A Closing Date without a closing

(This post is authored by Craig Blackmon, an attorney in Seattle whose practice focuses on residential real estate — see his web page or his blog for more information. Please note that this post is not legal advice. You should consult an attorney for specific legal counsel.)

Your purchase or sale is scheduled to close on the Closing Date. What happens if, for some reason (perhaps a delay with the lender), the transaction does not close on the Closing Date? What are the rights and obligations of the buyer and the seller?

time essenceA discussion of this scenario begins with the “time is of the essence” clause. Virtually all purchase and sale agreements (including the forms used by the MLS), contain a clause indicating that time is of the essence. When a contract does not contain such a clause, the law affords the parties some flexibility in regards to performance of their contractual obligations. With such a clause, however, the law requires the parties to perform as indicated by the contract. Thus, assuming the contract indicates that time is of the essence, the transaction must close on the closing date or there will be problems.

If the transaction fails to close because a contingency was not satisfied, such as a financing contingency, then both parties are absolved of their contractual obligations. A contingency is a “condition precedent” — i.e. a condition that must be satisfied before the contract binds the parties. So, if the contract includes a financing contingency, and the transaction fails to close because the buyer did not get financing in time, then neither party is in breach of the contract. The contract simply expires. If the parties want to proceed with the transaction and close beyond the closing date, they need to so agree in writing by amending the contract prior to its expiration.

If the transaction fails to close because one of the parties did not live up to their obligations, however, then the other party may have an action for breach of contract. For example, suppose the seller fails to execute the documents necessary to convey good title to buyer. If, at the time of closing, buyer has performed its obligations, then buyer has a breach of contract claim against the seller. Note, however, that the buyer must have tendered performance — i.e. deposited the funds with escrow to purchase the property — in order to have a breach of contract claim (with two exceptions noted below). If neither party has performed its obligations by the closing date, the contract expires.

If buyer did not tender performance, buyer may still have a claim if seller either waived the “time is of the essence” clause, or otherwise acted in a manner inconsistent with an expectation of performance on the closing date and the seller relied on that action in not performing (the legal term is “collateral estoppel”). In either case, the law concludes that the buyer has a claim because the seller has acted in a manner inconsistent with enforcement of the closing date.

About Craig Blackmon

I am an attorney in Seattle with a practice focused on residential real estate. I am also an owner and the designated broker of Quill Realty, a new model real estate firm. Quill provides its clients with both an agent and an attorney, so you can Sign with Confidence. And Quill charges less than a typical agent, so the client saves money as well. Craig on Google+

Comments

  1. Russ Cofano says:

    Great post Craig! Both Craig and I have received calls from unhappy buyers or sellers who want to make a claim for breach of contract against the other party because that party did not perform. One of the first questions that we ask is “Did you perform your end of the bargain?” If the answer is “no”, then all of a sudden the case got much tougher. The general rule is always come to closing to perform your obligations (seller = deliver deed/buyer = deliver funds) as if the other party is going to perform, even when you don’t think they will. If you do, you will likely eliminate the argument that the agreement expired because neither party performed.

  2. I think it is worth mentioning that closing dates are extended very often, without much ado, every day. A simple Form 34 that says “Closing date to be extended to” signed by both buyer and seller.

    Usually a buyer and their agent can cancel a contract during a legal “out” phase, such as the home inspection timeframe, if there are insurmountable problems. Even if the problems involve the loan early on, sometimes it is easier to close out on the inspection contingency or the resale certificate cancel timeframe.

    Many closings need to be extended and are not ready to close on time. These situations are often handled with a little fast shuffling of the two agents and without an attorney :)

    One of our agents had a very difficult situation where a lien came up in the buyer’s name at the last minute from an old school loan. The seller had already moved out and it took two weeks to pull it all together. It was tense, but all’s well that ends well! Agents handle these situations day in and day out, and most often everything is resolved, even if it is past the closing date in the contract.

  3. Ardell, you make a good point that I should have made clear in my original post. By mutual agreement, the parties can extend the closing date (although there could be an issue if there is no additional exchange of value — i.e. consideration). Thanks for the clarification.

    As for the “fast shuffling” of the agents, we all know that, by law, agents are restricted to filling in blanks on pre-printed forms. Anything beyond that constitutes the unauthorized practice of law. The extension of a closing date by mutual agreement of the parties probably falls within that rule and probably is permissible (although I am unaware of any specific legal authority that addresses the issue). Nonetheless, as the issues with a transaction grow more complicated, it becomes increasingly important to consult legal counsel, whose guidance is not restricted and who can offer comprehensive advice and assistance.

    • Chris Anthony says:

      Hello I am a first time home buyer and I have come across a problem that has reallly got my nerves shaking i have recently payed on a new home and upon closing i was short a sum of money that will take me approximately 5 business days after closing date to acquire due to my banks on holding rules on money wires i will acquire the money shortly but im afraid if the homebuilders will take action against me and i will lose all the money i have already paid. please I would appreciate any input or advice in this matter.

    • Hello, we are currently in a FEMA Buyout situation with our current house in NJ. The grant is in place and only needs to be executed, meaning our check just needs to be cut at this point. All paperwork has been submitted to FEMA/NJOEM/NJDEP and our town. We have a closing date in place and we have asked the seller of the house we are buying, to extend the closing date by 10 days to guarantee funding. However, they refuse and we could possibly loose the new house? What can we legally do to extend the closing a few days when the sellers refuse to do so? Do we have any legal rights? PLEASE HELP, THANK YOU!!!!

      • Yehara, I don’t practice law via the internet, I am not licensed in NJ, and I certainly have never seen your contract. So unfortunately I am unable to offer any guidance other than to say: Consider hiring a local attorney. Yes, it will cost at least a few hundred bucks, but it sounds like this is a big deal that will cause a major disruption in your life. I.e., it’s worth throwing some money at the problem in order to identify your options and get the best result possible. Good luck!

  4. Craig and/or Russ-

    Received some faxes over the weekend and a couple of them were P&S addenda. I imagine that if you were just browsing some of the written addenda language, it would probably make one chuckle. How strict is the law regarding blank addenda being filled in by agents? Some of the addenda language can be quite lengthy–so the presumption is that law is being practiced?

    As escrow folks, in most cases we understand “intent” of the agent, but, we can’t count how many times problems occur due to poorly written addenda regarding closing cost contributions. In several instances, sometimes due to lender requirements, the seller ends up paying significantly less than what was intended, to the dismay of the buyer and moreso to buyers agent who crafted the lanquage.

    One example of a problem that recently erupted post closing: an irate seller called after closing (naturally) and found out that they were required to pay for a specific policy for the buyer. The written addenda about this was very clear. The problem was that the sellers agent meant to write the opposite. The buyer was to pay for it. Please don’t ask how this misunderstanding was “missed” after they read and signed the addenda mid-transaction, and then the line item HUD selling fees were discussed at signing. I suppose the fog of a sale.

    Here’s another one that brings smiles and I quote verbatim: “buyer to walk through home five days prior to closing.”

    I think our Realtor clients would get a kick out of us publishing a quarterly review of the funniest written P& S language. It would be like David Letterman’s TOP TEN.

  5. Shhhh.we only fill in the blanks.

    I asked a lawyer once if I could get concurrent sentences for all of the clauses I’ve written over the last 15 years :-)

    Seriously though, I did ask an attorney what the penalty was for “practicing law” by writing a clause. His answer was that I would be held to the same standard as an attorney would be for the clause written. And here I thought I would be handcuffed and carried off in a paddy wagon.

    Of course agents write clauses and don’t just fill in the blanks. We couldn’t do business if we didn’t. What are we supposed to do? Find an attorney with an hour’s notice on a Sunday night? Why is there a blank Form 34 if we are not supposed to write on it?

  6. Russ Cofano says:

    Legacy

    I used to teach a Risk Reduction class for Realtors and one of the sections was on agent-drafted addenda. I had a whole list of real life clauses that agents wrote. Most were funny, some made you wonder if illegal substances had been consumed prior to drafting.

    I will try to recall some of these for a future post.

    Russ

  7. Please do! ;)

  8. Ardell, I note that the NWMLS forms manual provides instructions as to the appropriate use of the Form 34. Per that manual, an agent “cannot use or insert language not prepared by an attorney” into the form. Rather, an agent should use one of the “special” clauses included in the manual.

    As for the unauthorized practice of law, you’re correct, you will not be arrested. However, such conduct may give rise to a claim under the Consumer Protection Act. If a plaintiff prevails on such a claim, the plaintiff is entitled to treble damages up to $10k, plus an award of attorney’s fees and costs. Accordingly, while you won’t lose your liberty, you do face sigificant exposure.

  9. True, however I do not believe that Special Clauses section has been updated since October of 2003. I could be wrong on this one, but I do not believe there is one written yet to handle Escalation Clauses.

    There are several there that I have refused to use and insisted on an attorney handling, or the escrow company preparing, such as the paperwork involving a seller carrying a portion of the financing.

    I have also seen a poor agent botch the implementation of the Multiple Counter Form. He didn’t write it himself, but he had no clue how to use it and more than one buyer opened escrow.

    That being said, unless you are in NY or North Jersey, it is not likely that every agent will be using an attorney when writing contracts on an everyday basis. In my experience the need for special clauses hits an agent on the spot and every special clause of the future is first done by an agent.  Because there was no way to foresee the need.  Once these situations present a need for a special clause, such as buyers providing the willingness to escalate their offer or the seller wanting to counter more than one buyer simultaneously, attorneys are called upon by agents, or companies or mls services, to write them for all to use.  But the very first time…it’s usually an agent unless there is time to have the attorney do it beforehand.  In these situations, I often write the clause and add a 3 day attorney review and revise of said clause into the contract.

     In the meantime I am relieved to know that there is no minimum sentence for writing a form 34 that says “Closing to be changed from 2/25/06 to 2/26/06″ :-)

  10. 3 cents says:

    Great post Craig.

    To add to the topic, I offer the scenario where, in a contract w/o a Time of the Essence clause , the buyer is delaying the closing beyond the contracted closing date. What’s the seller to do? Some feel they have no choice but to wait because they dont have the TOE hammer. But, it is possible to “make” time of the essence by sending reasonable written notice (at least 30 days) to the dilatory party. At the now imposed TOE date, so long as seller is ready and able to close the buyer takes a risk of losing his downpayment if he does not close. Of course, every case is unique but this outcome is certainly in the cards.

  11. 3 cents — great point. This is certainly a strategy worth considering, although as you point out every situation is unique.

  12. my Dad was selling his house to get the down payment for a bigger house. the buyer’s agent cancelled the closing twice i believe the reason was the credit which we understood and wait one more week. the 3rd time my dad and i called to get directions on how to get to the tittle company, the secretary told us there was no closing schedule. after all this mess we find out that the buyer didn’t qualify for the loan and they had an interest of 9% or something like that. The bottom line is that we i had to purchase the house from my dad of course he left money for the down payment and on the top he paid about $10,000 for closing cost for buyer and seller. i need to know if there is a way to get compensated for this and who do i have to talk to.

  13. Are there any pre-conditions to not closing on the closing date. The buyer’s layer called and said that there was a problem with the mortgage and that we could not close for another week. We later found out from their broker that that was not the case. In fact she was not aware that the lawyer had decided to postpone the closing.

    As a result, I have lost about $3,000 in airline tickets for the family to move abroad not to mention carrying the mortgage for another week.

    I’ve asked my lawyer to issue a “time of the essesence” notice. So two questions: Can a buyer decide to post-pone the closing without valid cause (e.g. I just felt like it). And how does one go about getting compensated.

  14. Joyce P says:

    I am in the similar predicament as with DJ but then the problem is with the seller…he did major work in the property and he didnt apply for a permit…he is not issued a CO/CC and our closing date is pending….our lawyer applied of the “time of the essence” notice (10 working days)….im just wonding…what if he hasnt flfilled his obligations after the 10 days? what would be the next move? i only have 20 days left after my lock in my rates expires? …how does one get compensated if we dint close in a reasonable time and i have to lock-out a new HIGHER interest rate? can I demand to deduct the balance to the escrow?

  15. I feel badly that no one has answered Ana, DJ and Joyce. However, two of you have indicated that you have an attorney, so I think your respective attorneys are the ones who should address this.

    Here In Washington, and every state I have worked in, we have a “time is of the essence clause” in the contract. So invoking a 10 day notice that time is of the essence is somewhat foreign to me. I have only heard of it in NY and North Jersey were attorneys handle closings.

    Sounds like Ana’s Dad’s buyer got out on something in the finance contingency that had a rate cap of less than 9%. Here we do not have “rate not to exceed x%” in our finance contingency addendums. Though that clause has been in the finance contingency in every other state I have worked in.

    These three people remind us that no one should enter into a contract without intending to complete it. Often people ask me, when can I cancel?, when they are making an offer. I say stop a minute and don’t do this if you are not sure that you want the house. Many people are negatively impacted when there is a cancellation, so you shouldn’t start something you don’t intend to finish.

  16. Thank you, Ardell, for addressing those questions. I had not done so for two reasons. First, I’ve been rather busy, and blogging has slipped significantly down my “to do” list. Second, I get nervous when I provide answers to questions specific to a person’s situation. I don’t know where Ana, DJ and Joyce live, and so I don’t know what laws apply to them. In fact, unless they live in WA, I’m not licensed to practice law in their state and therefore should not provide any sort of legal guidance. If I do provide such guidance, someone could possibly conclude that I have formed an attorney-client relationship, and then I would have an obligation to provide competent legal counsel, which is tough to do in the context of a blog post.

    Ultimately, any time you have a legal question specific to your situation, you need to consult an attorney in your area. Admittedly, this can be expensive, but it’s the only way you can get legal counsel.

  17. I totally agree Craig. Just don’t know the courtesy rules for responding or not responding to Blog post comments. In my posts when people bring up specific cases, I invite them to email me off the blog, which they generally do.

    Each of the three people are looking to be compensated for their losses, but each has a different scenario.

    Perhaps a post on the recent theory that sellers should put up Earnest Money that gets forfeited to the buyer if the seller can’t close deserves some attention in a post.

    Generally the seller can say “no extension unless you pay my costs”, but the seller than has to risk going back on market and finding a new buyer. Often not as good as closing just a few days later with the buyer in hand.

    In Joyce’s case, we often close without permits on improvements for resale property. So I don’t know what is preventing the close. Clearly owners putting in improvements without obtaining permits is a very commy scenario everywhere.

  18. Joyce P says:

    In some instance CO/CC are not required in some counties in NJ for resale homes but the buyer made a lot of improvements in the basement (plumbing) and that requires a work permit and an inspection which he didnt apply for and this is one of the requirements from our lender. Anyway, we already filed ” time of an essence” notice and it will expire in 2 days. My husband and I decided not to give the seller anymore extension. We have a feeling and this has been relayed to us from the seller’s realtor that he is sour-graping about the whole sale. He feels that his asking price was too low when he placed the property in the market. We decided with no extension because we went with the buyer’s terms (early closing, a full asking price and a hefty downpayment). I just want your opinion on what we can do next…i understand that we have to discuss it with our lawyer but I want another opinion…thanks for the replies and i really appreciate it

  19. Joyce, it depends on how much you want THAT house. So answer that for me.

    Sounds like North Jersey and not South Jersey. It gets complicated because it sounds like “your” lender may have a restriction of funding that a different lender may not, based on your latest info. In that case it may be your default and not his…so you really need your lawyer to determine if you are required to find a lender without that restriction under the terms of your contract with the seller.

    Everything YOUR lender wants, that another lender may not want, does not necessarily become the seller’s problem.

    If your home inspector said it was all done very well with no defects or problems and Title says there are no encroachments caused by the addition, etc…and the only issue is YOUR lender’s requirement…how is that the seller’s “fault”? Not an easy problem there and you need your attorney to sort it out.

    I worked South Jersey and Bucks County and many, many, many homes closed without permits for additions. Seems maybe a little unreasonable on your lender’s part. Maybe the lender could be persuaded to drop the matter if you have a clean inspection and title report? Do you want the house if you can close it without the permits?

    It’s all gray area for sure… If a cash buyer could buy it without this problem, then the problem is caused by you via your lender. That’s just a clearer way to see whose problem it really is…though I don’t mean to be insensitive, I am thinking your attorney might look at it this way. Clearly the seller’s attorney may be looking at it this way, so I thougt it might be helpful to give you some different perspectives on this difficult and not black and white problem.

    If the seller goes back and gets permits to the date of closing, he may be liable for the taxes on the addition back to the date they were put in. Does your sales contract require permits for additions be provided by the seller?

  20. Joyce P says:

    How much do I want the house? I guess I want the house but not to the extend that I will incure too many problems from the seller’s lack of responsibility. The sales contract requires he provide for permits for the addition of the house and the seller agreed/signed the contract. The contract stipulates that the he needs to provide the permits (which he didnt) and the CO/CC on closing. His lawyers and the seller knew the requirement andthey have agreed to provide it. So anyway, we will see in 2 days and i will let you know. we may have a change of hearts…the question still lies…How much do we really want this house…Ardell, thank you for the replies…it gave me a different perspective of our situation

  21. You are very welcome, Joyce. Since the contract calls for permits, and he cannot provide them, then I think it is likely your call. But check with your attorney and then decide if it’s worth waiting for the permits based on how much you like the house, and how many others are generally available that you like just as much or better, at the same price. Not how many are “for sale” today, but how many are “generally” available for those willing to wait. And then decide.

    If you have been looking for a year and this is the only house suited to you in all that time, for example, you may want to hang in there.

  22. Karlene Cameron says:

    My husband and I are having a home built. The closing date has been extended several times. We are now in the +15 days part of the clause and it doesn’t look like the home will be finished. We are incurring significant financial costs associated with this (including having to extend the lock on our loan). I am unsure as to whether we have a TOE clause in our contract (the contract is not in front of me). My question is, do we have any legal recourse?

  23. Karlene, as I note above I am not comfortable providing specific legal guidance in the context of a blog. For starters, I don’t know what state you live in, so there’s a very good chance that I am not even licensed to practice law where you are located. Morevoer, there are a myriad of additional facts that are or may be relevant. For example, I don’t know what you mean by the “+15 days part of the clause.” If you want legal counsel and guidance about your specific issue, I suggest you contact an attorney in your area.

    Craig

  24. Jay Patel says:

    Hi, i have one prob. seller did not provide tax information on time, he gave tax pappers right 8 days before escrow close date, we can not get loan done untill another 21 days, now loan is done but seller denies to sell the property, but we want to buy so wht happens in that case??/

  25. Jay,

    Something doesn’t look right there. His “tax papers” and your loan are not usually related. The lender doesn’t get info from the seller to process your loan. Sounds like the seller is angry with you, and possibly rightly so. What State are you in? Tax info generally is public data available within seconds by an agent. What does your agent say?

  26. Jay, as I indicated in my email directly to you, I encourage you to speak directly with an attorney in your state. This is a legal issue and you should get input from an attorney. While it never hurts to get input from your agent, your agent is not an attorney and is not licensed to practice law. Rely on your agent at your peril (and at your agent’s peril if, in so relying, you suffer injury, as your agent is engaging in the unauthorized practice of law and may be liable to you).

    Craig

  27. I agree with Craig on this one, if you want the house and you want to force the seller somehow to sell it to you by blaming him for your inability to close…a lawyer is definitely your next step and pronto. But you may want the agent and closing agent to write down what happened, for the attorney’s benefit, as something doesn’t sound right there. You don’t want your own agent and escrow to be “witnesses against you” if your undersanding of what transpired doesn’t match their rendition.

  28. Leon Chang says:

    I will like to ask a question: I live in NYC, and selling a house. The Official closing date is a week from today, but the buyer’s lawyer has not finish the “title search” yet, even he has he ordered on December. If the “search” can not comlete before the closing date. Can I (sekker) not sell the house to the buyer without any fine because of buyer’s false? and can I recover my expense (ex. lawyer fee) from him? Thank You!

  29. Leon:

    You need to consult with an attorney in your area. I cannot and will not provide legal counsel via the web as I am not familiar with all of the facts relevant to your case, I am not licensed to practice law in NY, and I don’t get paid for free advice. Best of luck.

  30. Leon,

    Generally not in NYC…that’s GENERALLY, but ask the attorney. Time is of the essence clause there is usually invoked after the fact, and not at time of contract. Usually everyone is put on a ten day notice AFTER the problem to straighten up their act. Only place in the Country I know of that does it that way. Except North Jersey, which for all intents and purposes IS NYC as to real estate practices.

  31. Wow, a lot of individuals have taken this off to other specific cases and topics. I want to go back and address Ardell’s remark about the Form 34 for extensions. You don’t need to use the blank form for extensions. The NWMLS has forms for just this purpose. There is also a NWMLS form for escalation clauses now becauase of the proliferation of all the individually written forms that individual agents and broker’s offices were using. So, there is no need to go to a blank form in these cases. At times there are compelling reasons to use the Form 34 and much of the language we use in these cases are drafted by the attorney that we keep on retainer. I’ve recommended over and over to agents (and on many of my blogs) that ALL agents should have a relationship with a qualified attorney to help in these kinds of scenarios.

    In response to your question, Ardell, about “what do you do on a Sunday?” Well, the computation of time element of NWMLS contracts generally doesn’t require responses to be done on a weekend. Many agents have missed this piece and you should be able to contact your attorney on a Monday to help with your issue.

  32. Hi, I have a potental “situtation”. I live in Washington state and my wife and I have been looking for a house for some time and finnaly found “the one”. We made an offer and did an earnest money aggrement with a closing date “on or before Jan. 27″ which was accepted. We were preapproved and so the paperwork went pretty smooth. I performed the home inspection myself having worked in the trades for some time and noted a defective appliance and requested a home buyers warrenty with my inspection. The seller offered to provide $300 toward the appliance replacement and $300 toward the home buyers warrenty ($600 total) which we accepted. We just went in and signed our portion of the closing papers and paid closing costs at the title company. We were informed the seller’s lawer had advised him not to sign yet until he (the lawer) finished the probate of the property! I was shocked to hear this was the case and further that the seller’s intent was to provide us with a home depot gift card for $300 dollars! My wife paid for the closing costs by withdrawing from her retirement account at a substantial penelty and was informed the house will not close until “after January sometime” We have given notice at our appartment expecting the house to close on the 11th of January (the date on the papers we signed today (the 9th) and so will soon be without a place to put our household goods or live. In addition the inspection settlement that we aggreed on and signed specified $300 not 300 home depot dollars or 300 monolopy dollars. We really love and want the house but can a seller even market a house that has “probate issues” and would not the title search disclosed this? I realize I will need to speak to an attorney about this for specific action but do you think I have a case for damages as far as the seller defaulting on the closing date (assuming that happens) or trying to honor the inspection aggrement with home depot dollars? I suspect the seller may have “sour-grapes” syndrone over the aggreed purchase price but if that is the case does Washington state have Lis Pendens? The seller was not present at our signing and the officer at the title company who helped us did not talk to he seller until we were just finishing up. We did not hear the phone conversation but it was relayed to us by the title company officer. A lot of questions I know, but thank you for your considertion.
    Lee

  33. Lee,

    I’d say you moved from a “potential” situation to a “full-blown” situation a few days ago! :)

    I hope someone on RCG can help you but my guess is that, as you suggested, you will need to talk with a lawyer at some point soon.

  34. Sigh…yes..we are hoping it does not come to that and that the situtation can be resolved prior to the 27th (our drop-dead get moved and clean out the apartment date) As you may understand I am livid that this bomb was droped on us at the last second. Our loan broker and real estate agent are supposedly working on getting specific information for me today and I will know better what we need to do but I am thinking that if we cant resolve this successfuly in a very big hurry we wll incure some pretty heavy debt with finding a place to live and getting moved which I would hope to pass right along to the seller for breaching our closing date contract and not disclosing the “probate status” of this property until the last second. The tangled web some folks weave……
    Lee

  35. Lee:

    I would be happy to help, but I simply cannot give legal advice via comments on a blog post for several reasons. Call me today at your convenience to discuss (206-357-4222). In that conversation I can discuss general legal principles and whether you may benefit from legal representation. If you want specific legal counsel for your particular situation, we can discuss the terms of my fee agreement.

    Craig

  36. Reba,

    When you “go back” on a blog…try to put the number of the comment you are addressing. I glanced back to February of 2006…and can’t pull it out easily. You are addressing me specifically so put “in Ardell’s comment # X above from six months ago”…something like that, so we an try to remember what context we were using several months ago.

  37. Dustin,

    There really is no way anyone can help Lee on a blog…seller default or delay is not covered as well as buyer default or delay in contracts. It is one of the issues some are fighting for…an Earnest Money Deposit put up by the Seller, to go to the buyer, if the seller defaults or delays. A reverse scenario. I don’t see that concept gathering any steam though.

  38. If seller defaults, the buyer’s logical remedy is specific performance — a lawsuit seeking a court order requiring the seller to perform its obligations under the contract. Of note, an argument can be made that that specific performance is not available if the buyer has limited its exposure in the event of default to forfeiture of the earnest money. Thus, in those instances where a buyer is concerned that the seller may default, it may make sense for the buyer to NOT elect that limitation so as to clearly preserve the buyer’s ability to seek specific performance.

  39. Craig,
    Thank you so much for your insights and time during our phone conversation today. I am going to wait until the 27th as we discussed and see what happens. If we are not able to reslove this by then I will be contacting you with a retainer to persue the issue. If we are able to resolve this I will be breathing a sigh of relief and posting here eather way so folks know what is happening. I would like to thank everyone for their thoughts and time in responding to my problem and also to say what an awsome site this is, I feel very fortunate to have stumbled across it!
    Lee

  40. Mediaguy74 says:

    Hi there-

    Great post. I was wondering if my situation fell under this category, and if each state had different laws for handeling closings. I live in NYC and am in contract to buy a condo here. At the beginning of December is when the contract was signed and it included specific language that the closing was to be on or about 40 days from the time the seller signed the contract. That was to be next week. This pas Thursday, with our lawyers trying to settle on the date, the seller turned to her lawyer and said “im not ready. I am busy at work and dont have time for this now. Lets do it the 2nd or 3rd week in February.” From the get go my side has been up front and clear with the seller that time is of the essence and I need to vacate my apt by January 31st (for other legal reasons).

    My lawyer said she has the right to delay the closing 30 days (as I do), yet I cannot find any law that states that or what the process is for doing so.He said we could file a “time of the essence motion” but it would be denied more than likely. (Doesnt the “on or about 40 days” language constitute time of the essence? In addition to our brokers mutually agreeing to a expedited process?)

    My side is ready to go and can close any time. I want to see if she is in her legal right and if protocol was followed. She has been very difficult from the start and now this. So I want to know what my legal right is and how I can push this through. I am willing to delay it a week but not 4. Is there a formal way the sellers side needs to notify the buyer?

    She has had quite alot of time to prepare for the move. I am not sorry if she is unable to multi task and be organized. It should not come down on me.

    Thanks for your help in advance.

  41. I will never understand how NYC and vicinity gets away with that “on or about” closings, with no time is of the essence clause. It’s been that way for as long as I can remember. How do people give notice and hire movers? Honestly, while it does not help you any, we are just soooo glad that no one else does it that way.

    You already answered the legalities “My lawyer said she has the right to delay the closing 30 days (as I do),” No one’s going to second guess your attorney here.

  42. Mediaguy74 says:

    Thanks Ardell for your prompt answer. I guess my question/complaint is (and it may be hard for you to answer not being in NYC) is why isnt this clause talked about when all the papers are being signed. Its like having a get out of jail free card in the back pocket. I as the buyer then have no rights and its a lose lose situation. She wouldnt pay for my stuff to go into storage and I cant stay past the end of the month. I am just looking for some recourse or compromise to the situation.

  43. Medaguy,

    Nothing makes me angrier than the state of affairs regarding NYC and buyer’s rights…or more appropriately, lack thereof. I freak out about it from time to time when the NYC bloggers come over here :)

    I worked Bucks County in my early days in this business, and I am absolutely appalled at the lack of progress out there.

    Hate to say it here on Craigs post, but truth is….shoot the freakin attorneys out there! It’s because you have lawyer controlled escrows. Agents should make minimum wage out there! Don’t get me started.

    Sorry, for your situation…just how it is. In PA and South Jersey, it doesn’t work that way. So when I had a sale in PA where somewhere in the string of buyers and sellers, the first closing was in NY or North Jersey…it would hold up every transaction from NY to Newtown. An amazing mess all created because of the arrogance of the attorneys at your end, who can’t close two hours later if original time doesn’t work.

    Like I said…don’t get me started. As to your situation and the seller calling the shots…well, somebody oughta start screaming and that somebody should be the Realtor Community, IMNSHO

  44. Sorry, Mediaguy, I’ve got nothing to add to Ardell’s comments above (other than the shooting the lawyers bit). Your attorney should be able to explain the situation, and moreover I know nothing about NYC (other than that the Bronx is up, the Battery is down, and people ride around in a hole in the ground…)

  45. Craig,

    I think that’s a deletion, not an addition :)

    Seriously, though…I have first hand experience that when a lawyer is always used for all closings…the consumer is greatly disadvantaged. If a closing is delayed by two hours for some reason, the attorney schedule is not “open” and it can run out two weeks. Sellers and Buyers scrambling from here to kingdom come to reschedule movers…sometimes their belongings are already in a truck. Very unfair from the consumer perspective.

    Huge lawfirms may have paralegals to “move at the speed of the real estate transaction at hand”, but not often enough. Likely the reason there are not many that operate with attorney closings as the norm. But you would know that better than I.

  46. Hello again!
    Just wanted to post a quick update…
    Well seems that our realtor did not put the 27th as our closing date, as we requested but did it for the 31st….sigh. Soooo…The mortage broker and realtor (who work in the same office) have been trying to get information on what is going on have been stonewalled at every turn. The other realtor (for the seller) has refused to give the mortage broker the name of the attorney handling the probate and does not return their phone calls. In frustration I called the court house and got the name of the pobate attorney and called him myself. He said the exector for the estate put the house on the market not expecting it to close so quickly and that the property had just passed the dead line for creditors to file a claim, last week. He must now inform the court of the pending sale prior to closing and that it will not happen (in all likelyhood) prior to the 31st. He also told me the escrow company were idiots for not informing us prior to signing on the 11th that there was a hold on the property and they only informed us after the signing “because they just wanted their money”. I told him our situtation and asked him if he could possiably do anything to expidite it, it would be greatly appreciated and he said he would try but not to hold out much hope. Fortunatly the broker and realtor have said that if it does not close prior to the 31st they will foot the bill for getting an extension on our apartment and pay for movers (Because as they said “they screwed up” with the closing date). I am still very irrate that the sellers realtor did not inform us of the probate status of the property when the earnst money aggrement was signed and that the escrow company withheld this information from us until we signed and paid our closing costs(the court clerk informed me this information would have been made avaliable to them during the title search), expecting that the property was closing that day. Had we known at least we could have made arrangements for extending our appartment rental and at least saved a bit more money rather than pulling the entire amount for closing from the retirement account at a substantial penelty. And so it goes….I will let everyone know what happens next and thank you all for your consideration!
    Lee

  47. Probably should add a brief addendem. The realtor and broker have graciously said they would pay for the added costs because they had not set the closing to the 27th as we requested. But for any future readers please understand I recognize that the real screw up with that was my wife and I. I did something that I have advised many people countless times not to do. I signed a legal document without carefully proof reading it first. My bad. It is true that by the time we got back to the realtors office after viewing the house it was late in the evening and we had already done two other ernest money proposals (on other properties, which were rejected) earlier that week. The realtor had the form on his computer and just plugged the information for this property in and printed it out. We gave it a quick glance and signed. Something I would have chewed a friend out for doing in the same circumstance. Well live and (re-) learn! In the future I plan to stick to my own advise and read carefully and then make sure I understand and if I don’t, find someone I trust and is competent to explain it to me and then…sign or not if I don’t like what is in the document.

  48. I have a very general question. I have a closing date of Feb. 19 from the bank. I can close that day but the sellers attorney can’t do it because its a holiday (buying a VA foreclosure). What will the bank do if we don’t close on that specific day? Does this happen often and will be still be able to close?

  49. The bank is probably closed too. Look at your contract. It usually has a provision that if the closing date is a holiday, the next business day becomes the closing day. It won’t say it next to the closing date. It will say it someplace else in a calculation of dates and time clause.

  50. NY is real-estate idiocy.

    Lawyers hide behind the “on or about” clause so that they can close whenever it’s convenient for them, not what the signed contracts state. I’m supposed to close Friday, I can’t get anyone to firm up a date or time. Every time I ask, I am told “this is the way NY is…”. What, incompetent and inefficient with real estate transactions? Aren’t people sick and tired of this??? Every other state (save for NJ) can close in 30 days, can close without lawyers, and can get firm closing dates!!! It’s not hard to do! Buyers say they get shafted, but hey, sellers get shafted too! I have no idea when we are to close! It can be anytime in the next 30-60 days??! And, I have no grounds to do anything, or any recourse. I basically have to sit here and wait until I am graced with a closing date. And, let’s not forget. The market is terribly slow in NY. So the attorneys aren’t exactly swamped with closings, either. Maybe buyers and sellers need to unite and form a entity to advocate for our rights!!!!

  51. Claire,

    Only North Jersey and not South Jersey. North Jersey operates like NYC and South Jersey operates like Philly/Bucks County last I checked. I think the break is around Princeton. One of the reasons no one else copied the “attorney model”. The Title Company does the closing in South Jersey and most of the rest of the East coast (no escrow).

    Every seller can demand a “time is of the essence” clause from the getgo and refuse to sign a Purchase and Sale without one. But unfortunately they don’t realize the significance of the clause until after the contract is signed.

    I wouldn’t hold my breath on “the rights” of consumers there. It is absolutely unbelievable that there are still areas in this Country that do not practice Buyer Agency. Unfortunately I see it going from bad to worse, rather than improving generally. No one is “behind it” on a large enough scale. Unfortunately I see Redfin making the same mistakes as those who had the opportunity 15 years ago. It is disheartening.

    Good luck with your closing.

  52. I have a closing scheduled for a specific date in April for the house I am selling however, I have yet to find a new home. My agent seems hesitant to extend my closing. Any issues with asking to extend the closing date until I find a new home? My thoughts are if the buyer agrees to this we should be ok. Any thoughts?

  53. I sold my house in Big Bear, California. The buyers wanted a 30-day escrow which I agreed to. It was to close on April 16, 2007. It is now May 15th and escrow doesnt even have their loan docs yet. There had been two couples buying. One told the loan company not to send loan docs until they hear back from him. He pulled out a week ago, and the other couple are having the paperwork redone for them. I have incurred $2000 worth of house payments, insurance, and utilities because of all of this (its a vacation home and is empty). The financial situation is killing me. Do I have any recourse to get them to pay some of these extra costs? If you have no answer to my question, please let me know what to do. There is still no closing date at this time. I am in limbo.
    Thanks.
    Jerri

  54. I live in Hudson County, NJ. I have my house under contract since Feb. 2007. The closing date on the contract was April 20, 2007. Home inspection, appraisal, fire inspection and survey were done in time. The buyer was supposed to get the mortgage commitment by April 10, 2007. There was some delay in getting the mortgage and the closing date was moved to first week on May, 2007. Me and my tenants moved out of the house on May 1, 2007. The closing couldn’t be done in the first week of May and was again moved to May 15, 2007. I was given the reason that buyer was not having enough money to make a down-payment and hence he had applied for the home equity loan on his other home (his primary residence) which had already be approved and money was transferred to his account. The May 15 closing was also postponed and the reason this time was that the mortgage broker had gone on a vacation for 3-4 days. My lawyer send the “Time is of an Essence” letter on May 24, 2007 and had suggested to close the deal by June 5, 2007. My house is vacant right now and I have already lost more tahn 4000 dollars on mortgage, tax, insurance and rental payment. I have not heard anything about the closing yet and I don’t think it will be done on June 5, 2007. What are my options? If I break the contract after June 5, 2007, am I liable for any payments to anyone? Can I get back any money I have lost as my damages? Can I change my lawyer now? Any suggestions are appreciated. Thank you.

  55. I’m afraid I’m simply not comfortable giving you any advice at all as I have no idea about NY law. As a general matter, you can change lawyers whenever you want. They work for you, and if you want to fire one and hire another you have the right to do so, subject to the terms of your fee agreement and any outstanding amounts owed for services already provided.

  56. CYNDI - NEED HELP NOW! says:

    WHAT ABOUT IN FLORIDA? WE HAD A TIME IS OF THE ESSENCE CLAUSE IN THE SALES AGREEMENT. WE WERE SUPPOSED TO CLOSE ON JULY 30TH. WE HAD OUR FINANCING IN PLACE AND WERE READY TO CLOSE ON THAT DATE. THE SELLER DELAYED CLOSING BECAUSE THEY COULDN’T LOCATE THE DEED OR THE ATTY. HANDLING THE DEED. WE SIGNED THE SALES CONTRACT JUNE 15TH. IT WOULD SEEM TO ME THAT THEY SHOULD HAVE HAD PLENTY OF TIME IN WHICH TO GET THIS DONE. WE CONSULTED AN ATTORNEY BUT HE HASN’T GOTTEN BACK TO US. WE WERE INFORMED THAT THEY ARE NOW READY TO CLOSE AUGUST 8TH. WE ARE RENTING AND WERE SUPPOSED TO MOVE OUT PRIOR TO AUGUST 1ST THE LANDLORD IS NOW CHARGING US EXTRA RENT IN ADDITION TO VACATION TIME MY HUSBAND AND MYSELF USED UP IN ANTICIPATION OF A FIRM CLOSING DATE. NOT TO MENTION THE EXTRA UP FRONT INTEREST WE WILL HAVE TO PAY AT CLOSING. DO WE HAVE ANY RECOURSE OR ARE WE, “PARDON MY FRENCH” SCREWED. I MIGHT ALSO ADD THAT THE HOME IS A FORECLOSURE OWNED BY PREMIER ASSET MANAGEMENT INC. WOULD IT BE WRONG OF ME TO ASSUME WE WERE DEALING WITH PROFRESSIONALS HERE WHO CERTAINLY SHOULD HAVE HAD THEIR ACT TOGETHER. THE CLOSING WAS DELAYED A WEEK BECAUSE THEY COULD NOT PRODUCE THE DEED. THIS SEEMS QUITE NEGLIGENT TO ME AS IT WOULD SEEM THEY HAD MORE THAN ENOUGH TIME TO DO SO.

  57. Cyndi,

    I don’t deal with foreclosures much, but several types of purchases are expected to sell at less than fair market value, but have more than their fair share of hiccups along the way. Short Sales, Foreclosures, pre-foreclosures and vacant corporate relocation properties are usually in this group. No seller disclosure forms, no warranties, some potential legal issues on the seller side to get through to convey the property. Hopefully the price is lower than if the property were being sold by an owner occupant. That is the general tradeoff.

    “Finding” the Deed is not really the issue, as the Deed is produced and not “found”. Acquiring the legal authority to convey is more the issue.

    Your signature is needed to change the close date. Any negotiations due to the change are usually done at that time. The seller needs you to agree to the extention. Once you have agreed, you lose your leverage, so trading an extention for something else is often the remedy time.

    I’m sure Craig will jump in here when he gets a chance.

  58. Cyndi:

    I don’t give legal advice over the internet, particularly where the particular matter is outside the state of WA, the only state where I am licensed to practice law. I’m glad to hear you’re consulting an attorney locally — follow up with him and let him know you need some counsel immediately.

    All of that said, a couple of general observations: (1) I agree with Ardell, “losing” the deed makes no sense whatsoever; and (2) I suspect you will have a hard time recovering funds to compensate you for your loss incurred by the delay in closing. I’m not familiar with the laws of FL or the specific basis for any claim, but as a general matter there is always a risk that you will lose litigation, and win or lose you will end up paying your attorney a lot of money.

    Again, please discuss further with your atorney. This is not legal advice.

  59. I’m buying a home in WA which is scheduled to close on 8/24. The lender sent the loan papers to escrow on 8/17 with instructions that they needed 24 hours to review them after signing before funding would be complete and escrow could close. Unfortunately I’m in another state and didn’t find out until it was too late. There is not enough time for docs to be mailed to me/back to escrow/back to lender, and I can’t take time off work to fly there on a moments notice to sign. The closing date is now unofficially Monday 8/27, though no addendum has been created or signed as of yet.

    My question is this: I locked in an interest rate, and since then rates have gone down. The lock expires on 8/25. Since closing is now past the lock date, will the loan interest rate be re-calculated at the rate more favorable to me? At best it’s annoying that the closing is postponed – I may as well benefit from it!

  60. Scott — I never give legal advice via the internet. Regardless, I know very little about locked in interest rates and what happens in a situation such as yours. You should communicate with a knowledgable lender or mortgage broker — even your own — to learn more. Best of luck.

  61. I live in Virginia. A standard (form) purchase agreement contains the following language: “Settlement shall be at the office of ___ on or before _______ or as soon thereafter as title can be examined and necessary documents prepared, allowing a reasonable time for Seller to correct any defects reported by title examiner.”

    Any ideas as to what a “reasonable time” is? Is this not the same situation that the NYC/North New Jersey buyers face?

  62. PB — ah yes, what is “reasonable”… That question, by definition, has no ready answer. It depends on the circumstances of your particular case, of course, but also on the customs in your particular area (both geographic and subject) as well as how courts in your state have defined the term previously. If there are significant funds at issue, I strongly encourage you to consult a local attorney who will be able to shed light on these issues.

    Sorry I can’t be of more assistance.

  63. What happens if the buyer changes his mind on or a few days before the closing date for personal reasons and decides not to buy the house?

  64. Terry — this is not legal advice — if you want or need legal advice consult an attorney in your area. As a general matter, if the buyer does not buy, then the buyer is in breach of contract. Here in WA, the contract usually indicates that upon breach by buyer the seller can retain the earnest money as the exclusive remedy. If that is the case with the contract at issue, then if buyer decides to not buy without a legal basis for avoiding buyer’s contractual obligation to buy, then buyer forfeits earnest money.

    Some contracts, however, indicate that the seller can keep the earnest money OR seek damages for all costs incurred. If that is the case, then the seller could sue the buyer for all costs incurred. Such costs could include the difference in the sale price once seller finally sells to another buyer, the costs incurred by seller during the intervening period (mortgage, taxes, utilities, etc.), costs incurred to re-market the property, etc.

  65. I’m in the process of purchasing my first home. The house is a bank repo through Fanny Mae. We got to the point where we were unconditionally approved by Country wide and then we were suppose to set a date with escow to close. Escrow determined that Fanny Mae didn’t have the deed to the property. So they are working on getting the deed. Does anyone know how long the deed process takes?
    The last day to close according to the purchase and sell agreement is Nov 16th and the Fanny Mae put a clause in the contract that says if we don’t close by the 16th then they will charge the buyer (us) $100 a day untell the date of closing. Now if they defaulted on there end then we shouldn’t be charged right?
    Our realitor wants us to go ahead and sign the closing agreement before the 16th while escrow works on getting the deed and we wouldn’t get the keys to the house yet or have tittle. After thinking about it that doesn’t sound right?
    If this deal falls through we get our earnest money back right? But do we loose the appraisal money and I’m sure country wide still wants reimbursed for their work. What should I do?

  66. Mindy — I’m sorry but I can’t give legal advice via a blog. It may be worthwhile to hire an attorney in your area. He or she could answer these questions and give you guidance on how to proceed. Best of luck.

  67. What happens if the seller fails to put a closing date in the contract and then later tries to amend the contract in order to establish a closing date? What happens if the buyer does not agree to the amendment?

  68. BGC — as noted in the other posts, this is not legal advice. As a general rule, where the contract does not specify a closing date, closing would have to occur within a “reasonable” time, with “reasonable” being open to pretty broad interpretation. Moreover, a contract cannot be unilaterally amended by one party. The buyer would have no obligation to agree to specific closing date after the contract was created without one. That said, the buyer would need to perform — i.e. tender payment, sign closing docs, etc. — within a reasonable time, and failure to do so would be a breach.

  69. In our contract, we had a statement that said we should close on January 20th. THe seller is out of the country and requested to close on January 28th which conflicts with our current apartment lease. We prefer to close on Jan 25th, if we don’t we have to pay another month rent. The seller can’t do Jan 25th because they are out of the contry. We requested of them to close on February 22, then. What are our options and rights? Do they have to work with us? Or is it just their Jan28 or the highway. Are they going to say we are in breach of contract?

    Please help.

  70. Elvira — sorry, I don’t give legal advice via a blog, for several reasons. All I can tell you re some general legal principles. The contract as it exists defines the rights and obligations of the parties. You have no obligation to agree to any change in the contract terms, but on the other hand you need to abide by your obligations under the contract — as it exists — to hold the seller to their obligations. For specific advice it may be in your interest to hire an attorney.

    Best of luck.

  71. Connie hackenbruck says:

    What are some considerations involved in a delayed closing? I have sellers who would like to accept an offer in January or February and close in October.

  72. Connie — generally speaking, the primary consideration would be the risk of loss after contract is created but prior to closing. Also, the buyer’s financing could become a problem so the financing contingency is another consideration.

  73. Connie, I agree with Craig that those are 2 major issues of consideration. You don’t mention where you are located so it’s hard to say exactly but I can comment that in some markets where prices are declining you may have issues with the appraisal – which may impact financing and the actual price your clients get for the house.

    The other financing issue is if the buyer’s loan will allow for a loan rate lock for that period of time and/or the consideration of if the loan program they qualify for now is still available at the time of the closing in October. I’ve seen some serious situations arising for a lot of people that involve both of these scenarios both in and outside of WA.

    What’s causing the need for the long closing?

  74. I am selling my home myseld and everthing was ready to go for closing on monday Feb 4th. I got my hud1 from, inspection was done, appariasel was completed,etc. Today, I recieved a call from the title company saying that the buyer is switching his mortgage to another bank. I called the buyers realtor and he said they will need three more days to close and he has “no idea” why they are doing this 3 days before closing. I think they are going directly through a bank instead of through an broker to save closing costs. Should I be concerned?

  75. A few questions I would be asking my attorney representing me in my For Sale by Owner sale is:

    -did they borrower waive their financing contingency or was it deemed satisfied via the language in your contract?

    - is moving lenders unusual at the 11th hour?

    - how do I go about extending the contract to assist the sale in moving forward?

    - what do I do if the borrower changed lenders because they were rejected for financing at the last minute or could not satisfy any lender conditions?

    etc….

  76. Zach — I am sorry but I was out of the office for the last week and a half. It sounds like your issue is now moot. As a very general rule, yes, changing the lender or otherwise upsetting the funding apple cart just prior to closing can be a problem. You have no legal obligation to extend closing and instead could declare that the buyer is in default based on a failure to timely close (subject to the possible applicability of the financing contingency). However, that would only entitle you to the earnest money (assuming you’re contract fits the “standard” model). You would probably prefer to actually sell the house, in which case you need to cooperate with the buyer.

  77. I accidentally came to this website, because I have the same problem with the others: a closing date without a closing. I am selling my house. About 17 days ago, we received an offer (low offer, but quick closing-closing in 10 days). We accepted the offer partly based on the quick closing. We pre-signed all documents 1 day before the closing day, then was told they couldn’t close the next day because lender didn’t have enough time to prepare everything. The closing date was delayed by 1 week without addendum. Now 1 week past, we were told again the closing date need to be delayed for another week because some party was still waiting for some documents. I don’t know what’s the end of it. Is it normal? What can we do about it? Thank you in advance for any advice you can provide.

  78. This post just keeps trucking along…

    David — I have no idea in what state the property is located, and I am licensed to practice law only in WA. Plus, I do not render legal advice via a blog. That said, generally speaking, things can get a little complicated when the parties are “out of contract” i.e. the closing date has passed without a closing. If both parties are willing to continue with the transaction, then eventually it should close. If one party decides to avoid their contractual obligations at that point, then there are lots of legal issues to consider.

    I can tell you that closing are often delayed due to lender-caused delays, although typically only for a day or two. Your delay seems unusually long. If you are genuinely concerned and believe the buyer may attempt to get out of the contract entirely, you would benefit from retaining a lawyer in your area at this point to assist you. Best of luck.

  79. My “financial contingency” expires tomorrow. I can’t obtain financing and have a letter from a lender stating so (which I have forwarded to my agent and she forwarded on to the seller’s agent).

    I’m trying to cover all my bases and would like to know if there are any other documentation required to cancel the sales contract?

  80. Ken — this is not legal advice. For legal advice, consult an attorney in person or by telephone.

    The requirements of the financing contingency are specifically stated in the contract. I encourage you to closely review the contractual terms (NWMLS Form 22A Para 5) to determine whether or not you have provided the documentation necessary to invoke the protection of the financing contingency (and thus to get your earnest money back).

  81. Hello, I am happy to have found your site. I have been in contract in N.Y since July of 2007. I am in contract to purchase a home of a women with no heirs who is in a nursing home. The contract states ” to be subject to approval of a justice of the supreme court” and has a closing date of “on or about 10/5/07. My question is this, The sale has still not been approved by the court, and other contingencies like a fence being moved prior to closing have not been met. If I were to cancel the contract, would I recieve back my down payment that is being held in escrow?

  82. Dan — If you want to see this transaction through, or if you put down enough earnest money that it is worth doing so, you should hire an attorney in your area. I am not licensed to practice law in NY and your case has some wrinkles that require an attorney’s insight.

  83. MMy buyer won’t settle. We signed an agreement of sale a year ago, he wanted 1 year occupancy and then settle on the last month of occupancy june 1st. So he would finalize his divorce, now he’s telling me that his attorney told him not to settle because the divorce is not over. Then the new property would be fair game for his wife to go after. he wants to stay in the house as a renter, but I need the money to pay off my second mortgage on my second. he says he wants to settle in 90 days. I asked for an additional deposit which he refused. I think the guys is not being honest at this point. What would you do?

  84. Eric — if you’re concerned, the only way to get good advice is to consult an attorney in your area. Sorry I can’t be of more assistance. Best of luck.

  85. Hi , my buyer simply denied to buy the house on closing date , he already sent me fnancing confirmation inspection acceptance and everything was ready but at closing date he said he had some problem with his girlfriend so he can not buy our house, now i have already have leased another house for one year with 1500 $ monthly, already moved tho that place. house is vacant and is in no use , i paid fees for the lawyer for closing etc. what will be loses i can claim from buyer.also how about the deposit money of 5000$ do i have to pay it back or its mine as buyer simply refused to buy without legal reason.

  86. Saqib — I’m sorry, but you need to consult an attorney in your area. If there is $5000 at issue — at least, depending on the terms of the contract — then it is probably worth a few hundred bucks in legal fees to insure you are handling it correctly. Best of luck.

  87. Hi
    I am buying an REO property through a bank in MA
    The original closing date was delayed for 30 days (our P&S allows to extend it up to 30 days from the original date), because the seller does not have some foreclosure documents. On my end everything is ready.
    If the seller wants to extends the closing date furthermore, should I request an addendum where it specified, because currently he sends me an extension request every week ?
    Another question – my lock rate can expire if I extend the closing date and we also informed landlord we are going to live our current apartment on the closing date.
    Is it common to request from a seller to get compensated for this financial losses , do they usually compensate ?

  88. Rom — I apologize, but I have no idea about either the laws or customs in MA. If you’re concerned I suggest yopu contact an attorney in your area.

  89. Hi. The situation I have is that on the day of closing our buyer declared that they would not sign because their spouse who they were in the process of divorcing would not sign a quit claim on the house. All of the contingencies were met and the deadlines had passed. We extended the closing for a period to allow the buyer to attempt to have the quit claim signed, but this didn’t happen so the deal fell through. All of the financing was in place on the closing date. The buyer has now apparently engaged a real estate attorney on the subject of the earnest money deposit. We have another offer, but have lost a month, have had to pay another mortgage payment, and the new offer is for significantly less than the original contract. I was curious about what the Washington State law on the earnest money deposit says under these circumstances. Thanks.

  90. Rom,

    I can’t answer about the law, but in common practice an REO or Short Sale should be sold at discount to fair market value to compensate for their quirks. Yes, closings are extended and extended and weekly is good as it keeps everyone short term motivated as to close date. I believe you have the right to not extend, so if you want to ask for something in exchange for the extension at this point, no harm trying far as I can see.

  91. Jimmy,

    How much is the Earnest Money? The answer in WA sometimes depends on the amount as in small enough for Small Claims Court? A seller can immediately file in small claims court for the Earnest Money to be ordered to them by the Court if the amount is within the limit. Escrow will have instructions for you to follow.

    I did this once, but Craig can tell you if my way is illegal here. I was the seller. I released the first contract but NOT the Earnest Money. I accepted the 2nd contract and closed on the 2nd contract. I would not release the Earnest Money and claimed it against the shortfall between the two sale prices (my 2nd contract was also less than the first).

    Is the amount of Earnest Money higher than the difference between your two contracts? It doesn’t really matter. Just curious.

  92. Hi Ardell. Thanks for the speedy response. The Earnest Money is $5,000. The second offer is $5,000 less than the contract that fell through. We did submit a failure to close form on the original contract and have just put the house back on the market after giving them an extension on the closing date.

  93. Ardell; one more thing were you successful in your claim for the earnest money?

  94. They gave it to me before it got very far. They just changed their mind. I felt badly because it was really their agent’s fault. They told her they wanted new construction, but she didn’t want to wait for something to be built to get paid. She pushed them into buying mine that was only 1 year old, but they really wanted new. I was already in escrow on my new house, so I had to drop the price by the amount of the Earnest Money to get it back into escrow fast. I ended up closing on exactly the same day with the second buyer that the first one would have closed on.

    There is no “law” Jimmy that will make someone give you that Earnest Money. I’m 99% sure the best way is to go to small claims court and make your case for your loss and hardship. If you let it run its course an attorney will be assigned and all charges will come FROM the Earnest Money even if you win.

    Seems to me that there is a special provision regarding Earnest Monies and Small Claims Court. I think it doesn’t cost you anything, so check with Escrow for instructions rather than simply filing without those instructions.

    Let us know what happens.

    I’m sure Craig will chime in here as well.

  95. One more thing Jimmy. Often it is said that the seller can’t sell without releasing the money as the buyer can cause trouble in the second sale. I turned that around and threatened to get a quick judgment that would impact their being able to close on the new construction house. Lenders don’t like to fund if the buyer has a judgment in their name. I turned the tables on them.

    But yours could be as simple as small claims, though don’t expect it to be all about the contract as small claims people don’t do real estate much. From what I observed, the sad story won. So don’t get all black and white “it’s mine” about it. Show how you were damaged even though the contract says it’s not about the damages.

    This is just friendly advise, not “legal” advice :) Consult an attorney like Craig…outside of “a blog”.

  96. Jimmy — sorry for the delay! First, note that this is not legal advice. If you want legal advice, give me a call and we can discuss the terms of my retention (or contact another attorney).

    Based only on what you’ve told me, it sounds like you have a very good claim on the earnest money. Most contracts in the “default” paragraph of the first page have the “forfeiture of earnest money” checked. If that is the case, then your sole remedy against the buyer is to retain the earnest money. If that is NOT the case, then things get a little more interesting.

    Assuming that is the case though, you can certainly go the small claims route. Recovery is limited to $4k, though, so you will not get the entire sum. Plus, the contract includes and attorney’s fees clause. So, if you have to sue to enforce your rights under the contract (i.e. if you have to sue to get the earnest money upon buyer’s default) and you prevail, the buyer will also be liable for your attorney’s fees and costs incurred.

    Again, give a call if you would like to discuss further!

  97. Thanks for the input Craig; I very much appreciate it. Yes; we checked forfeiture on the first page and I also noted the attorney’s fees clause. I was curious whether we have to wait for 30 days (with the broker holding the money) before going to small claims; or is the event that happens after 30 days a different court? Also, is there an issue with us selling the house to another buyer whilst this issue is ongoing? I will discuss with my significant other to decide where to go from here. Thanks again!

  98. unhappy buyer says:

    my question is, does the mortgage 3 day right of rescission is applied after signing documents at closing?

  99. unhappy buyer, the 3 day right of rescission only applies to refinances, not mortgages used for purchasing a home. With a refinance, three “postal days” must pass after signing before the loan can fund. By your alias, I’m assuming you’re buying a home and not refinancing?

  100. Ricardo says:

    I am in NJ. I am selling my house and the closing date was last week. I didn’t show up because my attorney said all I had to do is sign the papers beforehand. My agent did not show up either. Then at the closing the buyer found the property tax is different from what I put in listing. There is an abatement situation that I was not very clear. It turned out after the abatement the tax is actually less than what I put in listing. Now the buyer wants to cancel the contract, saying that the tax situation is different so the contract is void. Also his attorney said because we didn’t show up at closing, they didn’t get needed explanation so they chose to cancel the contract. But in fact the tax is less and is to his advantage! Is the buyer in the breach of the contract in my case? I want to know if I can retain the deposit money because my mistake does not have any negative impact on the buyer, so I think I fulfilled my responsibility in the contract and the buyer should not cancel it. Thanks for your help.

  101. Ricardo: I am not licensed to practice law in NJ so I really cannot shed any light on your situation. Why not ask your attorney about this question? Sorry I cannot be of assistance.

  102. Heather says:

    My husband and I received an offer on our condo and we lowered the price, but asked the buyer to closer eariler then she originally wanted. We received the accepted offer back, but was not told that the date of closing was not changed back to the original (July 25th). We have already moved forward w/ the terms of the contract for it to close thinking that it was closing next week…but my agent called today and said the buyers lender will not allow them to close until July 25th. That is the date the buyer changed the contract to. We have already paid for several repairs that needed made to our home and sold all the furniture that was in the home. We also allowed the home inspection and appriasal to be completed….does this mean there is an applied accepted contract? or do we have to write the extension in a contract

  103. Heather — sorry, I don’t dispense legal advice via a blog, in part because I have no idea if you’re in WA (where I can practice law) or somewhere else. If you’re concerned about the existence or terms of the contract, I suggest you contact an attorney in your area.

  104. Craig,

    I we bought into a vacation development here in Washington State, almost 2 years ago, and the original closing date was January 3rd, 2008. We have since signed Addendum/Amendments to extend closing to April 25th, 2008, and July 30th, 2008. We now have received another Addendum/Amendment to close on August 8th to sign. Yesterday i received a vm from the developer that the home will not be completed until August 15th. Our situation at this time is that we cannot get financing for closing on this. I called our original sales rep 3 weeks to to verbally let them know this. I was told that the developer expects us to close on this deal (we did not sign a financing contingency). I was also verbally told that we could try to assign the p & s without advertising it specifically. I have tried to find someone to take over out p & s, and i do have someone interested in doing so. The p & s is not an MLS contract, but one prepared by an attorney firm here in Washington State. There is this clause for Closing. “This sale shall be closed on or before (January 3rd 2008), provided seller reserves the right to accelerate or extend closing for up to an additional 30 days without fee or penalty. “Closing” means the date on which all documents are recorded and the sale proceeds are available for disbursement to seller. Purchaser and seller shall deposit with closing agent all documents and monies required to complete this sale in accordance with this Agreement” Under the General Provisions paragraph it simply says “Time is of the essence”. We did provided $42,000 in Earnest Money at the time of contract (10%). All i care is that we get this $ back. The project has had it’s share of problems with getting things done on time. At the time in January, there were financing programs that would of allowed us to close at 90% financing if we need to at that time, not there are not for our situation. Do i have a good case to get back our Earnest $ if we do not sign an extension and the property is not finished and July 30th passes? due to the “time is of the esssence” clause? The part about the additional 30 days for the seller to accelerate or extend sounds a bit tricky though.

    Thanks

  105. Steve — I cannot give legal advice via a blog. This is not legal advice, and you are not my client.

    That said, based on what you have written, it sounds like you should be able to get the $42k back, but to have an informed opinion (and to counsel you as to how you should go doing so) I (or any other attorney) would need to review the contract. I encourage you to retain an attorney before you sign anything else. I would be happy to assist — link to my web page (by my picture to the right at the top of this page) and give a call if you would like to discuss further. If I don’t hear from you, best of luck.

  106. Steve Morberg says:

    Thanks Craig: for you and anyone else who will see this. Has anyone heard of a seller using a no solicitation clause in a purchase and sale like this one below? I know covenants can dictate certain actions and use with the property, but not allowing a buyer after closing to advertise and sell their property?

    “Without the express written consent of Seller (which consent will not be unreasonably withheld), Purchaser will not advertise or solicit offers from the public with respect to the resale of the property by the purchaser in any manner before the Closing Date, or within six months after Closing Date, including through use of any signage within a 1,000 foot radius of the Resort Development”

  107. I have a question

    My husband and I are buying a house in NY we agreed on a closing date of July 18th and the closing date is on the contract and we find out today 2 days before the closing date that the sellers of the house have left town and the closing date is delayed…can the seller leave town and make the closing date delayed with out telling the buyers? Just wondering about this

  108. Betty,

    NY is different than most of the Country. They usually do not have a “time is of the essence” clause. See if you can find that in your contract. Often the “time is of the essence” clause is invoked after the estimated closing date is past.

  109. Betty — this is not legal advice. For legal advice, consult an attorney licensed to practice in NY (I am not).

    If a client of mine asked this question, I would encourage her to make sure that she does whatever is necessary to close on the closing date (such as depositing all funds with escrow and/or signing all loan documents so that the loan can be funded on the closing date). By performing her obligations, she would clearly preserve the ability to sue the seller for failing to perform his.

    Again, if you have a question, its worth it for a quick legal consult in your area so you can get legal advice.

  110. John from NY says:

    Who is at fault? I have been led to believe that my house would close on 21 July. My Lawyer and real estate agent claim to have an approval letter from the buyers bank (received 2 July). On the date of closing we find out the buyers bank rescinded the loan due to contingencies.

    My original purchase agreement stated that an approval letter must be provided NLT 21 june.

    Do I have grounds to blame or sue my realtor my agent or the seller.

    I don’t want to do this but I would like to pin the rose one who is at fault.

  111. John from NY says:

    Correction for posting John from NY. I am the seller. ” Can I blame the buyer” not seller.

  112. NY John — Ardell may have some guidance as she worked in NY. As for me, I’m not licensed in NY, so I cannot give you any insight (besides, I have an iron-clad rule that I will not practice law via a blog). I suggest you discuss with your attorney. Sorry I can’t be of more assistance.

  113. Craig
    The original contract for the purchase of raw land stated that closing would occur 30 days following approvals of the project planned on said raw land, not to exceed eight months. Provision for an extension of close of escrow for one month was included in original contract. The developer ran into major dificulties with the city getting approvals so prior to the trigger of the one month extension an amendment was drafted so that the close of escrow was extended for six months No other terms of the original contract were altered. Two months into revised extension the approvals were obtained. Does the “30 days after approval” clause apply or can the developer wait until the last day of the extension to close? Contract has time is of the essence clause.
    Thanks

  114. Scott — I do not practice law via a blog for several reasons, so I am unable to answer your question. I suggest you contact an attorney in your area (i.e. in the state where the property is located) for legal advice. Best of luck.

  115. Anjum siddiqi says:

    I need help to write an addendum to extend the closing date from 22nd aug to 3rd sep ,,,because the utilities were not turned on until 21st aug ,,so the inspection and appraisal was performed …what language should I use…thanks

  116. Anjum — I do not practice law via a blog for several reasons, so I am unable to answer your question. I suggest you contact an attorney in your area (i.e. in the state where the property is located) for legal advice. Best of luck.

  117. Is anyone else surprised by the number of people from NY and NJ who are posting to this and for the length of time it has been going on? Especially due to the very specific type questions that they are and Craig’s continued (and appropriate) insistence that he cannot reply directly to their situation on a blog and since he doesn’t practice law in those states.

    Crazy.

  118. leanne finlay says:

    Maybe they are HUD law testers!

  119. My realtor picked a closing date that was way too early, and we weren’t able to get financing that quick. The closing was supposed to be tomorrow, and we need another 2 weeks. The financing is fully approved, we’re just waiting for the money. Can the buyer void the sale due to this? I live in Pennsylvania.

  120. Janet — I do not practice law via a blog for several reasons, so I am unable to answer your question. I suggest you contact an attorney in your area (i.e. in PA) for legal advice.

    That said, I can tell you that the answer to your question involves the terms of the financing contingency (if any), whether there is a “time is of the essence” clause, and state law regarding time for performance of contractual obligations. I’m not sure why you ask whether the “buyer” can “void” the sale, unless you are looking to get out of the deal on this basis. Finally, as a general matter and in this market, the seller may be willing to extend closing. You may want to see if this is an option. Best of luck.

  121. Hi Janet,

    Since I’m not an attorney and I am from Pennsylvania, I’ll answer that one for you.

    1) The Realtor may have picked it, but you agreed to it when you signed the contract. You can’t shuffle off the liability to the agent UNLESS it was faster than the norm in your area, shorter than that agent generally recommends, OR the agent should have known that your loan would take longer than most others.

    Some types of loans are expected to take no more than 30 days. A few are expected to take 45 to 60. If you had an FHA or a Nehemiah or VA or any type of loan that is known to possibly take longer than 30 days, and the closing date was set at 10 days, and you lose your Earnest Money as a result…then yes you could have an action AFTER you lose your Earnest Money. The agent being responsible does not matter to the seller or the contract. It is a suit after the fact, and separate from your real estate contract consequences.

    2) You are kidding yourself or someone is kidding you if “the financing is fully approved and we are just waiting for the money.” Waiting for the money doesn’t take two weeks. So go back to why you need two weeks.

    A seller will always give you two weeks (though you may have to pay his extra per diem carrying costs) IF the REASON makes sense. Yours does not at face value. Max it takes from fully approved to getting the money is the time it takes to prepare loan docs is about 72 hours.

    If I were the listing agent and you wanted 2 weeks to fund, I would recommend the seller say no. Needing two weeks usually means there is something wrong with the loan and it won’t EVER fund. Docs are IN and we are only waiting “for the money” is an overnight issue at best…not two weeks.

    Often when the buyer needs two weeks (and that is rare) it’s because the loan broker is switching lenders or the buyer didn’t get their paperwork to the lender on time or even yet.

    Most extensions the day before closing are 1-3 days.

    So…
    When was the contract signed?
    Was there at least 30 days from contract to close?
    Can the Agent for the Seller call your lender and find out the why of Two Weeks to see if that makes sense? Will you give approval for your lender to be transparent with the seller’s agent?

    Why would you want to “void the sale” if you need two weeks? You either need to weeks OR you need to void the sale. You would only need to “void the sale” if you cannot get the funding ever.

    V.I.P!!! If you ask for two weeks and you can’t get a loan at the end of two weeks…your Finance Contingency may be void by that time! You can only “void the sale” IF you are covered by the finance contingency for what is really happening, and it ain’t “waiting for money”.

    In PA “cash to close” is not a valid excuse. I add this in case you are “waiting for money” from someone other than the lender.

    Be willing to pay the extra costs the seller incurs for the two week extension. Be positive that you CAN in fact close in two weeks before you sign an extention. Usually that will negate the necessity for the contract being “voided”.

    Now go see an attorney within 24 hours and bring the whole contract, including the finance contingency, and give the attorney the written authority for the lender to speak freely with the attorney direct about the specifics of your loan in process.

    ALSO do the same with the Broker of the Real Estate Company who represents you. Not the agent…the Broker. The agent can be present, that’s the Broker’s call. In PA you are represented by the Broker…not the Agent. I am assuming and hoping that the Company who listed the house is not the same as the company your agent works for. In PA that would likely be Dual Agency. Here in WA it is not.

    Sorry this is so long. Just trying to get you thinking more on track before it is too late. We don’t have the specifics to really answer you, but maybe you will at least have the right questions after reading this.

  122. I’m wondering if Janet’s funds are coming from a 401k or something like that? Whenever I work w/a buyer who does not have quick access to their funds, I always recommend they get started on that sooner than later. I’m also wondering when Janet met w/her lender (for example, was it a 30 day closing and did Janet take 10 days to pick a LO)…more details would be interesting.

  123. Rhonda,

    Not having the cash needed to close is unfortunately not a covered provision under any Finance Contingency I have every seen. What’s your opinion of timeframe from approval to “getting the money” if that is what she means? Isn’t it usually 3-5 busienss days and not two weeks?

  124. Ardell, not having cash to close may mean someone is not really approved…especially if they’re having to scrape it together from various sources (thats why I’m interested in more details about this situation)…I’ve heard from some borrowers that it can take up to two weeks to get funds (maybe this is if they are borrowing against their 401k vs cashing out a portion of a 401k)… I think a lot depends on where it is and how the borrower is “getting the money”.

  125. Sorry for the confusion. We are actually taking out a home equity line of credit on our home to finance a mobile home for our son. The appraisal on our home took longer than anticipated, and the bank is now preparing the paperwork. When this is completed we will meet with a notary to sign the papers, then there is a 3 day wait. After that the money will be released.

    I was not looking to place blame or liability, I was just trying to get opinions. We put the offer in on August 19th, and the realtor was pushing for a quick closing. I knew we shouldn’t have made the closing so quick, but let myself be talked into it. So the person who said it is our fault is absolutely right. Anyway, I haven’t heard back from the realtor, but I am fairly the certain that it will work out in our favor. I just felt that the realtor over-reacted when we said we had to delay the closing. I’ll keep everyone posted.

  126. Thanks Janet! She was probably treating it like a cash sale since there was no mortgage processing of the purchase itself.

    It’s an unusual situation and there could have been another reason for the quick close date. Maybe it got you a better price. Maybe you beat out another buyer with the promise of quick closing.

    I just had the same thing happen BTW on a long close. The 3 day right to cancel period on pulling money out of another property does create some problems at times. Agents don’t see this very often as purchase loans don’t have a 3 day right to cancel period at the end, only refi’s.

    Best of luck to you. Sounds like it will all work out for you and your son in the end.

  127. It doesn’t sound like it was unfair for the agent to react to the closing date not being met – it’s a critically important part of the contract.

  128. Leanne,

    The criticism might be that the agent chose the date arbitrarily without helping her client determine what an appropriate timeframe would be. She seems to have set a timeframe not based on gathering the information needed to determine an appropriate date.

    It is always inappropriate for the agent to “react” and scare a client. The agent is supposed to be “the professional” in the room who keeps emotion in check during times like this. The agent provides present and future resolution. If the agent’s client is here…there is good reason. Something was lacking in the information and or the presentation of the information for the client to be here asking this question.

    Why do you always come from the agent being right side? You can see in the detail that a contract from the 19th had a closing date of the 4th or so with a long holiday weekend in between! How could you not see some agent fault in that? That’s a pressure cooker waiting to blow!

  129. Ardell, you are often very critical towards me, and I don’t understand it.

    What my point was, was that the agent had every right to expect the closing date would be adhered to. The fact that the agents reaction may have been ‘off the charts of professionalism’ wasn’t my point — my point was that buyers can hardly argue they didn’t know the closing date was looming.

    We don’t know all the details of that contract, so I wouldn’t presume to suggest to anyone that the agent pressured the buyer in the beginning. What I will say, is the closing date was right on the contract, and the contract isn’t something to be taken lightly by either seller or buyer.

  130. I’m sorry you two are having words over this. But when the agent insisted that the financing would come in time, we believed her. After all SHE is the professional who does this for a living. And yes, I didn’t appreciate her attitude at all. After all, she is supposed to be on our side. If she had said okay, let’s see if we can fix this, I would have felt much better. Anyway, like I said, I think it will all work out. But I will never use this agent again, or recommend her to anyone.

    I neglected to mention that she originally wanted the closing to be on August 29th, and we said no way.

    Leanne I have to agree that you seem to be making excuses for the agent. SHE was the one who insisted on the closing date, so how could she have every right to expect it to be adhered to.

  131. This is a nice illustration of one of the downsides of the agent’s business model. An agent gets paid only if and when the transaction closes. We’re all human and we’ve all got bills, so there is a powerful incentive to rush a transaction to closing. Perhaps that was the agent’s motivation in rushing the closing date to the buyer’s/Janet’s detriment.

  132. That’s as opposed to attorneys, which in large law firms try to increase collections prior to the end of the year because it affects their stats and/or draws. Just about everyone else in the world is trying to defer income to the next year (absent something unusual) to defer payment, but attorneys are trying to pay taxes earlier! :D

  133. Janet, your scenario makes total sense to me now–I’m glad you shared your situation with us. The agent may not be aware that home equity loans (especially if they’re new and not all ready establishted) take some time and are treated much like a refinance (hence your 3 day right of recsission).

    Thanks so much for shedding some light and helping future buyers/agents to keep this in mind when they use home equity loans for a down payment. :)

  134. BTW, Craig, I didn’t mean to disagree with you, just point out a rather bizarre behavior of attorneys.

    As to your point, the motivation of a professional representing you is always a concern. Doctor, lawyer, agent, whatever.

  135. Craig, your argument is pretty funny to me: “an agent only gets paid when a transaction closes…”

    To me, that would be an argument for a buyer to work w/an agent over an attorney: an attorney will be paid regardless if the transaction closes or not. (ya…I’m jealous! LOL).

  136. Craig,

    I had the same thought as the time seemed so awfully short around a holiday weekend. How many business days was that? Not enough under most any circumstances.

  137. Rhonda — Here is my point: If you only get paid when the deal closes, then you may rush the closing date to the client’s detriment (or otherwise encourage the client to close when it is not in their best interests to do so). Yes, an attorney will get paid regardless, but that means the attorney can keep closing in its proper perspective: culimnation of the desired transaction, NOT a personal payday.

    And, although not relevant, I feel compelled to add: yes, the attorney gets paid regardless, but the attorney is also making a lot less money in these types of transactions.

  138. “Ardell, you are often very critical towards me, and I don’t understand it.”

    Please don’t take it personal. Anyone who knows me knows that I am always pushing the envelope toward “consumer-centric” vs. “agent-centric”. It is what I do to be “of service” to the profession. To move agents closer to where the public needs the industry to go. It is why I blog in the first place.

    I used to go ballistic when agents called people “leads” and their important transactions “deals”. I still do, but most know not to do that in “my presence”. That is true both on and off blog.

    I want this 100 year old industry to advance in their technology AND in the way that they think.

    I want people who make MLS rules, to factor in how that NEW RULE affects the public, like 24 hours from listing contract to input. Makes NO sense from the standpoint of the seller at ALL! That is SO “agent-centric” as are many other common practices and agent behaviors.

    I’m a Norma Rae/Joan of Arcy type personality who tries to help the industry move in a way that is better for the public, both the buying and selling public. Just who I AM and why I blog.

    When you didn’t understand that forcing people to register to make a comment is “wrong”, when you don’t seem to understand that the buyer agent fee belongs on the buyer side of the table, when all of the consumer-centric advances that need to be made seem to fly over your head…it’s pits us against one another.

    Not because of you, as you are not different than 98% of agents in this Country. But blogging isn’t about digging in heals and staying the same. Blogging is about promoting change for the consumer. Blogging is not simply being same old same old in a new “place”. There’s a huge difference between blogging and being “a blogger”. A Blogger is embracing a mindset…and that mindset is not 100 years old. (not saying Leanne is 100 years old :) – the Realtor Organization just celebrated it’s 100 year anniversary.)

    How many comments here are from agents who don’t “get” that the listing agent should NOT drag the buyer agent fee into their pocket when they don’t represent the buyer? Many and most. That is why I celebrate Redfin and Craig’s methods. Not because of cost…who cares…not my business. Because these models recognize the buyer in the room.

  139. Craig,

    All professionals have their “pull”. I recently saw an attorney give bad advice or no advice on a short sale, because he felt there would be NO payday. So it does work in reverse. Someone you trust to do the right thing is always best, in either profession and any profession.

  140. Agreed — the best assurance of quality professional services, regardless of the fee arrangement, is to hire a quality professional.

  141. Craig, if RE Agents (and LO’s) were paid hourly for all the work they did (like an Attorney) then the cost per transaction (what is now the commission) would be lower and the professional’s income would be lower per transaction as well.

  142. Rhonda — SHUSH! What are you, crazy?! You’re going to let the cat out of the bag!! :)

    In all seriousness, I agree 100%. I have argued since I started this practice that agent fees are artificially high based on the commission system, which is supported (propped up, more accurately) by the MLS system. Hey, there’s a reason why agents are such avid bloggers — they spend most of their time working for their next client, and each client pays them handsomely for the work done on the client’s behalf. Agents — and particularly those good at getting the next client — benefit handsomely. At the expense of the consumer, of course…

    I’m sure we’ll get a rousing counterargument here. Agents are notorious for breaking down the many hours they invest in each and every transaction and the resulting “fair” fee that they routinely earn.

  143. Craig,

    Interesting link, but like some other companies, they do not appear to be open to having the best of people to give the best of advices. Everything is based on a newer or failed agent who is willing to get paid much less. So what good is paying for advices, when the source is not necessarily more knowledgeable than the consumer?

    My dream would be for every real estate company to offer a variety of options. Then the consumer can get the top agent’s opinion or the most knowledeable agent’s opinion, rather than “any old agent’s” opinion.

    How do fee for service companies get talented people to go there? It looks like anyone with a license will do as long as they are “willing to get a broker’s license” within a year. That’s likely going to become mandatory for all agents soon anyway, and will be a diluted version of the current broker’s license.

    The fee for service problems I have seen going back to the 90s is someone pays for “seeing a house” but then asks opinions of the door opener. The door opener is not qualified to give opinion, duh. Then the door opener feels put on the spot and the consumer thinks they are dumb. Even if they know the answer, the consumer didn’t buy the ability to ask the question. Lots of issues.

    Like are you paying an agent to sit in your house during an Open House, or to sell the house at the Open House. Is the fee the same whether the house sells that day or not?

  144. Janet, you actually inadvertently made a good discussion happen! :-) I don’t know your relationship with your buyers agent (or the sellers), or the particulars of your contract. My comment on the closing date wasn’t directed to you, but simply to point to the fact that buyers need to know what their dates and contract obligations are, whether there is an agent involved or not actually.

    # 138, ardell, we’re going to have to disagree. I don’t feel that blogging is ‘about promoting change for the consumer’, at least as you define change. I believe blogging is ‘about promoting real estate education for the consumer’. Especially education about agent and agency choices and models.

    You’re more about promoting change in commission structures than many of us, and I support your choice to have your point of view. That doesn’t mean that I agree. I support just about any real estate model out there – it simply means that I believe there is room in our market for consumers to choose whatever model they wish, and that learning the differences and nuiances of each agency model is critical to having the best transaction possible for the particular buyer or the particular seller.

    Real estate is a huge investment, and to choose the wrong property, or to pay too much are both things that we’d all like to see people avoid having happen to them. I’d say we all ought to be in pure agreement on that one.

    While Craig readily admits he blogs to gain business, I actually enjoy the educational side of the writing more than the expectation that “someone is going to hire me”. I suppose a lot of my assumption here is that many of the readers don’t even live in Washington State!

    And, just because we disagree on our own models, doesn’t mean I’m more right than you or vice versa.

    I could care less how you choose to get paid, how Craig chooses to get paid or anyone else out there. What I do care about is that buyers get to hear everyone’s point of view, from traditional to non-traditional. Education, and open discussion.

    The current fact is that the listing contract as you’d like it to be doesn’t exist. And, right now we have listing contracts that do not “give” a part of any commission to a buyer. Obviously, everything can be negotiated, but negotions are not “rights”.

    The buyers agent side of the commission does not “belong” to the buyer if there is no buyers agent. The listing contract says just the opposite. If you want that changed, then the listing contract itself must change. Certainly I don’t oppose anyone negotiating any point they wish — but to set expectations that are not legally grounded is misleading.

    You seem to like to jump to conclusions about what I am thinking when I write something. You just wrote this “When you didn’t understand that forcing people to register to make a comment is “wrong

  145. I think you need to compare agent fees to attorney contingent fees.

    I think at one time Redfin had what was basically an hourly fee for showing houses.

  146. # 142, Craig, I would be thrilled to be paid by the hour. THRILLED.

  147. Oh yeah, by the way, Craig – read Tim’s article from a few days ago where he tells of how so many agents commissions aren’t what they are supposed to be … :-)

  148. I have a question please. If a buyer wants to postpone a closing date and the seller agrees as a favor to the buyer, who is responsible for any costs or fees that accrue after the original closing date? Shouldn’t the buyer be responsible since he wanted the postponement?

  149. Alice — the parties should discuss and reach agreement as towho will be liable for these increased costs. It is up to the parties. I have no opinion as to who “should” pay these costs — or, more accurately, my opinion is not relevant. Again, the parties must figure this out.

  150. Hi everyone, I wanted to update you on my predicament. We FINALLY closed on Friday, October 3rd, and my son will be moving in (and out of my house) soon.

    When the realtor continued to give us a hard time, my husband told her to give us our money back and we’ll look elsewhere. That changed her attitude. After that she was very co-operative and helpful.

    We found out after the closing from the buyers that they really weren’t in a hurry. So it was all about the realtors! I guess I can’t blame them in this slow market.

    Needless to say, I am very happy that it all turned out good, and that it is over. Thanks to everyone for their input.

  151. I disagree entirely — you absolutely can blame the agents, regardless of whether it is a slow market or not. The status of the market does not determine the quality of the service to be provided. Just because these agents were apparently hungry for a payday does not entitle them to rush the transaction the possible detriment of the parties. It puts their conduct into context, but it does not excuse it. As noted above, this is a drawback of the “commission at closing” model (recognizing there are advantages to, and other models have their own drawbacks).

    Glad it all worked out. Now quick — change the locks!

  152. Craig et al-

    As a seller, how much can one negotiate the fee down to on a percentage basis? What’s the lowest you’ve experienced?

  153. Q — I don’t have much experience with negotiating the fee between seller and listing agent. Typically there is no listing agent involved when we represent the seller (seller is FSBO and protecting self by hiring attorney), and when there is we review the listing agreement but generally do not get involved in commission negotiation (beyond scope of our very low flat fee).

  154. Q-Diddy,

    The deepest “discount” on a full service listing fee is usually when it is coupled with a purchase agreement. When you buy and sell with the same agent there are built in efficiencies for both you and the agent that often warrant the best return for your overall dollar.

    It is often easier to get someone “from here to there” than it is to handle one side or the other separately. Most agents offer a different arrangement for multiple transactions.

    I’ve often wondered why some large companies don’t arrange for groups of employees who are selling to use this tool. If 4 people in the same office are selling with the same agent, and approach that same agent all at once as a group, they can negotiate a multiple transaction discount that would be less than any one of them individually could negotiate.

    Think out of the box ;)

  155. Q-
    I’m trying to purchase a house in Jacksonville,Fl. One day before closing,the selling agent informed my agent that another lien was found on the house.The selling agent has reguested a contract extension every month for the past four months.What could be taking so long and should there be any compensation to me for the 5 month delay?

    Thank you,Kevin

  156. I am buying a house in Allentown, PA. I had already signed all closing papers and got the key to the house on 9/26/08, however, the next monday my realtor tells me that the seller had not signed their side due to I was getting $1000 back and they did not agreed with that. I am getting an FHA loan and 5% seller assistance and $2000 lien(2nd loan) with a 0 interest rate. Due to they felt I got too much they then agreed to cut the 2nd loan to $1000 so that I would not get any money back. I have not signed any paper work after this though. Now, It has been 2 weeks after 9/26/08 and they do not get their papers to us signed on time. I have not closed yet. My realtor keeps calling their representative and they are not helping either. What can I do?

  157. Sandra — you should consult an attorney in Allentown, PA. Best of luck.

  158. Sandra,

    That doesn’t make a whole lof of sense on many levels. There are many programs in your area to assist you in understanding all this. See if you can find “Genesis” in your area. I know it exists in Norristown so maybe it is also in Allentown. They have counselors who might be able to help sort this out, but it doesn’t many any sense that you should have the keys to a house before closing and before the seller has signed off on the transaction. Sounds more like a funding problem.

  159. My loan has already been approved and I understand that our side has everything, however, we are waiting on the seller (a bank in CA) to sing the papers so that I can sign them again but they are not getting them signed on time and my bank and the realtor had to cancel closing last friday and it looks like this friday we are going on the same path. I will do some research and see if I could get some counseling. I think they are just being irresponsible or something is not being told to myself. This is frustrating since I have already paid for inspections, deposit, homeowner’s insurance, etc. Plus I have already spent too much time on this. This is the major reason I do not want to start all over again

  160. We are selling our home and purchasing a home. All our inspections on our home went great, but the septic failed on the buying side. This caused some delays along with the fact that our fha approved down payment loan was taken away from us on October 1st. We had a closing date of October 15th. We thought our attorney was informing the buyers of our issues and that we need a little more time to close. Well apparently the buyers showed up at closing, and that day we received a time is of the essence letter stating they want to close in six days or they are sueing us. We told them that six days was insufficient amount of time, but we could close on the 30th which would only be 8 days later. We have not heard anything from our buyers, and it has been 3 days. Meanwhile our sellers on the purchase are putting pressure on us. We had to have a 2nd septic inspection done (hydraulic load test). They insisted on using an inspector of their choice and wouldn’t hear of our having our original guy come back to do the test. We agreed along with agreeing to pay for 1/2 at closing. The report came in this past Monday (today is Friday). I have yet to have seen a copy of it. But the buyers are putting the pressure on to close etc.
    At this point, we don’t know what our rights are, what to do if the buyers show up to close on the 22nd. We feel we have given them a reasonable closing date, especially since we lost our downpayment and it takes time to liquidate assets and reach out for help.
    Any advice would be appreciated. We don’t want to lose our buyers, nor do we want to be sued!

  161. Sorry, Cheryl — I don’t practice law via a blog. It sounds like you have an attorney — you need to ask these questions of him/her. Schedule some time with the attorney where you can have all of your questions answered to your satisfaction. Best of luck.

  162. Hi,

    I am a first time home buyer in New Jersey. My closing is scheduled for October 31st. I heard from my attorney that the seller want to stay at the house beyond the closing date. My attorney has informed me that as per the law I have to give the seller a time of essence for 10 days. Also, my mortgage rate lock is only until 31st October. The mortgage company requires $800 to extend the rate lock by 2 weeks. The seller is not ready tp pay the rate lock extension fee.
    Also, the attorney suggested for closing to happen on 31st October and give the seller use & occupancy. I do not wat to give “use & occupancy” as I have heard of lots of other risks associated with it.

    Please advise me how to proceed without doing an use & occupancy and having the seller pay for the rate lock extension for the time of essence period. Is that legally correct.

  163. Raj,

    Sounds like you are in North Jersey vs. South Jersey. You already have an attorney, as does the seller. No attorney in Seattle can override your immediate on the ground legal advices. In North Jersey and NYC you don’t have a time is of the essence clause, which is the norm in your area but not in most places. The sellers are not responsible for your rate lock and until they insert the time is of the essence clause, the seller is not in breach.

    Your attorney already gave you your options. You can’t force the seller to pay for your rate lock extension. This scenario is not unusual where you are. It is most anywhere else, but not where you are.

  164. I have an open escrow with the loan contingency shall remain in effect until the designated loans are funded, we have asked for extensions the seller has not responded, and know he has relisted the property and has another excepted offer with another client. the seller never cancelled my offer, . And know he does not want to return my escrow deposit. My question is what can over ride the loan contingency if any.

  165. To exercise your rights under the Finance Contingency, you likely had to submit a letter of denial from your lender before the close date when you did not perform by the required time. Read your Finance Contingency…every word of it. Also you usually have to prove that if the problem was time and not that you couldn’t get a mortgage, that you are not the person responsible. Did you apply for your loan in the timeframe required in the Finance Contingency. When the lender asked you for documents, was your response unreasonably delayed?

    It’s not automatic…you have to perform your duties and obligations outlined in the Finance Contingecny, and you have to continue to perform your duties to the lender in a VERY timely manner. AND if you want to say you couldn’t get a loan by the close date, you need a letter of denial from the lender before the close date.

    Check all of that. Document the facts and take it to an attorney.

  166. Ardell’s advice is right on. Good luck.

  167. HI. I’m just wondering if someone might have some general guidance on this issue.
    I signed a purchase contract for an owner-financed property in Florida and was to close on July 25th, with a clause that seller may extend it for additional 60 days. Unfortunately, since i didn’t have a place to move to, i moved into the unit and I have been sending payments as a renter but closing is just now about to happen in december! The purchase agreement which was signed July 1st clearly states “buyer is responsible for taxes” for the year 2008. My dilemma now is that I will be responsible for back taxes for a property that i would legally assume ownership of for one month in the year 2008 if we close this december. I know the law doesn’t care about “fair” but are there grounds on which i can dispute having to be responsible for all of 2008 taxes ESPECIALLY since seller failed to close on July 25th or even 60days afterwards which makes that contract expired? The seller is being a jerk as right and maintains i have to pay ALL of 2008 taxes regardless. As it stands, closing hasn’t happened to date but set for first week in december. Am i still bound by the terms of the contract which i am guessing by virtue of us not closing within the time frame stated on it has expired? Shouldn’t the responsibility for the taxes be prorated? Any input anyone?
    I know this is not a forum for substitutes for legal counsel but general comments or guidance is appreciated
    By the way, delay in closing was not my fault. I have tried to talk to the seller almost to the point of stalking him several times over these months to voice my concern about why we aren’t closing in the time stipulated in the contract and he just says don’t worry, we’ll close soon.

  168. Why were you willing to pay the taxes from January through July or September in the first place? Very unusual. Is the property owned free and clear? Does the seller have any liens on it? Don’t close without having someone review this situation, preferably an attorney. At the very least, make an appointment with the Title Company (most closings are done by the Title Company in Florida) and have them go over all liens with you well in advance of their expecting you to sign. Take all of those documents to an attorney. Something doesn’t seem right. If the owner has enough money to finance, why wouldn’t he have enough money to pay his own taxes?

  169. Ardell, thanks for your input.
    I signed that contract on July 1st and thus agreed to pay those taxes because I was hoping closing would happen by July 25th as stated on the contract. Although that is responsibility for half the year which I wouldn’t have been the owner, i was willing to live with that.
    Is it a fair assumption though that the contract has expired because closing didn’t happen when it was supposed to? Just to mention, the “time is of the essence” clause is also on this contract

    From public records, there’s no lien on it and 2007 taxes were just recently paid. You brought up an interesting point – if he could finance it 100%, why doesn’t he have the money to pay taxes and so bent on extorting me? Perhaps this is just a a case of a scrooge that will milk “poor little guys” like me of their every penny. In any case, it appears he owns this property (and possibly several others around the block) free and clear though.

    I posted to the forum though with the hope that “experts” like yourself might see something that I as a “lay man” doesn’t know from the very broad description of my case. I will get to an attorney shortly. In the mean time, let me know if you think of something else especially regarding my question about whether this contract has expired and thus makes the terms not enforceable

  170. “Although that is responsibility for half the year which I wouldn’t have been the owner, i was willing to live with that.”

    There’s more than meets the eye here, Jay. In 20 years I have not seen a seller with that need. The only way this would make any sense is if it is someone who owns the property free and clear (thus able to hold the paper on it for you) who does not have the income to pay the taxes. At minimum those taxes should have been paid from the rental payments you have made and not in addition to the rental payments you have made.

    No one can give you an opinion as to your contract as you are taking sentences out of context. Just because four words point to x answer does not mean x answer is correct.

    I am what I call “a 4 corners of the will” thinker as to legal issues. If everyone is proceeding in good faith, a legal out can’t be found in a few words. If a seller can perform the day after closing date, it is not reasonable for a buyer to say “tough cookies”…yesterday’s gone, nor would a Court likely hold that the buyer did not have to buy if closing was delayed 24 hours.

    You lost leverage when you moved in. The owner had something to gain by not closing.

  171. “Is it a fair assumption though that the contract has expired because closing didn’t happen when it was supposed to? Just to mention, the “time is of the essence

  172. Ms. D. Hampton says:

    Craig:
    Your post was so HELPFUL! I am in North Carolina, and have signed a contract to purchase a home. I feel at this point, I have been given the run around. I was given a verbal proximation of a closing date. I packed, faxed all dox’s that were needed, and have all of my money. That closing date was moved, and my agent and lender noted, it was unofficial. Now, I finally was mailed a closing package with a congrat’s letter, utilties connection sheet, and items I needed to present to the attorney at closing with a definite date. Today, I found out that the lender may have to change the date again. I was told it was because their office was understaffed and that a lot of homeowners had applied for refi’s so my package was kind of pushed to the side. Is there any way that if I do not close on time on this Friday, I can file for a breach of contract, go to another lender, and dissolve my relationship with my agent? He has tried to work hard, but this is stressing me out! I have given my notice at my current resident and am spending more and more money to maintain this household, save to move and reconnect utilities and down payment on the home. How can I get out of this if I don’t close on time, and what are the consequences of doing so?

  173. Sorry, D. — I don’t practice law via a blog. You need to consult with an attorney in your area (i.e. one licensed to practice law in NC). Best of luck.

  174. Frustrated says:

    Craig:

    We are currently in contract to purchase a house. Per the contract, we are scheduled to close on or before June 30th. We just got an addendum to the contract by the seller requesting an extension of the date to July 31st. The only problem we have with this is that mortgage rates might shoot up in that time frame. We haven’t locked into a loan yet as we are waiting to get closer to the 30 day lock period. If we do not sign the addendum, can the seller legally postpone the closing date to end of July? We live in CT so I need to know how binding the contract is on closing dates. We don’t have a Time of Essence clause in the contract.

    Thanks!

  175. Frustrated — see my comments 173, 161, 157, etc. If you want legal counsel about a contract in CT, you need to speak with an attorney in CT. Sorry I can’t be of greater assistance.

  176. Frustrated,

    The seller likely can’t, unless you agree…but you can’t make him move out either. Try proposing “yes, if you pay for the rate difference for the delay”. Sounds like you are in a place with attorneys in play…ask your attorney about the seller paying for a rate difference, and how to lock that in fairly, if you agree to the extension.

    The only places with no time is of the essence clause is usually where each party has an attorney who handles the closing. Sounds like you are playing by “New York Rules”.

  177. Maybe this has been covered earlier, but I didn’t see it. I’m the seller. Escrow was to close 7/30. Problem with buyer obtaining financing, so contract extended to 8/15. Unfortunately the bank that was funding his loan closed its doors a couple of days before 8/15, so it was extended to 9/7. On 9/2, buyer signed a “Rescission of Purchase & Sale Agreement” which we first heard about and received a copy of, today, 9/3. Unfortunately we put money down on a new apartment on 9/2, and are now out over 1800.00 in costs (non-refundable rent, storage unit rent, gas, septic pump/testing) Buyer is asking for his $1,000 earnest money back. We believe the earnest money should go to us because he kept the sale of our home tied up all Summer and we’re out $1800.00 and still have no sale. Any words of advice would be appreciated. Do we fight for the $1,000 or let it go and start all over? Thanks-

  178. lawatha,

    Usually if you don’t release the $1,000, you don’t get it either. In most cases it takes both signatures to release it. I don’t know if the buyer’s Finance Contingency continued to cover them through the extension.

    I have seen sellers grant the extension with the added proviso that the Earnest Money become non-refundable in exchange for the extension.

    I’m not sure why the buyer went to “rescission” vs proceeding. Your comment doesn’t say. Is it because they can’t get a mortgage, or because they are giving up?

  179. Thank you for bringing up the bit about granting an extension with the added proviso that the Earnest Money becomes non-refundable in exchange for the extension. We’ll definitely put that in if the situation ever comes up again.

    Our buyer is backing out because he’s fed up- is what we’ve heard through our realtor. His bank had not denied him, it was just taking longer than he wanted to wait. (The paperwork doesn’t specify a reason) We have been more than patient and were moving out the day he backed out of the deal.

    Thank you,

    • Hi,

      Thank you so much for this posting, it has been very helpful.

      I just had a question about the deposit in this situation. If the buyer attempted to get the financing, but it didn’t go through in time to close on the contract defined date, and there was no further extension signed by both parties, can the buyer than walk away and make a claim for the full deposit amount?

      Or is simply failing to get financing by the said date not sufficient grounds to cancel the purchase altogether and request a full refund?

      • Sharma — if you’ve got a real, legal issue, then you need to consult a real live attorney. This is not legal advice — this is simply a comment on a blog.

        That said, as a general matter whether a buyer will be entitled to a return of the earnest money based on a failure of financing is determined by the terms of the contract and in particular the financing contingency. I don’t know what your contract says so I will not even hazard a guess as to whether or not the buyer in your hypothetical should get the earnest money back. Indeed, its not even clear to me whether this buyer HAS a financing contingency. Certainly absent such a contingency, it is likely taht the buyer will not get the earnest money back under these circumstances.

        • Thanks so much for the response!

          The contract did have a finance contingency, however the buyer ulitmately did recieve financing, 31 days after the orignal close by date. They still want to cancel and claim the full deposit.

          The contract wasn’t extended, and they’re claiming thecontract expired and is now no longer binding. I understand that they no longer have to purchase the property, but are they entitled to reciept of the deposit?

          • Sharma — whether they are entitled to the deposit, again, is determined by the terms of the contract and specifically by the financing contingency. Again, I have no idea what those terms are. If you are unable to decipher the legalese and make your own determination, then you need to consult a lawyer in your area. Depending on the amount of money at issue, it very well may be worth a several hundred dollars in legal fees (lawyers are expensive) to determine whether or not you have a good claim to the earnest money.

            Best of luck!

          • Thank you so much, I will now contact a local attorney!

  180. Here is my Nightmare. We relocated to TX and found a house we liked and put a contract on it. It does have a 15 day time is of the essence financing contingency, so here is what happened. We attempted to get financing and it was taking to long and had to fill out several extensions (throughout this process we gave the mortgage people all documentation they required even blood samples. Just kidding). Anyway it had been a week and we hadn’t heard from the mortgage broker so we went straight to the bank to get it and we were in the process of that loan. In the meantime we asked the sellers to get repairs and provide receipts and they chose to do the work themselves. Which I was ok with but I still wanted a receipt or a professional to make sure it was done correctly. They refused and my realtor paid for it. At this point I thought the sellers were a little shady but my husband and I were living out of boxes with family and desperately wanted to get into a home. So on a Friday the extension was up and we were going to sign another extension as well as contact the sellers mortgage person just so they could have peace of mind. I didn’t get the paperwork until after I left work and was
    so busy I wasn’t able to. Well on Saturday the sellers put there house back on the market and were talking to an attorney. Monday was a holiday and Tuesday we were given the clear to close. However right after that we were sent a release of the earnest money from the sellers. They believe theyshould get it and we disagree. They are upset because they it’s were in storage which I feel bad for however I don’t think they should have put anything in storage until we had the ctc especially all the ext. Also our items were in storage we lost $300 for inspection,$400 for appraisal, $100 for option fee and $50 we paid back to the realtor for the receipt. Plus the $1,000 that is just sitting at the title company. My quation is do I have recourse? I was thinking of taking them to all claims court. What do you think?

  181. Usually in a scenario like that everyone would take a step back, take a big long breath and put the pieces back together and close escrow. Did they have a new buyer? Why wouldn’t you close once you were able?

    Not sure if the extensions were close date extensions or extensions of the 15 day Finance Contingency. When did you make the offer and when was it supposed to close originally? Was it a short sale?

    If you originally proposed a 30 day close and it took 45 days, that’s fairly reasonable. If you originally proposed 45 days and it took 6 months…not so reasonable. One would think that your agent and the agent for the seller would be able to work this to a closing once your financing was approved, unless they had a new buyer.

    Another possibility is the seller lost the house that they were going to buy while waiting for you, and now have no reason to sell and no where to go.

    It sounds like from what you are saying that the house is now “for sale” and you were ready to close but they no longer wanted you to buy it. Something doesn’t sound right there… What is your agent saying?

  182. It took us about 60 days to get financing. The extension was just a close extension. We were out of contract on Friday. They put the house back on th market on Saturday and in between Saturday and tuesday when we were approved they already had a new buyer. Honestly don’t care we found a better house however we did lose a lot of money for this deal and they won’t release the earnest money.

  183. Nightmare — if you had a financing contingency then you may be entitled to a return of your earnest money. If its over a few thousand dollars, its probably worth at least consulting an attorney to find out. Best of luck.

  184. Craig,

    I once had a scenario many years ago where a lender denied the loan the day of closing for something they had in their possession five weeks prior. We threatened to sue the lender and things turned around pretty quickly and it closed. Plus the lender paid the buyer’s damages without a lawsuit. Of course the story is much longer than that, but I’m wondering at what point the lender becomes responsible for causing the loss of Earnest Money and other costs?

  185. Ardell — there is certainly no bright line that defines when a lender has acted negligently and caused a loss as a result. Rather, its a spectrum and the closer the lender’s conduct gets to the “clearly gross negligence” the more likely the lender will be liable. Of course, loss of the earnest money in some circumstances may be the buyer’s fault too (e.g. failure to apply on time) so it could be pretty complicated to figure out who is liable.

  186. I’m curious how Nightmare selected their lender and what the issue was that took so long for the lender to underwrite. Some loans are taking longer to close–however a “mortgage professional” should be communicating this to the borrower–even when it’s bad news…it shouldn’t be a surprise.

  187. I will try to respond to everyone’s e-mail.

    I did have a finanace contingency but it was only for 15 days. (I think my realtor messed up there). Don’t know when lender is responsible but they seem to never take accountability for their actions. Honestly it wasn’t our fault that it took so long. We applied and provided all information in a timely manner and the lender could attest to that. However I do believe we did have several issues that seemed to take them longer to review and OK. Funny thing is the lender was suggested to us by a friend. We had a relocation and I guess the information was hard to follow. Also my husband and I have seperate bank accounts and they wanted all the money in one account but then they didn’t want it in his it was just a mess. We finally got it straightened but it did take a while. The mortgage professional was keeping both realtors aware however the dates they were giving the realtors were not accurate and always had to be pushed back.

    • Yikes…it does sound like a nightmare… Ardell–I’m not sure if you’ve written about how long a financing contingency should be–it not, could be a great topic.

      Nightmare, it doesn’t make any sense to me that they would have you move your funds around–especially since any large deposits would have to be sourced (documented where they came from) anyhow.

  188. Exactly. It was a mess and a headche.

  189. Nightmare,

    My best guess on this is it was not the lender’s fault, and they were shifting monies thinking that only one of you vs. both could be on the loan. Does that sound familiar? Was the approval granted in both names vs. one name? Were there indications that they might need to change to one vs. both along the way? Very common in relocation scenarios where “trailing spouse” income is not qualified income.

    As to your and Rhonda’s “question” about contingency time frame, that’s a HUGE can of worms as agents are not very well versed on how to dance around that issue. I am, because I was a banker for 20 years, not because I’ve been an agent for 20 years after that.

    Broker’s like to teach all agents one way, and often (unfortunately) that one way is from the seller side of things. I don’t know the agency laws where Nightmare is and I don’t know if she had a “Buyer’s Agent” or a “sub-agent” for the seller. Some areas like NYC still have that, in which case it is totally appropriate to word things in favor of the seller. Also the date could have been shortened by the seller via counter offer vs. offered by the agent for the buyer.

    Rhonda – For a client with an 800 credit score, 50% down and twice the income needed to qualify, I might shorten that time frame IF there are multiple offers OR even pull the Finance Contingency altogether. Vastly different if the buyer has “issues” 620 credit score and FHA. But I can say I have never put 15 days. The “CA method” is often 21 days, and that’s the shortest I’ve seen in 20 years.

    Also the contingency date is not usually for a full approval…it is a commitment letter with the list of outstanding conditions.

    Many people do not realize that keeping the agent OUT of their financing details is a huge mistake, as the contract is worded to incorporate time frames needed, which are different from one borrower to the next. If a buyer doesn’t fully clue the agent in on the finances thinking it is “none of their business”, that usually comes back to bite them unless the borrower is over-qualified.

    • What would you recommend for a client with lower credit scores or less money down when your client has selected a mortgage originator you’ve never worked with?

      • Rhonda,

        I would use the same basis as if they had used an originator I have worked with. I would hold their lender to the same standard. I had two of those this year. They both closed on time, but it took 10X the work on my part for that to happen.

  190. No we were both going to be on the loan. My husbands score is lower however he makes more money. My agent as well as there agent were in contact with my lender. I guess I just lost about $2,000.

  191. This sounds very familiar. The 60 days, things in storage, the repairs, the house goes back up for sale, another buyer, then the loan gets approved.

    Oh, and the caveat is that a friend recommended the lender.

    You are for sure out the money unless some one else steps up to the plate. The seller waited and kept the property off the market. Obviously the property was desirable and attracted a buyer immediately as it was returned to the market. That would be a hard thing to dispute in court.

    Now, what happens in many cases is the new buyer goes away after the inspection, maybe sooner.

  192. I am ok with losing the option money to that however I see detrimental reliance and breach of contract on there part because we waived the option period becaus they were going to do all repairs and provide receipts which they did not. They breached the contract first. They did not abide or cared to however we tried everythig we could to get financing and they get our earnest money. I guess I don’t get that. Our realtor paid for a receipt and we paid her back. Honestly if they weren’t going to get the work done as outlined we wouldn’t have waived the option fee or even went into the contract. Your thoughts.

  193. if anyone can advise, would love the help. we know nothing about buying a house. our realtor put 30 days in contract as the closing date. had we known we’d be responsible we would have insisted on 45 days (we did ask for it but he said 30 was normal) the deed came up saying the house was owned by a company which turns out to be the owner’s company. he didnt disclose this and the bank only found out when deed came back. well now closing is a wk away. bank may not be done & seller will not sign to extend contract. we think he’s regretting and wants out. wouldnt his non-disclosure make him at fault or is this something our bank should have figured out sooner? we dont want to lose our earnest money or the money we paid for inspection. even if the bank gets done we’re afraid he’ll get ot somehow. can we lose all our money? thanks

  194. Leslie,

    It sounds like your contract to purchase is with someone who is not the legal owner, so it may be an invalid contract unless it was amended once the actual owner was identified. 30 days used to be “the norm”…not so much these days. Not sure why your lender cares who owns the property and how that caused your loan to take longer. I wouldn’t hang my hat on that one. Wrong seller on contract might be the better route to take. Check with an attorney. Sometimes a letter from an attorney can get you that needed extension.

  195. leslie — Ardell’s advice is right on: consult an attorney, particularly if your earnest money is at risk or you want to hold the seller to the terms of the contract notwithstanding this apparent wrinkle. (Like Ardell, I don’t even understand why current ownership of the property is an issue.)

  196. How can I negotiate a deal with a Homebuilder that filed for Chapter 11. They pushed my closing date by 6 months.

  197. This is not legal advice — for legal advice, consult an attorney, not a blog
    ARJ – I don’t have much experience with a Chapter 11 bankruptcy but I do know that as a general matter the bankruptcy trustee has a great deal of control over any disposition of the assets of the bankruptcy estate. So you might want to start by contacting the trustee. The name of the trustee should be available online via the W. District of WA bankruptcy court. You also might want to consider using an attorney or agent with a high degree of famliarity with the bankruptcy process — try contacting Kary Krismer (google the name, you’ll find him, he is also an avid blogger). Best of luck.

  198. I am concerned and would like some guidance

    My closing date was May 28th.

    Financing issues prevented me from being able to close. Lender asked for documents at day of closing that were later found to not be necessary.

    Also the floating hard wood floor had soft spots that were to be remedied per our walk through on the 26 that were still an issue deemed to be out of industry standard.

    My current living situation was coming to a fast end by May 31st

    I asked for an extension till June 2nd due to word from lender and builder.
    June 2nd the financing was not complete and the floors were not fixed.

    We wrote an amendment “seller will address hard wood flooring along window glass wall prior to closing.

    Closing was reset for June 2nd.

    June 2nd the floor was not done.

    Ironically, approximately 30min after I discovered the flooring was not done. The lender who works in the same building (on day of closing) asked me for more documents “by request from underwriter”

    I supplied the documents and we reset for June 4th

    My extension for my current living situation expired on June 3rd and I packed all of my things ready for closing on June 4th. I show up to the address for closing and no one was their, lender did not pick his phone up and I could not contact the seller. My Agent and I were waiting and did not receive any communication until after the 4:00 appointment. I was then in a situation where I had to rush to an apartment complex to sign a lease before they closed at 6pm that day. I signed moved in.

    I received voice mail after our 4Oclock time stating closing will be pushed out again until Monday the 7th. I notified all parties at that time I could not move forward due to logistical issues and timeliness.

    I paid over 5K in earnest money. Am I protected?

  199. Rich,

    What City/State are you in and you said “builder”…was this new construction?

  200. Atlanta GA,

    I would like to keep the builder name confidenital at this time to protect all parties.

    I am glad your willing to respond I am concerned about this matter and if you have any insight I would greatly appriciate it.

  201. Rich:

    As I always say, seeking legal advice from a blog can be, uh, counterproductive. For $5k, its probably worthwhile to spend a few hundred more with an attorney there in GA who can tell you what steps you need to take, if any, to secure the return of the funds.

    Best of luck.

  202. We are in contract with a bank owned property in the Denver, CO area. As buyers, we have fulfilled all of our contractual terms and were set to close on Jan 18th, then closing was pushed to Jan. 19th, then Jan. 21st. On Jan. 18th, we were contacted by our lender stating that they received an email from the title company (of the seller’s choosing) that they could not close on the 21st and would actually need to postpose to mid-Feb. Immediately started making phone calls to our agent, as this was the first we had heard of there being a problem. It turns out that the title company submitted the title commitment to our lender before realizing that they never took the title out of the previous homeowner’s name (when the house was foreclosed on in Oct. 2010.) In the meantime, there has been numerous calls and emails from our agent to the seller’s agent and the title company trying to get a status update over the course of several days, with no response from either. Our contract states that our closing date is to be by Jan. 27th. The bank “wants the house off their books by Jan. 31st.” We have refused to postpone beyond the 27th because we must be out of our rental by Jan. 31st and we feel that if the title company has really made it a priority to correct their mistake, it should have been completed between Jan. 18-Jan 27th. We have discussed our intentions of not agreeing to extend beyond Jan. 27th with our agent and she is in agreement with us. What advice could you provide to us? Is this common practice to be ignored by the seller’s agent and title company? Should we be more flexible or do we have the right to back out on Jan. 27th?

    Thank you, Heather

  203. I have a crazy situation. We just finished up fixing up this house to get FHA approval. Our agent differs from listing /buyers agent. We just had the re inspection thought we were ready to go. Title and property guy we hired to do search said the taxes are wrong. This house has been listed for 11 mos. I checked all sites they removed the house from list.I still have print outs and figures from my realestate agent for how much property tax was. Whos responsible for this mistake? can anything be done? What are my rights? Do we need a attorney to help with this? Can we back out putting a lean on property for labor and supplies? What options do I have? I live in PA,Beaver County.Any imput would be GREATLY APPRICIATED!!!!!! Thank you,Tammy

  204. Hello, there seems to be alot of good information here! I’m curious to see if anyone knows why a commercial landord would delay approval of a new buyer past the closing date of escrow? The buyers credentials are excellent and everyone is ready for the transaction to finish. Thank you in advance!

    • I don’t do commercial, but the ones I have seen get very bogged down in legal issues before closing and closings are often delayed. Usually just because the transactions are more complex and they don’t want any lose ends.

  205. Rich — My advice? You need to consult a lawyer. The laws of every state are different so consult one in your area. Rely on legal advice gleaned from a blog at your risk.

  206. Hello All,

    I have a situation. I am a first time home buyer and recently signed a contract to buy a property in Springfield, VA. The contract as a financial contingency which was 25 days after ratification and closing on 30th day from the ratification. The closing did not occur on the closing date mentioned in the original contract due to lenders delay for deciding on the mortgage. And I had to sign the financial contingency removal document on 27th day as seller threatened the contract otherwise. However, the original contract asks for a lenders letter that clearly states approval of loan and/or financing to support the financial contingency removal and the letter I signed for removal of the financial contingency also mentions the same but I only provided a clarity commitment letter that lender provided which does not mention approval of loan when signing the financial contingency removal.
    Now the seller is calming for $4000.00 EMD amount that I put in escrow as my lender did not approve my loan on the basis of insufficient funds for closing. Which is 100% untrue. However, the contract fell apart now and we are trying to settle and release the contract.
    But, I think I was miss guide during the process and now feeling very own to forfeit the complete EMD when I am already in loss by baring the appraisal fee and home inspection fee.

    As I read the last paragraph by Craig, I found a hope as I can claim a breech of contract claim against seller. But not sure. Can anyone advice me about the position I am in? Should I loose all the money I put in this process, where I did not do anything intentionally to harm anyone.

    Or try and compromise with the seller and settle for a part of the EMD. Please, please, please advice as I badly need guidance and I am not getting any from the sources I should. :(

  207. My best guess from what you have said is you had the money to close…but maybe it was someone else’s money? An “unqualified gift”? Borrowed money?

    Normally a finance contingency does not cover you for insufficient cash to close. Clearly it isn’t the seller’s fault that your lender insisted that you did not have enough cash to close.

    You need to contact an attorney because why would your lender say you didn’t have the cash to close, and that was the basis for the loan being denied, if you did have the cash to close? There is some reason there and it may be pretty easy to turn that unqualified “cash to close” into “qualified cash to close” and you can maybe close on that basis vs losing your Earnest Money.

    Maybe there was a gift that needed to be “seasoned” in your account, and the gift was handed to you at closing instead. Lots of reasons for what happened to be valid…but maybe corrected.

    You need a clearer picture of why that loan was denied, as cash to close is often stated as an exception to protection in the Finance Contingency. A lawyer needs to go over those details in your actual contract and advise you accordingly.

  208. Hello, My husband and I are trying to purchase a condo and signed a contract with seller on July 3rd. The original closing date is July 27th but extend twice due to condo project approval does not satisfy Chase’s underwriting requirements. The last extension date is Aug. 23rd(lender cannot tell me when can close) but we still cannot close to propery approval issue. Two months past, we are told by Chase they are still have questions about condo project approval. Our lender always told us we will get loan appoved soon but never happended. Today, our agent told us the seller has terminated the contract without sending a notice and have signed leasing agreement with another party. We feel mad and want to terminate the contract with requesting our EM back. But seller wants to retain our EM. Is there any way we can get our EM back? Your help is really appreciated!

  209. Shirley:

    Unless the amount of earnest money is nominal, I think it is worthwhile to spend money on a lawyer so you can have the best chance of getting the earnest money back. There are way too many details omitted here, starting first and foremost with the terms of the contract at issue, for me to even hazard a guess as to any legal basis for a full return of the earnest money. You need to hire a lawyer in your area to get that kind of advice.

    Best of luck.

  210. Craig,

    Thanks for your quick response. our EM is 1k and we don’t know if this amt is too small to worth to hire a lawyer. According to the contract under financing contingency 4A(1)Property Approval:If the property does not satisfy the lenders’ underwriting requirements for the loan(s),(including, but not limited to appraisal, insurability and lender required repairs), Buyer may terminate this contract by giving notice to Seller prior to closing and the earnest money will be refunded to Buyer.

    Our problem is lender never gives us the exact date when can we get final loan approval. Lender still needs more documents regarding the building flood insurance from seller. So after two times extension to our original contract, we never file another extension because nobody knows when our loan will be finally approved. Seller’s agent including seller knows the situation. Even though we and seller’s agent still try our best to have this deal close and never lose our hope from lender. But untill couple days ago, seller’s agent called and said seller has back out from this contract and signed a leasing agreement with another guy. We also received a call from lender and confimed our loan was finally denied due to property’s situation. Our loan officer said will issue us the official written document and stated we cannot get loan is due to property does not satisfy lender’s requirement. Does this will help us to get EM back? Thanks again for your help.

  211. Shirley, again you need to consult an attorney in person, not via a blog. I’m sorry, but there are too many variables — not to mention the fact that I make my living dispensing legal counsel and this is all gratis — for me to render legal advice.

    That said, it’s tough to justify hiring an attorney for $1k. If you lose the earnest money, perhaps you want to pursue a claim in small claims court.

    Best of luck.

  212. Shirley,

    You keep mentioning Chase’s decision vs what is actually wrong with the building. If other units are selling with financing from different lenders and Chase is the holdup, then the result might be different than if NO lenders will loan on that building due to a problem associated with that building.

    If what Chase is looking for is different from what most lenders would be looking for, then that is an issue with buyer’s failure vs the building’s failure.

  213. Thanks for Craig and Ardell for providing me the help information. After several negotiation with seller, Seller agrees and sign ROEM and we will get $890 and seller gets $110. Not too bad

  214. Shirley, that is great news! Congrats on getting a very good result (89% of the money back with zero legal fees incurred).

  215. So, I’m in a situation that we missed our closing date as well (today 10/26). Try to make this short.. haha..

    It’s on a short sale, per contract, close up to 45/days from acceptance/mutual. Thing is, we didn’t get the P&S until 8/days after seller(Chase)approved, and sent it to the Short Sale(lawyer). It was dated Sept. 21st. I had to request my realtor to get it from the selling realtor, otherwise my lender was not going to move forward with my loan (I’ve already been pre-approved) without the actual copy of the P&S. My lender finally got a copy of it on Oct. 5th. and we found out the closing date was to happen on Oct. 26th, or it would go to foreclosure.
    Talk about a mad dash to get things done. Got the inspection scheduled that following weekend, Oct. 6th.. my bank got a rush on the appraisal, and got it done that following weekend, Oct. 14th.. bank got appraisal back on the 17th, locked my rate in the same day.. then went to underwriter…

    Docs got sent to Escrow on 23rd.. Signed docs on 25th, was hoping to sign on the 24th, but didn’t work out… Called Escrow today, and was told they are still waiting on final HUD approval.. which I had a feeling was going to happen… and most likely they should have it by Monday… So, told my bank about it, and now they need a new closing date… as the deadline to release funding had passed.

    Now, I had my agent draw up a Form 34 with a new closing date, which by the way, was giving to us back on Oct. 19th after I had my realtor inquire about requesting an extension as we were not given enough time due to the P&S being given to us so late after it was signed off by Chase. At that time, the Short Sale office emailed the selling realtor that Chase had ordered and extention to 11/15 and that foreclosure was postponed. But at the same time, we worked like mad to get it done by the 26th as we didn’t have actual docs to show the extension. Plus they said it would take 10/days for them to get the docs on the extension from Chase…. I think I spent as much time on the phone between my realtor and lender to get everything moving as fast as I could.. but yet, we missed the date…

    I’m hoping that the extension gets accepted and we can close by end of next week, as the current home owners are still in the process of moving out, and still have stuff left over at the house that they need to get, which they had ask if they could get it by middle of next week.. at this point, I don’t mind as I wasn’t on planning to move in until the end of Nov. so I can clean, paint, etc the new place with nothing in the way..

    What a way to end my week!

  216. Hi,
    just wanted some advice or suggestions. Our house went under contract a few weeks ago to an investor who is paying cash. They offered us a way lower amount than what we were asking but we accepted the offer because the comps in the area aren’t that great and they offered to pay closing costs. After taking a few pictures the buyer came back and lowered their offer by $7K “because of the comps” So we countered half way and have not heard from them since. We were scheduled to close on Monday but it’s Sunday and our agent has not heard anything except “if the seller would like to proceed after Christmas we are fine with that”. However, since we were scheduled to close Monday and according to the contract, we needed to be out by closing, we’ve already moved. We have not received the form to terminate the contract, but we have also not heard back on our counter offer. We are willing to at this point to just take their previous offer, but our agent cannot get in touch with them. They put down $2K in earnest $ and our agent said that technically we could go try to get it at this point, but in his words “good luck with that” because it’s a low amount. (Really? I thought that was a lot, but whatever) I rather just close on the house and move on at this point since we’ve moved out already.

    Additionally, since our contract was binding 13 business days ago, we have been in the due diligence period all along and ironically, the last day of due diligence falls on our initial closing date which I also thought was weird.
    I’m just wondering, should we be worried since they have not technically backed out of the contract? Does the contract expire on Monday? If we don’t hear anything by Monday, what does that mean for us? Would we be able to extend the closing date so we can still close, is that a mutual thing that both parties need to agree on, or is it just assumed that the closing date will be extended since we have not heard? Should we just assume the buyer was just messing around and is waiting for the contract to expire? I’m so confused and have so many questions, but most of all, this has been a very stressful 3 weeks for us because we’ve had to move so fast in order to meet their closing deadline, and now we are just in limbo waiting and wondering if it was all in vain and we just got suckered.

    any advice would be awesome… thanks!!

  217. I need help, i had done all my paperwork within 30 days, all that was needed was a closing date, then i was informed that the seller wanted extra 30 days till the closing, i was furious but decided to wait, my closing date is sceduled for january,10th 2014, i received a call that they are asking extra 2 weeks due to bad weather conditions AFTER the closing, imagine how i felt receiving that, what are my options, what if they cancel the closing because i will not give them those 2 extra weeks, please let me know?

    • I am sorry, Lanes, but I don’t practice law via a blog. To get advice upon which you have the right to rely, or for that matter to get advice from somebody who should know the answer, you need to contact a local attorney in your area. Best of luck.

  218. Thanks for the post! You are absolutely right that different issues may happen during the real estate transaction and loan underwriting which may cause a buyer to miss his closing date. And missing the closing date can put at risk a deal that is so important for you. The sales contract, which indicates the closing date, also says that a seller can terminate the transaction if the buyer fails to perform his duties within selected time frames. Before missing the closing deadline, a buyer can apply for an extension from the seller. This normally involves a formal contract addendum which states a new closing date to which the seller of his own free will agrees.

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