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We are currently buying a house on Long Island. We have been in contract since July. The house has a major permit open and cannot give us a clear title. The seller is threatening to back out if we don’t agree to close with some money in escrow. However, the contract states that they WILL PROVIDE A CLEAR TITLE. Our lawyer seriously recommends not doing this because of the severity of the permit. They cannot legally back out of this contract right? They are showing the house this weekend! And are asking 10,000 more than our current contract is agreed to. I think they’re tying to get out of contract to simply get more money. Does anyone know our rights here? I know our lawyer is speaking with theirs but I feel somewhat in the dark and would love opinions.
I have no clue but for For my standard contract section 21 sub b and c I read it as they cancel if they can’t get the co. I would not close with money in escrow based on how major the open permit is. Is it a dormer? If it’s not to code the entire dormer might have to come down. Your better off walking away which stinks especially in this sellers market.
I signed a Ryder that made them have to get any permits closed and they couldn’t walk away. Best thing I did.
Be guided by your lawyer. If your not happy hire another lawyer for a second opinion
Seller is probably hoping to get an all-cash buyer who doesn't know better in this market.
If anything, as the buyer, you should walk away. as 94nasupra mentions, it could be a big deal. Like tear down the dormer, tear down the deck, tear out the basement, etc.
What is the open permit for?
As to showing the house and raising the asking price, that's fine for them to do so as you haven't closed yet. But obviously while you're under contract they can't go to contract with someone else.
Not sure about the contract in question, but it seems obvious they know the heat of the market and want to sidestep dealing with you and your pesky desire for a clean title (j/k)! lol One open house and they might get an as-is cash offer, or two, or three. It's that crazy out there.
I think this is an interesting anecdote for those who say "it's a sellers market, open permits don't matter." They still matter to the town, the lenders and ultimately the buyers/sellers, just not as rigidly as in a cold market.
The entire building was moved 3 blocks 20 years ago! Permit was opened for the move but never closed. The worst case is the entire building can’t be on the property! No way we would close with escrow. No idea how the seller thinks that’s even an appropriate option. We called the town and the current owners have filed the paperwork but everything is so far behind with how the market is right now. It could take another month or so. Seller says they’re not willing to wait to sell. We think they’re crazy thinking they can find someone to close on the house like this. It’s in our contract that they have to close all the permits. I was very adamant that that be put in there. I don’t understand how they think they can walk away if we do not accept the escrow. They signed the contract saying they’d complete this issue. Hoping our lawyer can come up with something. Craziness!
The entire building was moved 3 blocks 20 years ago! Permit was opened for the move but never closed. The worst case is the entire building can’t be on the property! No way we would close with escrow. No idea how the seller thinks that’s even an appropriate option. We called the town and the current owners have filed the paperwork but everything is so far behind with how the market is right now. It could take another month or so. Seller says they’re not willing to wait to sell. We think they’re crazy thinking they can find someone to close on the house like this. It’s in our contract that they have to close all the permits. I was very adamant that that be put in there. I don’t understand how they think they can walk away if we do not accept the escrow. They signed the contract saying they’d complete this issue. Hoping our lawyer can come up with something. Craziness!
Maybe have your attorney send them a "time is of the essence" letter asking for specific performance.
Not sure what other option you have, as the seller is waiting on the town to either say yes or no. No wonder they want to find a desperate NYC-fleeing cash buyer now...it will put it all on them.
Do you have any penalties listed in the contract if they don't close on time, or if seller walks away?
When is your scheduled close date? Given this situation you should stall as long as possible - it's all on the seller right now to make good on the clear title.
At the very least, if seller wants to back out you should get refunded any money you've spent on inspections, attorney, loan application fees, etc.
But - currently you have a valid and enforceable contract. Unless the contract stipulates escrow is required you don't have to accept it. Which is why I asked about a scheduled close date. While there is always wiggle room in a a contract, if you've been in contract since July it's not reasonable to expect to close say next July.
When I mentioned "time is of the essence" this is a legal term that says that you will be harmed if this contract is delayed, etc. For example, if you sold an existing house, you will incur additional temporary living costs. Or if you had to re-sign a lease, or incurred storage fees, etc. Of course if you haven't incurred anything then it's really more of a bluff.
"Specific performance" basically says - seller, live up to your end of the deal and do it when scheduled.
This is why you need to go through all options with your attorney.
You have an attorney (who, you know, knows a lot about contract law) and you're asking if anyone on an anonymous internet forum knows contract law? Am I missing something here? Make your attorney do their job. There are some issues I would say OK - close with money in escrow, but a house that's been moved? A cash buyer who takes this on deserves what they get.
It sounds like the CO is really major and not just a permit/final inspection type deal.
Do they have to get a variance?
How will the taxes be influenced?
Is the house worth the hassle of waiting for it?
I'm in a similar situation. Been in contract since the beginning of April.
The sellers finally went through the Board of Zoning to get a variance and are in the process of obtaining the CO.
It's been like pulling teeth to get it done.
The town is backlogged due to covid and the massive amounts of projects going on.
I suspect the sellers would rather I cut my losses as the property value has gone up 40k since then AND people are offering 30k over asking.
For me, It's worth waiting. I'm in contract for 5% below listing price and had repairs completed. It would be a minimum for 60k more for me to get into a comparable property.
Get reimbursed for inspections and attorney then walk away. You don't want this headache.
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