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Our contract does state that if we cannot get a mortgage, we do not have to close and can walk away. Since the lender would not allow us to close on house until we close on our condo, wouldnt that excuse us?
Not legal advice, but I don't think so. You CAN get a mortgage; the contingencies set by the mortgage company is not the problem of the seller.
Our contract does state that if we cannot get a mortgage, we do not have to close and can walk away. Since the lender would not allow us to close on house until we close on our condo, wouldnt that excuse us?
Who is advising you? Once your financial situation changed you should have renegotiated the terms of the contract to make it contingent on the close of escrow of your condo and extend the closing date of this purchase. Did you tell the seller about the change in your financial situation?
It seems a clear default if you didn't renegotiate the terms of your contract once you had a financing fail. Your contract doesn't require that you immediately notify the seller if there is a change in your financial/lending situation?
We had a date of August 26th in the contract to close. We would have closed by that date; however, my wife lost her job around that time and as a result our lender would not allow us to close on the house until we sold the condo which we just close don this week. We didnt default on purpose - it was due to wife losing job and as a result lender putting a contingency on our loan. And we are ready to close now.. only 1 month later. It just does not seem fair. Im not sure what costs they incurred in that one month - they have not lived in that house for 2 years and its paid off but I know they were renting it until end of summer. We had to incur many costs and headaches as well (our child could not start school on time and we are renting now to keep her in the school district where the house is while at same time paying for condo mortgage and dues).
No offense, but NONE of this is your sellers problem. You signed a contract stating you would close on a specific date and you did not close. Did you ask them to sign an extension or did you not and just assume they should have no issue with closing late?
There are lots of costs that could have occurred. Loss of rent, paying an extra months mortgage as well as an extra month of all utilities. All things they would not have had to pay for if you would have closed on the date that you agreed to close on.
We signed a contract to buy a house in late May and put a $20k deposit on it with the seller's attorney. There were no contingencies except for us getting a loan. The seller put a goal closing date of end of August into the contract. At the same time, we were selling our condo. In the process, my wife lost her job and so we changed the loan to just in my name but it then became contingent upon us selling the condo first before we could close on the house. The condo sale took a very long time due to buyers/condo association missing paperwork/etc. The sellers of the house we are buying became impatient and started legal action saying if we dont get a closing date soon they are moving forward to keep the deposit of $20k. Well we closed on our condo this week and are ready to close on the house anytime the sellers want but they now are saying they incurred losses and demand to keep $5k of the deposit. We don't want to agree to this and they aren't willing to budge. Our lawyer says they have already filed most paperwork to start legal action to keep the entire deposit if we dont close. He says we will more than likely lose the deposit and incur attorney fees of at least $5k. We have to give an answer today on whether they can keep the $5k of the deposit or we go to fight them.
I understand that the seller can only keep money if (1) buyer backs out (which we are not ding) or (2) buyer defaults (I dont see how we defaulted - would the fact that we were supposed to close in August but are ready only a month later(due to circumstances outside our control) be considered buyer default? Even though our lender put a contingency on our loan that we cant close on house until we sell our condo due to my wife's job loss in this entire process?)
If we choose to fight this, are we really likely to lose in this case? Is our lawyer essentially right?
I understand that they wont be able to sell the house while this is going on right?
"Only". And certainly not the seller's control.
They have incurred losses because you didn't hold up your end of the agreement.
We had a date of August 26th in the contract to close. We would have closed by that date; however, my wife lost her job around that time and as a result our lender would not allow us to close on the house until we sold the condo which we just close don this week. We didnt default on purpose - it was due to wife losing job and as a result lender putting a contingency on our loan. And we are ready to close now.. only 1 month later. It just does not seem fair. Im not sure what costs they incurred in that one month - they have not lived in that house for 2 years and its paid off but I know they were renting it until end of summer. We had to incur many costs and headaches as well (our child could not start school on time and we are renting now to keep her in the school district where the house is while at same time paying for condo mortgage and dues).
Doesn't matter. Doesn't matter. Doesn't matter.
You don't get to decide if the seller could afford anything. Your costs and headaches are not their problem because they were caused by you. You don't get to decide that one month is no big deal.
Our contract does state that if we cannot get a mortgage, we do not have to close and can walk away. Since the lender would not allow us to close on house until we close on our condo, wouldnt that excuse us?
I believe that is correct. And the seller can keep all the earnest money in that case, I believe.
So OP are you saying the sellers don't want to sell to you now at all?
They want to keep 5K of your 20, cancel your deal and find a new buyer? OR….they want to take 5K as compensation for the delay, and so you need to come up with 5K more, because you're 20K deposits would now be 15K.
You HAVE your mortgage now, right? IF you are indeed ready and able to close now as soon as the sellers can give you a date, I don't see why the seller's (who one presumes wants to sell) -- would back out a a deal that's sooo close to being closed.
And IF indeed the delay "cost" the sellers money, then yes, you should compensate them for that.
Give them what they want and move on to close this deal. What's you're lawyer say about that? I have to admit it doesn't sound like that attorney doing that much to help you get the deal done. Do you also have a real estate agent helping you? I take it the sellers have no agent. No RE agents get this close to a deal and don't fight hard has heck to get it done.
What kind of statement is this? "Well we closed on our condo this week and are ready to close on the house anytime the sellers want "
The seller wanted to close on or about what was in the CONTRACT!
They don't just randomly choose a date now. If you agree to the $5K, there is probably going to be an addendum coming with dates. Contract has dates and performance expectation. That's why you are always reminded with "time is of essence".
I understand the 'time is of the essence' statement .. my question is, does it matter why we didnt close by Aug 26th (or contract)? It was not foreseeable or our fault that wife lost job and then lender put contingency on our loan to sell condo first. Does that matter or not at all?
Did you have an agent or attorney look over the contract before you agreed to it? Because it sounds like it was written to the sellers favor.
Why WEREN'T contingencies put into the contract -- such as job loss, or God forbid, death of spouse or health incapacity, whatever you can think of. Suppose one of you have been in a terrible car accident fighting for your life, were you still suppose to close on time? (We had a neighbor who was selling her house, died between contract acceptance and closing. Things DO happen you know.) Are they likely? No But they certainly aren't so out of the realm of possibility that they shouldn't be addressed.
Sounds to me like the contract didn't have enough protections in it for your side of the deal.
So OP are you saying the sellers don't want to sell to you now at all?
They want to keep 5K of your 20, cancel your deal and find a new buyer? OR….they want to take 5K as compensation for the delay, and so you need to come up with 5K more, because you're 20K deposits would now be 15K.
You HAVE your mortgage now, right? IF you are indeed ready and able to close now as soon as the sellers can give you a date, I don't see why the seller's (who one presumes wants to sell) -- would back out a a deal that's sooo close to being closed.
And IF indeed the delay "cost" the sellers money, then yes, you should compensate them for that.
Give them what they want and move on to close this deal. What's you're lawyer say about that? I have to admit it doesn't sound like that attorney doing that much to help you get the deal done. Do you also have a real estate agent helping you? I take it the sellers have no agent. No RE agents get this close to a deal and don't fight hard has heck to get it done.
Yes, correct. They said they will go to closing if we give them $5k. If we do not, they want to pursue legal action to keep the $20k.
We are completely ready to close at this point as our condo sale is complete and mortgage, lawyers are ready. We thought everyone was happy but the sellers surprised us with this at the last minute and they requested answer by today.
Lawyer says to give them the $5k but I am sensing he is just tired of this and wants to close, move on. $5k is alot to us, we dont have the money right now unfortunetly with everything that's happened.
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