Question: I am the listing agent. In response to an offer we received, my seller wants the buyer to pay for the smoke detectors, water heater bracing, and any other mandatory point-of-sale requirements. All we have to do is counter paragraphs 7B(1) and (2) of the Residential Purchase Agreement and say “Buyer” instead of “Seller” shall pay for those items. Is this advisable? 

Answer: No. It is legal to require a buyer to pay for point-of-sale requirements, such as smoke detectors and water heater bracing, but it’s a risky proposition for your seller. Unless a property is exempt, the law places a burden on a seller to not only install smoke detectors and brace water heaters before close of escrow, but to also certify that these tasks have been performed (see bottom of page 2 of the TDS).

A buyer could agree upfront to pay for these items, but later during escrow, decide not to pay for them after all for whatever reason (and trust me when I say some buyers know how to play this game). Even if the buyer decides not to pay, the law still requires the seller’s compliance. It’s true that, as a result of the buyer’s nonperformance, the seller could cancel the transaction. However, it doesn’t make sense for the seller and agents to do all the work needed to complete a sales transaction, only to have it fall apart at the end over a few hundred dollars.

It’s also true that, instead of cancelling, the seller could just close escrow. But if, after close of escrow, a fire, earthquake, or other incident causes injury or damage that operable smoke detectors or properly-braced water heaters would have prevented, the seller could arguably be held liable for potentially large sums of money. That’s an unnecessary risk for the seller to take as compared to paying a few hundred dollars during escrow for smoke detectors and water heater bracing. If that is nevertheless what the seller wants to do, that’s up to the seller. We would at least protect ourselves in that situation by informing the seller in writing that closing escrow without operable smoke detectors and water heater bracing is strongly against our advice, and that, before proceeding, the seller should consult with the seller’s own attorney as the seller deems appropriate, concerning the serious legal, financial, and other consequences.

Bonus Question: Can we help the seller under these circumstances by drafting a waiver for the buyer to sign before close of escrow? Answer: No. The smoke detector and water heater bracing laws do not contemplate any waivers. If we drafted one anyway for the buyer to sign, and it is deemed unenforceable by a judge or arbitrator, the seller will surely try to hold us liable for any loss.

-Thank you to Rebecca Alvarado (Pasadena Office) for suggesting this week’s legal tip.

Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of June 4, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.