Buyer’s Ability to Conduct Inspections After the Due Diligence Period and Seller’s Obligations

QUESTION: One of my listings has been vacant for several years. The MLS description clearly states that the existing utilities have been disconnected for a long time and that the seller is not willing to turn them on. The property went under contract with Form 2-T, but now, after the expiration of the Due Diligence Period, the buyer wants my seller to turn on the utilities to conduct inspections. Does my seller have to turn on the utilities?

ANSWER: Yes. The ability to conduct inspections in the Offer to Purchase and Contract (Form 2-T) extends all the way to Closing. Once the Due Diligence Period has ended, the buyer has limited ability to terminate without breaching the contract, but the right to inspect continues nevertheless. The large, red warning at the beginning of paragraph 4 of Form 2-T goes into more detail on this issue.

Paragraph 8(c) of Form 2-T states that the seller must provide reasonable access to the property, including existing utilities operating at seller’s expense through Closing. While your MLS listing provided a preview of the terms your seller expected in a prospective offer, paragraph 19 of Form 2-T says that if any contract term between the parties is not in Form 2-T, then such terms are excluded. That means that unless your seller excluded the obligation to provide existing utilities in the contract, then the contract requires the seller to provide operable existing utilities. Any statements in the MLS to the contrary are simply not enforceable.

To resolve the wrinkle in your case, you might try to work out a shared cost arrangement with the buyer to turn on the existing utilities. They may be open to such a solution given the statements in the MLS. Be aware, however, that if the seller does not fulfill their obligations under the contract, the buyer may have the ability to terminate the contract for breach by the seller, and seek damages as explained in paragraph 8(n).

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