The 11 percent jump in home prices in the past year far outpaces income growth.
What is a curable defect?
A curable defect exists when a property has a problem that either a buyer or seller can correct based on the terms of the agreement. It can be within the building or on the site, including the lawn and garden.
A curable defect occurs due to a depreciation of property. The buyer inspects the property before paying for it while noting down the defects, including physical problems. Before the buyer considers canceling the agreement, the seller has an opportunity to correct the problem. This enables the seller to remedy the buyer’s objections and maintain the deal.
When addressing the defect in the objection notice, the buyer should specify the actions that the seller must take in order to achieve an acceptable fix. With this, the seller has the right to correct or not correct the defect. The seller’s refusal, however, can become a violation of duty if the agreement does not state the right. Nevertheless, the seller has an obligation to cure some defects based on the buyer’s insistence.
The buyer may insist that the seller pay for the cost involved or cure the defect in good faith. On the other hand, the seller may limit the expenses or refuse to spend on the defect at all. If the seller fails to cure the defect successfully, the buyer can decide to waive the defect and continue with the deal or end the agreement.
When the seller remedies the defect, that cost is added to the selling price; if the buyer fixes the defect, the cost is deducted from the sale price.
Curable defect example
Someone agrees to buy a property worth $300,000 but notices a roof leak during the inspection, a defect which the buyer insists the seller remedy before closing the deal. The seller refuses to repair the leaking roof, and the buyer can decide whether to accept that decision and proceed to closing or object to the agreement. Although the seller refuses to repair or replace the roof, he lowers the cost of the property to $280,000.
Discover how you can deal with a distress property using these seven negotiating tips for sellers under a gun.