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[SIZE=2]Seller's attorney argues that the Seller cannot deliver good title (her paying off her mortgage is a title defect) and therefore, she is not in default under the contract, if she doesn't close.
When I closed on a house years ago, the horrible attorney the builder used did not do his paperwork. He processed the papers in one lump sum with a whole bunch of other sales by the builder. When I went to sell my house, the title was not clean and I could not sell it until it was fixed. The builder was still listed on the title. Since this was just an error and the builder really did pay off the loan, I got the title cleared and was able to sell. I can only imagine what would have happened had he not paid off the mortgage.
If the title is clear when you close, but the mortgage doesn't get paid off, your seller would still be on the title...your title. I don't think she can close without paying it off. Really sounds like you are getting into a nightmare.
If the title is clear when you close, but the mortgage doesn't get paid off, your seller would still be on the title...your title. I don't think she can close without paying it off. Really sounds like you are getting into a nightmare.
Well, it's actually much better than it sounds. At least the seller says she is willing to work out with me. I'm also glad that the seller hired her own attorney.
If not paying off mortgage is a title defect, then this gives a free pass to any seller who has mortgage to breach the contract. My attorney thinks it's a weak argument.
[SIZE=2]Seller's attorney argues that the Seller cannot deliver good title (her paying off her mortgage is a title defect) and therefore, she is not in default under the contract, if she doesn't close.
Is this true?
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Well, here in AZ, the seller would be in breach of the contract and you would have legal recourse. Of course, as the saying goes, you can't get blood out of a turnip.
Actually, this would put the house into a short sale situation. How much of a deficeit is there? I hate to say this, but if it's not too much, perhaps all parties involved could make it work. Can realtors/attorneys lower their fees? Does the seller have some funds they can bring to closing? And can you contribute? If there's only a few thousand $$$, this will sometimes work.
If the deficeit is significant, then it's a short sale situation that would be subject to the lender agreeing to accept the shortfall on the mortgage balance. You'll be looking at another 30 to 60 days and a ton of paperwork (on the seller's side) to get it through.
Can your attorney at least advise you about whether or not the seller is in breach? If the seller can't close, I can't imagine that it's just a matter of, "Oh well". There should be some sort of compensation for your time and expenses. You went into this deal in good faith, and the seller should have been expected to do the same.
Last edited by Gretchen B; 04-24-2008 at 12:32 PM..
Reason: punc
If the seller can not pay off the mortgage then it must sell via a short sale. The lender will not release the lien on the home until they are paid something. Try to negotiate a short with the lender. Did the seller just realize he/she didn't have enough to pay off the loan?
Read this posters other thread below and you will get the whole story. The seller already applied for mitigation. The buyer (the OP) wants to bring her to litigation because he thinks she does have the money. Now they are playing a cat and mouse game. There is more to the story below.
In Oregon our contracts state that the seller is able to clear title in the purchase and sale agreement unless otherwise documented (we have a short sale addendum that gets attached for those situations). If nothing it attached the seller is making the representation that they can indeed provide a good clean title.
It is a defect in title, and I think it is weak because the seller TOLD the real estate agent that she COULD clear title. She made a representation about her ability to clear title and entered into a contract accordingly.
You must really like this house to be putting up with all of this nonsense.
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