The house has been sold firm and there is no inspection condition.
On the final walk thru the buyers start the dishwasher and now saying “it’s making a loud noise” when rinsing.
The Buyers want to holdback $5,000 from the closing funds until the dishwasher is repaired.
The dishwasher is working and was always working, but probably due to the age makes this louder noise. Can the buyer even start any appliances during the walk through, and what about the holdback? What are the Buyer’s rights?
This is a problematic issue for the Buyer. Their rights, whatever they are contained in the Agreement of Purchase and Sale.
So, hopefully they wrote a number of clauses into the Agreement in order to protect themselves.
It is very unlikely that they added any kind of a provision allowing them to test appliances at all, let alone at this time. This would mean that the testing was performed illegally, and in all likelihood any evidence relating to this testing would be inadmissible in Court.
They thought it was “loud” but others thought it was “normal”. So, the question here, would be exactly how loud was it, based upon real noise measurement, that is, in decibels?
“As is” Condition
Without saying anything at all, the dishwasher was sold in “as is” condition. If we want some kind of upgrade, then we will have to have some sort of reference in the Agreement to a better condition.
Here are some of the ones which are popular:
- good working order
- normal working order
- working order
You will notice that none of the usual clauses made any reference to the level of sound.
So, you would have needed something in the Agreement which would have specifically addressed the level of sound measured in decibels, if you wanted some kind of remedy here.
There is no right to holdback funds in any amount whatsoever, unless that matter is specified in the Agreement, or negotiated between the parties.
This is to prevent any surprises. The Seller will receive his money which he can use towards the purchase of his own property, that same day.
If the Buyer wanted some sort of “holdback remedy” immediately before closing, then, that arrangement would have to be clearly spelt out in the Agreement.
That’s an awful lot of money for a dishwasher. Brand new and installed, the total cost is not likely to exceed $1,000.00. So, this amounts to 5 brand new dishwashers, which would hardly be reasonable under any circumstances!
What’s the Value of the Dishwasher
What kind of dishwasher was it? What did it cost? What kind of shape was it in? Does it actually wash the dishes? What kind of “mileage” was on it? Was it used once a day, twice a day, or only once a week? Was there a manufacturer’s warranty on this dishwasher? Did the warranty expire? If it was still under warranty, was that warranty transferrable to the Buyer? And, if it was transferrable, did the Agreement of Purchase and Sale actually say that?
Current Second Hand Value of a 5 Year Old Dishwasher
Let’s assume that we are dealing with a $1,000.00 dishwasher, brand new and installed. It went down to $600.00 in the first year, and then to $200.00 at the 5 year mark, assuming that it’s still under warranty. Once the warranty expires, it’s effectively worth somewhere from $0, not working to $199.00, “still working and functioning, but fingers crossed”.
Under those circumstances, how much at best should the holdback be?
Holdback of any Funds: $200.00 to $5,000.00
Without written authorization, this comes as a surprise and if the Seller is short even a small amount of money they will not be able to close on their purchase. At the low end, this could easily amount to one hundred thousand dollars in potential losses sustained by the Seller.
The proper remedy for the Buyer is to close the deal, pay the full purchase price as was agreed, and sue in Small Claims Court for their loss.
Brian Madigan LL.B., Broker