 days.

If your dead furnace is not too ancient, it might still fall under some kind of warranty. Check the paperwork. You should also check to see if the furnace is covered by your homeowners insurance, though that's not too likely unless it was damaged by some type of weather event or other claim.

Unfortunately for you, had escrow closed before the furnace crashed, the new owners would have been responsible for the repairs. This is unless the buyers could somehow prove you knew of the problem before the sale and didn't disclose that information, or the inspector was negligent.

Minus any of those outs, here are your options. Either get the furnace fixed if it's fixable or offer the seller a cash credit to do the same. If it turns out the furnace needs to be replaced, you could try to get the buyer to renegotiate to help out -- but you really have no legal position to do so.

Try to be as aboveboard with the buyer as possible on this. Sorry to say, but you might be footing all or most of the bill. Good luck.

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