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I wrote the clause in the contract . My agent said to just ask for more money down. But as i understand it on day 59 financing could crash and the buyers get a full refund and I'm out 60 days of marketing time. I wanted no contingency contract within 30-35 days if i had to wait 60 days to close
If Offer A crashed on day 59 ... you have back up offer B ready to go. Isnt that the point of the back up offer?!
Your agent (most likely) can still list and show yoru property ... it would be listed as "contigent" but still showable ... more back up offers?!
Also, at least in my state, if they failed to meet the requirements of the contract and did not close- they forfeit the deposit to you. How much is it? That's what its there for.
Has Contract B completed an inspection of the home? There is no guarantee that Contract B would stay in the contract after the inspection contingency.. Some people offer higher to get the home under contract so they can whittle it down with inspection items. If Contract A is switching lenders and terms.. I would be concerned. There is no way they will get final underwriting approval in a matter of days after just switching... so you are right to be concerned. You should definitely talk to an attorney first thing tomorrow and have them review the language of the clause you wrote.
I wrote the clause in the contract . My agent said to just ask for more money down. But as i understand it on day 59 financing could crash and the buyers get a full refund and I'm out 60 days of marketing time. I wanted no contingency contract within 30-35 days if i had to wait 60 days to close
IMO You wrote a clause that seems fairly free to interpretation. What I would do if I feel the accepted buyers were not financially strong I would leave myself a out with back offers accepted and I would pressure the buyers to close with a 30 day escrow. 60 day IMO shows you're ok with lolly gagging the sale. So the buyer acts accordingly.
And I wouldn't write my own clauses. I would tell a lawyer what I want and have him write it.
Last edited by Electrician4you; 12-08-2013 at 03:32 PM..
Danger, Will Robinson.
So, in the aftermath, the OP is asking for an interpretation of a clause he wrote, from people all over the country.
Attorney Time? That was when the clause was being drafted.
Quote:
Originally Posted by AZJoeD
Like all contracts and clauses added to contracts, this is up for interpretation. In fact you are obviously unsure of the very clause that you wrote which is why you are posting here. In other words, you are going to get several differing opinions.
I won't bore you with my opinion, but I think trying to cancel this contract could cost you more in legal fees than you will get from contract B should the buyers wish to put up a fight. Chances are they won't, but who knows.
In my opinion you accepted an offer and were happy with it until you got a better one. If you were unsure of the buyer A you should not have accepted their offer. The truth is very few banks will approve underwriting and final approval for a close 25 days away (most wait until the last minute). Your initial contract was flawed in that regard.
Only you can decide which way to go, I doubt even an attorney will advise you on this choice.
This pretty well says it all. Although I think an attorney would have some advice regarding the ramifications if the OP would skip on Buyer A based on the lender and the language and the balance of the contract.
Wonder how the agent feels about the potential liability of presenting an offer with an amateur clause in it? Hope it is documented that the OP was strongly urged to consult with an attorney before drafting.
I care because all i have is a letter that a 8 year old could type up saying we, Mr & Mrs ****** commit to lend $******* to Buyer xyz. Its not an official email from a banks underwriting dept that all stips have been met and they are clear to close.
And that's the only type of letter anyone gets. What kind of letter do you want? Something that states, "Based on this buyer's information, I would give my first born if they can't buy this house." or maybe something like "Based on this buyer's information, I promise to buy your house if they can't."
All any letter ever states is they're willing to lend $X. You can't control the amount down or the type of program they qualified for. Many buyers want 3% down, but only qualify for 5% down. Some only qualify for FHA financing. You, as the seller, cannot control what the buyer's financing is nor what type of letter their lender decides to provide, and as long as it doesn't say they're denied, they get to move forward.
And, YES, the deal cold still fall apart on day 59, as that sometimes happens... Getting a commitment letter isn't going to ensure that doesn't happen.
I have a few of these, about nine times out of ten buyer 1 closes.
We fully inform buyer 2 and we ask that they run the due dilegence in tandem. If buyer 1 closes we give buyer 2 their expenses. Seller must consult an attorney.
If buyer 2 closes we give them their earnest money back.
Sometimes we offer buyer 1 money to terminate and release.
Please help I'm down to the 9th hour. I have 2 contracts on my house. The 1st called contract A, and a higher cash back up lets call contract B.
Contract A is for 60 days closing with 80% financing, 20% down and conventional financing. To make sure i wasn't tied into contract for 2 months and then financing failed at the end, this clause was added. "full underwriting to be completed within 35 days of effective date of contract. Futhermore buyers lender grants final approval to buyer for financing and buyer to provide such proof to seller in writing on or before the 35days. At this point all the contingencies have been met and the only thing remaining is for time to elapse till closing". Now on day 33 the buyers on contract A sent a copy of a generic letter head from a private party saying the private party has committed to lend 95%. I have no idea who this "private"is. Note: My realtor is clueless on what to do. He wants a larger deposit and not address contract B's position and rights. Naturally i'd like to go with contract B's contract without a lawsuit.
Here's the problem: contract B is a cash contract with proof of funds and substantially higher. Is this change within contracts A's right? If i accept contracts A's non conventional 95% private is this hurting contracts B's contract they entered into in good faith? Do i even have a say in this?
Is party A in breach of contract?
If your realtor is clueless, try and drop him/her. Also ask a lawyer if you can get out of the contract and go with the cash buyer. Good luck.
Your deal says financing of 80% based on a 20% down payment, does it not?
That doesn't sound like the deal you are now being offered. That, to me, is a HUGE difference. It 'sounds' like 95/5 is a better deal, but certainly not for you. To you it screams that these people are unable to get reasonable financing, and therefore are unlikely to get a deal to closing.
Talk with your attorney first thing. Curious to know what he says, and what the final resolve will be. I would at least like for him to press the lending party for a demonstration that they have the liquid funds and are willing to underwrite this transaction with those funds. Otherwise it sounds to me like your buyer found a neighbor who was willing to write a letter so your buyer could buy time to secure 'conventional' financing. Would not surprise me at all if this buyer either folded by closing, or came back with an 80/20 deal, and asked for more time--the exact thing which you were trying to avoid to begin with.
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