[WSBARP] When is closing?

Tue Dec 1 16:30:06 PST 2020

Rich,

It seems that S and B have a binding contract in which B agreed to accept the property AS-IS.  There may also be a clause that required S to maintain the property in its current condition until closing.  The standard Form 21 RREPSA contains the following language at paragraph f, Closing and Possession:

[cid:image001.png at 01D6C7FF.38C1C820]

There could be an argument over whether a weather event constitutes “normal wear and tear,” but if this language was included in the PSA, S may have an obligation to return the property to the condition it was in when the parties reached a mutual agreement.  Absent that language, or if the PSA is clear that the property is being sold AS-IS no matter what the conditions (which could change between mutual acceptance and closing), I don’t believe S would. Have any obligation to perform repairs.

I don’t believe that the fact the transaction did not close on Day 1 (absent any fault on the party of S or B) provides sufficient grounds for rescission or to void the transaction.  If the transaction failed to close due to the negligence of S or B (i.e., one of the parties signed late), then my analysis would change.  Assuming all docs were signed and ready to record on Day 1, I believe the title company may have some liability for its role in failing to record the documents on the instructed date.

My two cents, for whatever it’s worth.

Best regards,

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From: <wsbarp-bounces at lists.wsbarppt.com> on behalf of Rich Holland <rich at pnwle.com>
Reply-To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Date: Tuesday, December 1, 2020 at 11:57 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] When is closing?

Interesting fact pattern – almost exam like – from an out of state colleague:

PSA says property is AS IS, with all faults, etc.  Seller will not repair, knows nothing of the property.  Buyer agrees.
Closing is set for Day 1 (just for simplicity).

Day 1     Escrow has Buyer and Seller docs, funds, etc. and sends docs out to record.
Day 2     Title receives but does not record documents due to cut off.
Day 3     County is closed
That night, massive windstorm comes and does significant damage to the deck on the property
Day 4     Buyer’s agent contacts Title and forbids them from recording transaction
                Seller claims transaction is already closed and recording is ministerial and property is AS IS anyway
Day 5     Buyer’s agent still blocking title and states that Buyer’s insurance refused claim because Buyer wasn’t the owner on the date of the storm.

Now, I have a number of thoughts about this but was curious about the collective wisdom.  Clearly, to me, if one removed the escrow company from the equation, ownership transferred on day 1 when S gave B the deed and B gave S the funds.  Recording has to do with notice; not effectiveness of a transfer.  I wonder, therefore, whether that is changed because of the neutral third party.  This also reminds me of the recent thread on here about when Closing actually occurs.  To me, B has no real claim against S regardless of Closing.  Either it was already B’s or B had already contracted to purchase the property AS IS.  To be clear, I am not given to understand that the Buyer wants rescission or to cancel the transaction (depending on the interpretation of when closing occurs), but, of course, wants S to replace the deck which, of course, S is not going to do for B or anyone.

I am curious of your thoughts on this.  Was the transaction closed?  Did the title company do the right thing by refusing to record?  Does the S have some sort of claim against B since S remains the listed owner with the County for taxes etc.?  Given the incredible oversimplification and understanding that it depends on what the contract actually says, does B have a legitimate claim to halt the title company when S has already delivered the deed?  And, for that matter, when is “delivery” from S to B when an escrow is involved?

Suffice to say, I responded with more questions than answers.

Sincerely,

Richard L. Holland
WSBA#23921

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