Relisting house after buyer doesn't show up at closing (contingencies, negotiations, agent)
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We live in Massachusetts. After all contingencies have passed, the buyer of our home informed us on the evening before closing that they needed an extension for closing. They are having issues with the sale of their current home and wish us to wait due to issues they have to fix with their other home. Their offer to purchase our house specifically stated that the offer was NOT contingent on the sale of their current home. There is no contingency in the purchase and sale regarding their current home. They want a three week extension. They have misled us regarding (1) the need to sell their current home and (2) they also produced a "FINAL COMMITMENT" letter from their mortgage company and a truth in lending statement last week to show us that they would meet the closing date but would not share with us the contingencies (the sale of their other home) We have already kept our home off the market for two months and we do not want to have it off the market for essentially the entire month of June especially if we don't trust that they will come through in three weeks. It is too big of a risk. After letting us know on the night before the closing that they would need an extension, they "went dark" and did not communicate until 4:55 PM Friday (the day of the scheduled closing). The house is empty, broom clean, etc. We are currently out of contract. My broker says we need a release from them in order for us to put our house back on the market. Can they hold our house listing hostage so that we release the deposit back to them?
I'm in MA too. There are several MLS companies in our state. My understanding is that the MLS I am a member of requires a written release from the buyer before you can re-list your home. Most buyers will not sign anything unless they get their deposit money back.
Clearly in this case the buyer failed to perform according to the contract. I would consult my real estate attorney to insure that legally speaking your contract is null and void at this point and I would ask my agent to call MLS (on Monday as they're closed on Weekends) to see if there is any way around the signed release.
If the contract is in default, why would anyone need to release anything? The buyer released it by not showing up. That's one messed up MLS rule, or one misunderstood MLS rule. It's probably more for a buyer backing out, not a buyer that defaults. There currently is no active contract on the house, hence, there is nothing for the buyer to release. Read your rules again as I don't think a default would constitute a release for the MLS.
If the contract is in default, why would anyone need to release anything? The buyer released it by not showing up. That's one messed up MLS rule, or one misunderstood MLS rule. It's probably more for a buyer backing out, not a buyer that defaults. There currently is no active contract on the house, hence, there is nothing for the buyer to release. Read your rules again as I don't think a default would constitute a release for the MLS.
At first blush, it sounds like a ridiculous rule but how does the MLS know that the buyer defaulted? Take the seller's word? I don't think so.
Escrow agents are only allowed to release deposit funds either by mutual agreement or court order as well. Do you think the buyer is going to agree to release the deposit to the seller because they defaulted? It's unfortunate that when money is involved people will not do what they agreed to. Often, when buyers default retaining their deposit money means going to court. In my experience, not many buyers will admit wrong doing and simply release the funds to the seller.
Out of curiousity, I thumbed through the rules on my MLS's website and they don't really cover this situation. I would have your agent call MLS on Monday for clarification. While I've never encountered this situation in my own career, I have seen others in my office face this situation and were told by my borker that they needed a release from the buyer in order to re-list the property. It may be an out of date rule she's thinking of or she may just be wrong, but it seems like too much of a coincidence to me that the OP's agent and my broker have the same understanding of the procedure.
OP, why don't you charge the buyer some amount of money for the extension and/or require them to put up more earnest money PLUS have them sign a document NOW that says that they agree to allow the escrow agent to release the money to you if the closing does not take place by the new date?
I'm in MA too. There are several MLS companies in our state. My understanding is that the MLS I am a member of requires a written release from the buyer before you can re-list your home. Most buyers will not sign anything unless they get their deposit money back.
What horrible rules. So the buyer can hold the seller hostage to get back their earnest money. And the only recourse is to sue them?
As for the OP's situation, I would have an attorney draft a letter demanding the release plus the loss of earnest money or they will get sued for even more money.
We agree with your approach and tried to accomplish an agreement yesterday (our closing date) At 4:55 PM on the closing date, they offered us a very small number and extended the request to 3 weeks (the day before the closing they said they would only need a few days). There will hopefully be more negotiations on Monday, but we are trying to understand our position regarding relisting the house.
As for the OP's situation, I would have an attorney draft a letter demanding the release plus the loss of earnest money or they will get sued for even more money.
Absolutely - get a lawyer on this immediately. The buyers are at fault for violating the contract and having the house off the market for 2 months is a big deal.
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