Must Repairs Be Performed During the Due Diligence Period?

QUESTION: I have a question about repairs under the Offer to Purchase and Contract (form 2-T).  Assume that the Buyer and Seller enter into an agreement that provides for a Due Diligence Period of 21 days and Settlement in 40 days.  After extensive negotiations, the Buyer and Seller agree in writing 2 days before the end of the Due Diligence Period that the seller will make several specified repairs.  There’s no way the repairs can be completed before the end of the Due Diligence Period.  In this situation, shouldn’t the Buyer try to get an extension of the Due Diligence Period in order to retain the right to terminate if the Seller fails to properly complete all the agreed-upon repairs?

ANSWER: An extension of the Due Diligence Period is not necessary in this situation to protect the Buyer.  Paragraph 4(d) does advise the Buyer to make repair requests in sufficient time to allow repair negotiations to be concluded prior to the end of the Due Diligence Period, and the “Warning” in paragraph 4 advises the Buyer of the consequences for failing to terminate the contract prior to the end of the Due Diligence Period if the Buyer is not satisfied with the results or progress of the negotiations. However, note that under the “Seller Obligations” paragraph, the buyer has the right up until Settlement to verify that any negotiated repairs or improvements have been made by the seller in a good and workmanlike manner.  The seller’s refusal or inability to properly make all agreed-upon repairs would give the buyer the right to terminate the contract even though the due diligence period has expired, and recover not only the earnest money deposit, but also any due diligence fee and due diligence costs according to paragraph 23(b).

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