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Just wondering if some of you had similar experience and how you dealt with it.
Two weeks before our closing date, seller noticed us he can't close the house sale on the date written on the contract. He propsed a 10-day delay.
However, on our end, we've arranged everyting already, from mortgage to our kid's daycare. Some of them are easy to re-arrange, such as moving company. But some of them are hard, such as locking of mortgage rate. The 10-day delay is after our mortgage lock-in period and our locked mortgage rate will expire. Current rate is crazy comparing to the rate we locked. Also, due to our schedule, we really need to close it on or very close to the date stated in the contract.
We've asked our lawyer to talk with seller (and his lawyer) but the result was VERY disappointing. He told us the seller doesn't reveal any reason for delaying the closing and:
1. The closing date on the contract is NOT firm.
2. He has no way to ask the seller to close on the date stated in contract or not even before the newly proposed date.
3. He can issue some sort of time of essence notice to firm up the closing date. But that has to be done after passing contract stated closing date. Even if he issue the notice, he has to give the seller at least 10 day buffer.
4. The seller has no responsibility on the expiry of our locked low mortgage rate. Therefore, if we have to take a higher rate due to the delay, he's not responsible for our loss.
I think it's not coincidence that seller's newly proposed date is 10 day after the contract stated closing date. He must have consulted his lawyer about that time of essence notice. So, we are worried he'll keep delaying the closing date somehow with his lawyer's aid.
Do you guys know what we should do? Do the answers above make sense to you? Will it help if we switch lawyer now to solve this issue?
Number one, how is the closing date in the contract NOT firm? Standard real estate contracts contain a closing date that is legally firm, meaning it can be used in the process of legal action taken against the party violating the date.
Number two, you should be able to buy an extension on your rate lock. That might give you enough time to close with the invocation of the "time is of the essence" clause after the closing date passes without a closing.
If he really doesn't want to close or cannot close, you are stuck. And does the contract state that you cannot sue him for damages after the fact to recover the cost of the increased mortgage rate caused by his failure to perform? If that is the case, there's not much you can do. I would not have agreed to that during the attorney review period.
If it were me, I would bypass all the pros and knock on his door and get a solid answer. Even if it's "I just don't want to sell anymore, or can't sell anymore", then you need to know that now.
We know a couple that just went through something like that recently (last week as a matter of fact) where the seller wanted to delay the closing. The original close date was 7/9 but got delayed until 7/12 and their rate lock was set to expire on 7/15 (locked at 3.50%). The seller wanted to delay until 7/19 but the buyers stood firm and said no due to the rate lock expiry.
The buyers gave the sellers several alternatives (via attorney):
1) Close on 7/12 and the sellers pay the buyers prorated/negotiated rent from 7/12 to 7/19. Walkthrough to be completed when the sellers move out.
2) Delay till 7/19 but the sellers will be responsible for the rate lock extension cost (2 week extension was in the neighborhood of $1000+ I believe)
3) Forgot what the 3rd option was but they didn't take it.
The sellers negotiated #1 above and are paying the buyers a prorated rent (miniscule rent at that but the cost of jumping up to 4.50%+ 30 yr fixed would've cost them $200 more per month in mortgage payments so they just accepted it). You may need to rent it out for free if it comes to that....
As for the NJ standard contract, most of them read "on or about" or "on or before". Regardless of the phrasing, we were told that neither the seller nor the buyer can legally require the other to close on that date without some sort of a "time of essence" clause. Even if you do sue for damages, the cost to do so will more than likely eat up any settlement you reach.
You need to speak to your attorney and s/he, needs to come up with alternatives like this and send it to the sellers attorney immediately.
Unfortunately - Either side can delay up to 10 days without any legal recourse. That's why we moved up our closing date to be 11 days before the mortgage rate-lock expiration just-in case. If they delay further, you have some legal recourse. But if it's just the 10 days, there isn't much you can do.
We know a couple that just went through something like that recently (last week as a matter of fact) where the seller wanted to delay the closing. The original close date was 7/9 but got delayed until 7/12 and their rate lock was set to expire on 7/15 (locked at 3.50%). The seller wanted to delay until 7/19 but the buyers stood firm and said no due to the rate lock expiry.
The buyers gave the sellers several alternatives (via attorney):
1) Close on 7/12 and the sellers pay the buyers prorated/negotiated rent from 7/12 to 7/19. Walkthrough to be completed when the sellers move out.
2) Delay till 7/19 but the sellers will be responsible for the rate lock extension cost (2 week extension was in the neighborhood of $1000+ I believe)
3) Forgot what the 3rd option was but they didn't take it.
The sellers negotiated #1 above and are paying the buyers a prorated rent (miniscule rent at that but the cost of jumping up to 4.50%+ 30 yr fixed would've cost them $200 more per month in mortgage payments so they just accepted it). You may need to rent it out for free if it comes to that....
As for the NJ standard contract, most of them read "on or about" or "on or before". Regardless of the phrasing, we were told that neither the seller nor the buyer can legally require the other to close on that date without some sort of a "time of essence" clause. Even if you do sue for damages, the cost to do so will more than likely eat up any settlement you reach.
You need to speak to your attorney and s/he, needs to come up with alternatives like this and send it to the sellers attorney immediately.
If the situation is just being caused by logistics around moving out then yes this is a good option. As was pointed out earlier you need to have an honest open conversation with the seller and figure out what's going on. If their/your lawyer can't get this to you, have your real estate agent go around the lawyer and talk to the other real estate agent, who in turn will talk to the seller. It has been my experience that good real estate agents are much better at working these things out than lawyers. Both RE Agents have much more of a vested interest in getting this deal closed.
On our house closing our buyer wanted to close sooner then on contract and the person we were buying for wanted to move out later. We covered the cost of carrying expenses for the few days we'd have to stay in our old house, we didn't require the people we were buying the house from to pay us anything( they were old). The lawyers held $1000 from us and $1000 from the person we were buying from in Escrow for a damage deposit, that money is released once both parties agree there are no damages.
Just wondering if some of you had similar experience and how you dealt with it.
Two weeks before our closing date, seller noticed us he can't close the house sale on the date written on the contract. He propsed a 10-day delay.
However, on our end, we've arranged everyting already, from mortgage to our kid's daycare. Some of them are easy to re-arrange, such as moving company. But some of them are hard, such as locking of mortgage rate. The 10-day delay is after our mortgage lock-in period and our locked mortgage rate will expire. Current rate is crazy comparing to the rate we locked. Also, due to our schedule, we really need to close it on or very close to the date stated in the contract.
We've asked our lawyer to talk with seller (and his lawyer) but the result was VERY disappointing. He told us the seller doesn't reveal any reason for delaying the closing and:
1. The closing date on the contract is NOT firm.
2. He has no way to ask the seller to close on the date stated in contract or not even before the newly proposed date.
3. He can issue some sort of time of essence notice to firm up the closing date. But that has to be done after passing contract stated closing date. Even if he issue the notice, he has to give the seller at least 10 day buffer.
4. The seller has no responsibility on the expiry of our locked low mortgage rate. Therefore, if we have to take a higher rate due to the delay, he's not responsible for our loss.
I think it's not coincidence that seller's newly proposed date is 10 day after the contract stated closing date. He must have consulted his lawyer about that time of essence notice. So, we are worried he'll keep delaying the closing date somehow with his lawyer's aid.
Do you guys know what we should do? Do the answers above make sense to you? Will it help if we switch lawyer now to solve this issue?
Many thanks!!!
"Specific Performance". Most sale contracts include an "SP" provision. If the contract doesn't provide for the right to extend the closing date then the seller is technically in default and is opening himself up to a lawsuit. Tell him to close according to the scheduled date or reduce the price of the home to compensate you for the costs that you will be incurring. Those are his options. Your attorney should've informed seller's counsel right away that the seller will be in default.
Just wondering if some of you had similar experience and how you dealt with it.
Two weeks before our closing date, seller noticed us he can't close the house sale on the date written on the contract. He propsed a 10-day delay.
However, on our end, we've arranged everyting already, from mortgage to our kid's daycare. Some of them are easy to re-arrange, such as moving company. But some of them are hard, such as locking of mortgage rate. The 10-day delay is after our mortgage lock-in period and our locked mortgage rate will expire. Current rate is crazy comparing to the rate we locked. Also, due to our schedule, we really need to close it on or very close to the date stated in the contract.
We've asked our lawyer to talk with seller (and his lawyer) but the result was VERY disappointing. He told us the seller doesn't reveal any reason for delaying the closing and:
1. The closing date on the contract is NOT firm.
2. He has no way to ask the seller to close on the date stated in contract or not even before the newly proposed date.
3. He can issue some sort of time of essence notice to firm up the closing date. But that has to be done after passing contract stated closing date. Even if he issue the notice, he has to give the seller at least 10 day buffer.
4. The seller has no responsibility on the expiry of our locked low mortgage rate. Therefore, if we have to take a higher rate due to the delay, he's not responsible for our loss.
I think it's not coincidence that seller's newly proposed date is 10 day after the contract stated closing date. He must have consulted his lawyer about that time of essence notice. So, we are worried he'll keep delaying the closing date somehow with his lawyer's aid.
Do you guys know what we should do? Do the answers above make sense to you? Will it help if we switch lawyer now to solve this issue?
Many thanks!!!
He has to sell you the house...it's called specific performance. He can't continue to delay the sale. You force the sale by invoking "SP". This is a fundamental contract point that I would be stunned to think was not included in your contract.
I just closed on a home 4 days ago in Fair Lawn and was in the exact same situation. The closing date on the contract was July 12 which coincidentally was the same date my rate lock (3.625%) expired. The sellers are in the process of buying another home and told us they won't be able to close til late July. I pushed them (through my lawyer) to close on time and after a lot of back and forth we were able to close on the 12th. They agreed to pay us 'rent' for the time they occupy the house after closing (which wasn't much). While it stinks that I don't have access to my home after closing, I'd rather close early and avoid having to pay for a rate extension (and collect some rent in the meantime) than to delay it a few weeks.
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