In this article, we’ll discuss the process that occurs after the initial purchase contract and price are agreed upon and signed by the buyers and sellers of a home. We’ll cover some of the complications that can arise during the attorney review period and discuss what’s commonly included in the attorney modification letter.
For a majority of the population, purchasing a home is the largest transaction any of us will undertake in our lifetimes. Because of this, it’s common to feel excited, scared, frustrated, and impatient throughout the entire process; most of all during the attorney review period.
When you sell or purchase a home, your realtor will usually present you with a widely used form contract. The realtor will have the ability to customize that form to fit your needs. The contract will typically provide that each party's attorney will have 5 business days to (1) approve the contract, (2) reject the contract, or (3) negotiate modifications to the contract.
During these 5 days, the contract is contingent upon attorney approval. If your attorney fails to reject or seek to modify the contract within the 5 days, the contract will automatically be binding upon you after the 5- day period expires.
Modifying Real Estate Contracts
The actual attorney review period can feel a little fuzzy when you’re in the middle of it. If you’re a buyer and your real estate agent sends over anagreed-uponpurchase amount, but the sellers decide not to sign anything, then no party has entered into any attorney review period. Once the contract is signed by both parties, they enter an official attorney review and modification period. This period allows for the inspection to be performed and extensions to be filed as necessary. These time frames are not concrete, but if extensions are not requested appropriately a deal may fall through or a contract may become binding. Missing deadlines can happen, but having a good real estate attorney will reduce the chance of missing a deadline or fudging a line on the contract to near zero.
Once the inspection has been completed and the buyer’s party has had a chance to review the inspection report, the buyer’s attorney will draft an initial modification letter. This letter doesn’t make any changes to the real estate purchase contract but rather acts as a separate type of contract modifying specific items, typically all related to the inspection report.
When your attorney sends a letter requesting modification of the contract, he or she will include language in the letter that states that the proposed modifications do or do not represent a counteroffer. If the modifications do represent a counteroffer, the other side will have an opportunity to negate the contract by rejecting the modifications. If the modifications do not represent a counteroffer, rejecting the modifications will not nullify the contract. The modification letter may list any number of things, not limited to items on the inspection. For example, the modification letter may list a different deadline by which the buyers have to secure their mortgage loan, or changing the amount of earnest money required by the sellers to satisfy a previous request by the buyers. These negotiations can go back a handful of times until both parties are satisfied.
Often, the parties cannot agree on all of the contract modifications within the 5-day review period. In this case, the review period is typically extended by mutual agreement.
A good attorney will be sure to staunchly protect his client's interests while, at the same time, working to achieve a meeting of the minds between the parties to prevent the deal from falling through.
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