Contracts: The P&S Deadline, the Failed Septic, and the $15,000 Deposit

Do not assume there is no contract

• The accepted written offer may itself be an enforceable contract. Massachusetts courts have enforced written offers to purchase that contemplated a later P&S where the parties had settled all material terms. The absence of a signed P&S does not automatically mean the buyer has no obligations.

Was there a breach?

• The offer required the buyer to sign the seller's standard-form P&S. Demanding a $25,000 credit plus a new septic system before signing is a counteroffer, and refusing to sign without it may be a breach - unless the property's condition or a disclosure failure gave the buyer a legitimate reason to condition the signing.
• The buyer's letter did not terminate the agreement by itself, and the seller's 'you are in default, I keep the money' letter does not settle the question.

Keeping the deposit

• A deposit is not automatically forfeited. The seller must show a breach and either actual damages or a valid liquidated-damages clause. A clause that operates as an unreasonable penalty is unenforceable, and the seller has a duty to mitigate by relisting.

The broker's role

• The listing broker is a stakeholder, not the seller's collection agent. Release requires a written agreement signed by both buyer and seller, or a court order or arbitration award. Turning the money over on the seller's unilateral demand is conversion and a license problem. If the parties cannot agree, the broker should hold the funds and consider interpleader.

The statute does not assign the cost to the seller

• Title 5 requires an inspection before transfer of an on-site sewage system. If the system fails, the local board of health will require an upgrade, and at closing either the seller completes the work or the buyer agrees in writing to complete it within a period the board sets.
• That makes the septic a negotiated allocation, not an automatic seller expense. The buyer's demand for the seller to install a compliant system is a bargaining position, not an entitlement.

Why it becomes a financing issue

• The buyer's lender will not fund while the system is failed. If the parties cannot agree on who fixes it and when, the buyer may never obtain a loan commitment, which converts a property-condition dispute into a mortgage-contingency issue.
• Practically, the parties should either price the risk (a credit with an escrow holdback for the upgrade) or extend the contingency in writing. Doing nothing pushes both sides toward litigation over the deposit and a potential c. 93A claim.

Lead paint (house built 1923)

• The seller must deliver the Massachusetts property-transfer lead notification and give the buyer a 10-day opportunity to have the property tested for lead. The 10-day right may be waived only by a signed writing from the buyer.
• If the notice is not delivered and the right is not properly waived, the buyer can rescind the transaction, and the licensee faces license discipline and consumer-protection exposure. The buyer's attorney should calendar the 10 days and the waiver.

Smoke and carbon monoxide detectors

• Before transfer of a residential property, the seller must obtain the local fire department certificate of compliance for smoke and carbon monoxide detectors. The closing attorney typically collects it; closing without it leaves the seller exposed and can delay recording.

Recording and excise

• The deed must be signed by the grantor, notarized, and recorded with the deed excise stamps paid at $4.56 per $1,000 of consideration. The closing attorney confirms the stamps, the discharge of the existing mortgage, and the title rundown before disbursing.