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Our contract has a loan contingency. So since we were not able to obtain a loan until selling our condo, doesnt that factor in?
You are PROBABLY right, but were it me I'd pay it and catorgize it as a 'I hope karma will bite them in the butt eventually' category. You just need to look at it differently. When you were bidding on the price would you have paid 5K extra to get it? I bet so, given the amount of that deposit. So, you are just paying $5K more for the house and honestly, over the life of the mortgage $5K isn't a whole lot added to your monthly payment.
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If I was the seller I'd be holding you to the contract. Which if you didn't perform you'd be out the money because that is the terms we agreed to. It's a business transaction, plain and simple. I'd be empathetic but I'd at the very least demand to be reimbursed for any additional expenses incurred as result (probably a mortgage payment at a minimum). Follow your attorney's advice as they know the specifics of your contract.
Well now, wait a minute -- I must admit the BUYER/OP has me thinking this again.
I'd still give the seller the 5K or negotiate it just to get this deal DONE -- BUT…..IF his contingency DID SAY -- contingent upon getting the loan -- and they didn't get the loan when anticipated -- THEN I DO think the BUYER might be right. That's what that contingency was for…..
…and was there ANY OTHER language about in the event the loan doesn't come through, what then, what were THOSE DETAILS? Loan doesn't come through…THEN WHAT? extended contract? renegotiated closing date? forfeit of deposite? automatic deal negated if no loan after xx additional time?
You mean to tell me none of THAT was spelled out?
I of course defer to the attorney because the language of the contract will cover it. His attorney said no.
Our contract, which will be different than his, allows a financing contingency but it expires 5 days prior to contract close date. This means that if you don't notify the seller of loan denial at least 5 business days prior to closing the seller would be entitled to the EM. The close date can be extended with an addendum to the contract. I suspect most standard contracts have similar language.
Additionally, per our contract buyer is obligated to inform seller of any financing denials or status changes affecting the ability to obtain the loan. So, per our contract, your failure to disclose that you had to change the loan 1-only in your name 2-that you had to sell first, would also put you in default and you'd possibly lose the EM for that reason in addition to your failure to close.
Where is your agent in all of this?
Last edited by Brandon Hoffman; 09-27-2016 at 01:18 PM..
That is interesting! If the buyer knew their loan was in jeopardy and didn't take immediate steps to let the seller know, I guess that would seem like something a judge would consider.
We have a clause that states a buyer will do just that.
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Additionally, per our contract buyer is obligated to inform seller of any financing denials or status changes affecting the ability to obtain the loan. So, per our contract, your failure to disclose that you had to change the loan 1-only in your name 2-that you had to sell first, would also put you in default and you'd possibly lose the EM for that reason in addition to your failure to close.
I'd imagine based on a related thread that the two sides have settled or will very soon.
The contract said the buyer could cancel if they didn't get a loan.
That is NOT the same as GETTING a loan, BUT that LOAN has a contingency (selling the condo.)
The buyer didn't seem to have a plan or have a "what if" contract clause -- IN HIS FAVOR -- for what if you GET a loan but there's contingency on that loan. That's not the same thing as not getting a loan at all.
But the seller did wait, and only wanted 5K -- which may have been negotiated down (we don't know).
I hope the buyer comes back and says all it well.
Sorry but with the standard contract used in NV there would be no issue. The contract either continues as written and closes or the buyer gets his money back. The loan contingency is simple and requires that the buyer be able to get a loan. Had a deal this spring go to the day of closing when the bank underwriter canned it on the basis the buyer was not really going to live in the property. The underwriter was wrong but refused to budge. The earnest money however was never in doubt. We worked out new financing and closed three weeks late.
It may well be that the contract is different elsewhere though I would think any financial contingency that does not provide full protection for the buyer on a lender condition is very bad lawyering on someone's part. I would also think the holding of escrow by a non neutral is a terrible idea.
I too find fault with the OP or agent for not settling this matter prior to the closing. You don't let contracts deteriorate when you know there is a problem. But in this jurisdiction the one contingency that is virtually never waived and is always absolute is the financing one. I would think any agent who assisted a client in waving that clause and then had a problem is off into malpractice.
Looks like the OP is in New York State based on prior posts.
Here, there is a financing contingency, BUT the buyer has a number of days, specified in the contract, to notify the seller that they are not going to be able to get financing before they would lose their earnest money. That number of days is negotiable and varies usually based on what the lenders are saying they will be able to do at any given time.
Looks like the OP is in New York State based on prior posts.
Here, there is a financing contingency, BUT the buyer has a number of days, specified in the contract, to notify the seller that they are not going to be able to get financing before they would lose their earnest money. That number of days is negotiable and varies usually based on what the lenders are saying they will be able to do at any given time.
Don't know how New York handles this.
I can't see how one would ever agree to waive the financing clause for even a day. That puts the funds of your client in the control of an agency over which the client has no control. In the example I cited a quality control guy in underwriting shot a deal at the last instance. Should an idiotic action by a bank cause my client to lose his earnest money? There is no certainty that a bank will complete a transaction until it funds. Simple as that. Why some agents would allow their clients to put the earnest money at risk escapes me. Our clause does require a good faith effort by the buyer to obtain financing. But that is no protection against missing a close at the last minute.
I can't see how one would ever agree to waive the financing clause for even a day. That puts the funds of your client in the control of an agency over which the client has no control. In the example I cited a quality control guy in underwriting shot a deal at the last instance. Should an idiotic action by a bank cause my client to lose his earnest money? There is no certainty that a bank will complete a transaction until it funds. Simple as that. Why some agents would allow their clients to put the earnest money at risk escapes me. Our clause does require a good faith effort by the buyer to obtain financing. But that is no protection against missing a close at the last minute.
Yes. Why should a seller take their home off the market in good faith, coordinate movers, possibly even have moved out, and get no compensation for their time and expense? The onus is on the buyer and buyers agent to make sure the loan is processed in a timely fashion and to choose responsible and reputable lenders.
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