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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 36604
Experience:  16 years real estate, Realtor. Landlord 26 years
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I'm selling a home in California. The buyer didn't remove

Customer Question

Hi,
I'm selling a home in California. The buyer didn't remove the loan contingency on 8/12. We submitted a Notice to Perform on 8/13. They buyer released all contingencies today, but I know they don't have their loan papers. Can we cancel escrow?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Barrister replied 1 year ago.

Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.

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Do I understand you correctly that they are releasing all other contingencies, but are asking for more time to get their loan approved?

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Have they asked for any prior extensions?

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How long of an extension are they asking for?

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And I am assuming that the deadline for meeting all contingencies was 8/12?

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thanks

Barrister

Customer: replied 1 year ago.
I have a digital document that releases all contingencies, but I have another document that extends escrow and the loan contingency. It doesn't make sense that they will both release all contingencies and then ask for an extension.
Yes, the deadline to release the load contingency was 8/12. There was a physical contingency also, but the buyer visited the house this past weekend and found it satisfactory.
The extension is for a day, but we are interested in cancelling the contract as we have a higher backup offer.
Customer: replied 1 year ago.
No, they have not had a prior request for extension.
Expert:  Barrister replied 1 year ago.
Ok, in a real estate transaction, both parties have a duty of good faith to work with each other to complete the transaction. However, if there were fixed dates for compliance with any contingencies and the buyer has not met them, then he is in breach of contract and you would have the legal right to refuse any extensions and demand immediate performance in writing from the buyer.
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When one party breaches a contract, that releases the other party from any duty of further performance under the contract.
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So if the buyer can't perform under the contract as written, then you have the right to hold them in breach and cancel the contract by written notice delivered to them.
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thanks
Barrister
Customer: replied 1 year ago.
According to the California Residential Purchase Agreement, the Loan Contingency says: Buyer's qualification for the loan(s) specified above is a contingency of this Agreement and unless otherwise agreed in writing.
Since the buyer doesn't have a written verification from the lender at this time, doesn't this mean he did not fulfill the contract, even though he removed the loan contingency?
Why would he remove the loan contingency and then ask for an extension? Something doesn't smell right.
Expert:  Barrister replied 1 year ago.

Since the buyer doesn't have a written verification from the lender at this time, doesn't this mean he did not fulfill the contract, even though he removed the loan contingency? Why would he remove the loan contingency and then ask for an extension?

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If written verification of loan approval was required, which is normal, then yes, he would have failed to meet the contingency.

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I can only guess that if he has agreed to drop the loan contingency, then he must have thought that he either had financing arranged or had some type of private financing set up so it wasn't necessary. Then he must have realized that his plans fell through and asked for the extension.

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But either way you are under no legal obligation to agree to the extension and can demand immediate performance or you will declare him in breach of contract and terminate.

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thanks

Barrister