What are the buyer’s options when the seller removes a broken built-in appliance?

QUESTION: Only a few days before closing, my clients learned that the seller had removed a beautiful built-in, cabinet front refrigerator and replaced it with what looks to be a used, freestanding stainless-steel model of significantly less value. When I asked the listing agent about the replacement, I was informed that the refrigerator had died and that the seller replaced it with one that could fill the opening. The refrigerator was not listed anywhere in the purchase agreement and I’m unsure if that was a mistake. My clients felt the built-in refrigerator brought the whole kitchen together and have learned that a replacement will cost as much as $15,000. With closing only a few days away, what can we do?

ANSWER: Form 2-T, paragraph 2(b), specifies that all “built-in appliances” are included in the sale as part of the Purchase Price. A refrigerator that is “panel ready” or “counter depth” may look like a built-in refrigerator to an untrained eye. Therefore, we would always recommend that agents specifically identify, within the purchase agreement, any appliances that the buyer wishes to be included in the sale.

If the seller had opted to leave the “dead” built-in refrigerator in place and simply notified all parties that the refrigerator was no longer working, the buyers would have two options under their contract. One, the buyers could terminate the agreement under paragraph 11 of Form 2-T by giving notice of termination. Termination under this paragraph would entitle buyers to a return of any due diligence fee and earnest money deposit, as the home would not be in as good or better condition as on the date of their offer. Two, if the damage were covered under any insurance policy, the buyers would be entitled to purchase the home and receive any benefits or payment under of any insurance claim filed by the seller. Note, however, that paragraph 11 does not allow the buyers to seek reimbursement of any other expenses incurred during their due diligence. The reasoning for this limitation is that the seller is not considered to be in breach of the agreement if conditions of the property have merely changed and should not be penalized by having to pay buyer expenses.

Once the seller removed the refrigerator, however, there is a good argument that the seller breached paragraph 2(b) of the contract to purchase. By removing the appliance, the seller has taken from the buyers the option to have the refrigerator repaired. Furthermore, the replacement is materially different and less desirable than the original. Under paragraph 23 of Form 2-T, the buyers would have the right to terminate the contract and seek reimbursement of their expenses incurred to investigate and prepare for the purchase of the property. If the parties are unable to reach a resolution prior to closing, you should advise your clients, in writing, to seek legal advice to fully explore their options to help make the decision on how to proceed with the purchase of this home or terminate the agreement and recover their damages.

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Filed Under: Contract Law,