Q: We were supposed to close on a house a week ago. The day before the scheduled closing, we went out to the house and noticed that the seller did not fix the heating system as we agreed in the contract.

We gave the seller a one-week extension. It is now the day before the revised closing date and he has not yet fixed the problem. Our lease is up, we have been packed and ready to move, but we don’t really know how to handle this situation. What should we do?

A: If you are represented by an attorney, you should discuss your options with him or her. You need to review the terms of your contract to determine what you can do at this point.

If the seller fails to make the repairs, does the contract allow you deduct from the purchase price the cost of the repairs? If you don’t close, can you sue the seller for your damages? If you do close and he has not made the repairs, can you sue him after the closing for the repairs?

Some of these questions can be resolved by looking at the terms of the contract. If the contract provides that the seller can return your earnest money in case the seller defaults and that is your only remedy, that won’t help you much.

A better option might be to determine what the cost is to fix the heating system and have the closing agent or title company hold back the cost of the repair plus some extra money. The money would be deposited in an account that would provide that you would get reimbursed money for the cost of the repair.

By using a holdback of the funds, you could close and then get the system fixed. In some ways, if you choose the company that makes the repair, you might have a higher level of trust that the work was done properly by a qualified repair company.

If the seller refuses to make the repair, and refuses to agree to the holdback, then you’ll have to determine what the cost is for the repair and assess whether the house is worth it if you have to pay to fix the problem.

If the repair cost is small, you may decide to close anyway and make the repairs yourself. If the repair cost is large, you might decide it’s not worth buying the home and demand that the seller give back any money you paid upfront.

Whether you can get anything more than the money you put down originally is questionable without, perhaps, employing the services of an attorney to force the seller to pay up for the seller’s failure to comply with the terms of the contract.

Whenever you look at issues like these you have to first assess the potential cost to you of the repair against the cost of pursuing the seller. If you hire an attorney and the cost of going after the seller outweighs the cost of the repair, it might not be worth hiring the attorney.

At that point, you’ll have to decide to move ahead and foot the bill yourself, or move on and find another place to live.

You need more information to make an informed decision. You need to evaluate the potential cost of the repair. Determine how invested you are into purchasing the house, including what you have paid your lender for fees and what other expenses you have incurred in connection with purchasing the home, and what it would cost you to hire an attorney to assist you in this matter.

But don’t let your mind be swayed from making a rational decision simply because your lease is up and you’re ready to move. You can always find an inexpensive short-term or month-to-month rental that will give you the flexibility to find another home that will be a good long-term purchase.

If you already have hired an attorney, you should discuss these matters further with him or her.

Nov. 27, 2007