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So basically the seller screwed up and the buyer is screwed?
Not necessarily; if the owner is profiting from the sale after all closing costs are incurred, then the money for the second lien should be taken out of the proceeds. However, if the seller is underwater, then yeah: buyer is screwed unless they're willing to come up with $10K out of pocket or (assuming the property appraised for enough to cover the added cost of the second mortgage) change the sales price and end up with a higher mortgage.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by FalconheadWest
Yes, there are regional differences in the languages of a contract, however, a legally executed contract is still a contract with dates in it, and one party cannot make changes to it without the other party agreeing. I'm sure ALL states/regions acknowledge a contract is a contract, and when one party doesn't abide by the contract, that's called Default, and each contract would state what happens when there is a default.
Totally with you on this on Falcon, but the issue, at least here in CA would be that the second loan may have no recourse or deficiency judgement, but in other parts of the country the seller would be liable for a deficiency. In short sales here, the 2nd lender usually is happy to get 5 cents on the dollar, or some very nominal fee.
I would think it's time for the seller and their agent to get busy and try to get the 2nd to discount the note to where the deal can close, and avoid the short sale condition.
Sounds like the seller is screwed to me. OP has a legal contract so NOT THEIR PROBLEM.
I don't think you understand the problem. The buyer will not have a clear title unless the second is paid off or the lender agrees to remove the lien in exchange for a partial payment.
As someone pointed out earlier, one of the key questions is whether the seller was supposed to receive at least $10,000 at closing. Even if the answer is yes, the seller could still make it difficult for the buyer. I agree with you that the buyer has the legal right to close at the agreed upon price, but enforcing that right could become expensive.
Sounds like the seller is screwed to me. OP has a legal contract so NOT THEIR PROBLEM.
You're incorrect in that it has the potential to be a MAJOR problem for the OP.
Just because they have a legal contract with the seller doesn't guarantee that the seller will perform their duties. If there's a second lien involved that must be paid off, and seller can't (or won't) come up with the $$$ for it, and OP won't do so either, then guess what? OP most likely doesn't have a house to move into.
While OP will have several legal options to pursue to be made whole financially, and definitely should receive restitution above that, there's not a reasonable possibility of a judge forcing the seller to follow through with the sale. There would most likely be a settlement of some sort but no transfer of property.
I guess it depends on how much the seller would have profited, how much the second mortgage is, what their state law says, etc...
I understand completely. I went though the same thing when I bought my house. Maybe I lucked out? IDK but have either of you had that experience? If not then I guess you are just assuming how it is handled?
IDK but have either of you had that experience? If not then I guess you are just assuming how it is handled?
I went through this on a personal purchase. The sellers "remembered" that they took out a $100k home equity loan. They tried to not move forward because "we already spent that money..." They locked us out for the inspection. They locked the survey guy out of the backyard so he couldn't do the survey...
We sent a demand letter from an attorney specifying what specific performance was... they decided to play nice, until closing... Mrs. Seller didn't show up. Mr. Seller did. I sent the title company to their house that evening and didn't really give her a choice to sign or not. She was scared that they showed up, and she signed.
During the title search, the HELOC docs were seen on file, and forged signatures... the actual seller of the house was the father. The kids took out $100k and he didn't know. They still had plenty of equity so the lien was paid off, but yes, I've been in the situation before, and as long as you know the contract you signed, you know your options for moving forward.
Attorney time. Everything here is experience and conjecture -- your attorney will be able to advise you so as to best protect your interest and investment of time and money.
If the BUYER doesn't close by the April 30th date, then the contract is not valid anymore because it will have expired. If the buyer needs to ask for an extension of the contract, that opens the contract up for other terms to also be negotiated. The seller doesn't have to agree to the extension. If the seller doesn't agree, the buyer is in default by not closing before the closing date. Dates are important. Why wouldn't a closing date be important in a contract in Florida?
While our contract does state an "on or before" closing date, going past that date does not invalidate the contract.....there is NO "time is of the essence" clause in our contract documents. Without that, legally as long as the buyer is diligently pursuing the contract is not in default nor "expired".
Where we were in FL, it was the same thing. An attorney needs to review the OPs contract.
Many agents in our area are not aware of that. They think that the contract just dissolves away after that date on the contract yet it LEGALLY does not.
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