Does granting a commercial buyer’s feasibility study period and inspection rights obligate a seller to make repairs?

My client submitted an offer for a commercial property using the Commercial Contract—Improved Property (TAR 1801) with a request for a feasibility period and the right to inspect the property. The seller rejected my client’s offer because he is selling the property “as is” and not doing repairs. Therefore, the seller claims the feasibility period and right to inspect are not necessary.

The listing agent said we could submit another offer and leave Paragraphs 7A and 7B blank. Are the Present Condition Paragraph and Feasibility Period Paragraph mutually exclusive?

No. First, all buyers purchase property “as is”. Paragraph 7A states that the buyer accepts the property in its present condition (“as is”). If the seller agrees to make repairs to the property, Paragraph 7A also contains space to list those specific repairs.

Second, even though a seller has stated he will not make any repairs, a buyer will typically want the right to inspect the property and to terminate should the condition of the property be unacceptable. While a seller could refuse to agree to the feasibility period, it is generally not a good idea to prevent a buyer from having a right to freely inspect the property. It should be stressed to the seller that agreeing to a buyer’s feasibility study period and inspection right does not obligate him to complete any repairs other than those already agreed upon under Paragraph 7A.

About Texas Association of REALTORS®

The voice for Texas real estate
This entry was posted in Commercial, Legal and tagged , , , , . Bookmark the permalink.

2 Responses to Does granting a commercial buyer’s feasibility study period and inspection rights obligate a seller to make repairs?

  1. Stuart B Scholer says:

    Under such circumstances a Listing Agent should also remind his Seller Client that “as is” does not absolve the Seller from disclosing defects that the property has. Listing Agents should also be leery of such Seller attitudes for fear of being dragged into a lawsuit after the sale of a property. Many Brokers in the Commercial RE industry have a “no need to disclose attitude” also. Buyer Agents beware!

    Like

  2. These articles are excellent, there are a lot of newer RE agents that need important information like this one. I hope more Commercial brokers realize how important is to talk to your clients and explain is better to disclose earlier than later when there is a problem. Elsa Martinez, REALTOR®️ Davinci Real Estate. (956) 984-9177

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s