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Is it a good idea for a buyer to make repairs before closing? In Costa Rica real estate, homes are offered for sale “as is”, but should you negotiate any repairs to be made or not? And when can the repairs be made?
You’ll find that every real estate agency has its own way of working. In our offers, we specify that the BUYER may conduct a home inspection within two weeks of the offer, at the BUYER’s expense. Only structural damages, septic, drainage, or roof problems will allow the BUYER to default. BUYER will accept minor damages.
It is easy to include a home inspection contingency in your offer. Personally, I prefer to make the offer first, then have the home inspection done, with the earnest money deposit placed in escrow. That way, the buyer can still walk away without incurring additional costs. And you will not risk buying a home that needs a new roof or any other significant investment after you close on the property.
So, let’s move on to the question: can you make the necessary repairs listed in the home inspection report before closing? The short answer is: not really, because the property is not yours yet. Allow me to walk you through the whole process.
Option to purchase
A formal offer is not a legally binding agreement in Costa Rica. The option to purchase – sale agreement, also called a letter of intent or SPA (Sales Purchase Agreement), IS a legally binding agreement. Once both parties have signed, the buyer must deposit the earnest money. Between the formal offer and the option to purchase – sale agreement, everything is still negotiable. In this purchase option, you should describe anything important to you, including the repairs.
Inspection report
The home inspection report will show you any defects the property has and repairs needed. Some sellers might agree to make the repairs, and some do not. If the seller takes care of the repairs, you will have to hire the home inspector again to go back and verify that the repairs were done correctly. Be aware that the seller is responsible for maintaining the property until closing. If any damage occurs because repairs were not addressed in time, the seller is responsible for that damage.
Minor damages
The customary way is to make a statement about the minor repairs and what damages would not be acceptable to you. That means that you can change the last part, “minor damages will be accepted by BUYER,” before you sign the SPA. Or you can wait until you receive the home inspection report. You might be better off negotiating a lower sales price to cover the repairs the property needs, rather than asking the seller to make those repairs.
Important damages
Keep in mind that home inspectors only state the damage and necessary repairs, but they’re not experts. Electrical, roof, and septic issues are typically issues the inspector will report, but usually recommends that an expert have a good look at severe damage. There are a few issues that can be very important and should not be left to be fixed after the closing, or it’s sometimes even better to walk from the deal:
- Septic tank
- Hot water tank
- Pressure pump
- Leaking roof
- Retainer wall
- Leaking swimming pool
- Solar heating system
Repairs before closing?
Very few sellers will allow you to access their property for repairs before closing. Your repair people might make the problem even worse. Who would be responsible if something went wrong during those repairs? Imagine a minor accident during repairs before closing: your plumber is fixing a water pipe, and the house floods. Is it worth running that risk?
If you are allowed to do the repairs before closing, even with the seller’s approval, you risk losing the work/money if you don’t close on the property. Keep in mind that the transaction is not closed until both buyer and seller have signed the deed and the buyer has the keys to the property in hand.
Suggestion
My suggestion is to hire a home inspector to ensure there are no major investments required. Use the home inspection report to get a list of repairs to be fixed after the closing. It’s much better not to make any repairs before closing, so you won’t run into trouble.
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