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We had a contract with a buyer to purchase our home. It had

Customer Question
We had a contract with...
We had a contract with a buyer to purchase our home. It had a 30 day option for obtaining financing. That contract was signed on 11/07/2016 at 11:34 AM. Today at 2:35 PM the buyer informed us that he could not get financing. He provided the standard form and a attached denial of credit letter supposedly from the lender, but it did not state the lenders name and the signature line was empty. Does constitute a valid denial of credit and allow the buyer to get their earnest money back?
JA: Because real estate law varies from place to place, can you tell me what state this is in?
Customer: TExas
JA: Has anything been filed or reported?
Customer: He just sent an email with the attached denial statement and the cancellation form to my agent
JA: Anything else you want the lawyer to know before I connect you?
Customer: no
Submitted: 11 months ago.Category: Legal
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Answered in 1 minute by:
12/8/2016
Lawyer: Barrister, Attorney replied 11 months ago
Barrister
Barrister, Attorney
Category: Legal
Satisfied Customers: 38,661
Experience: 17 yrs practice, Civil, Criminal, Domestic, Realtor, Landlord 26 yrs
Verified

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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Does constitute a valid denial of credit and allow the buyer to get their earnest money back?

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Is this on a bank's letterhead or just some random Word letter that anyone could have typed up?

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thanks

Barrister

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Customer reply replied 11 months ago
Just random form that just as his name and nothing from lender or signatures
Customer reply replied 11 months ago
if valid denial of credit they can get their earnest back within 30 days. My other question is did he get the letter even in prior to 30 days? Being technical about it, it was actually a few hours over 30 days...
Lawyer: Barrister, Attorney replied 11 months ago

Ok, then you are well within your rights to demand something from the lender as a formal letter, on their letterhead, because that is what real lenders send out when denying someone..

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So this smells a little sketchy to me..

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As for being over the 30 days, no real estate contract ever closes on time and both parties have a legal duty of good faith to work with each other to get the deal done. So as long as it is relatively close to that 30 days, it will count if it got in front of a judge.

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The only way you can set rock solid deadlines in a real estate contract is by using the statement "Time Is Of The Essence" in every clause because that creates a drop dead date. If they miss it by a minute, they are done.

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But I would definitely refuse to release any earnest money unless they provided something more formal from their lender..

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As an aside, I used to be a closing attorney for 4 different lenders...

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thanks

Barrister

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Customer reply replied 11 months ago
Thanks. The 30 days was not for the closing, it was the secure financing clause. He had 30 days to secure financing to get earnest money back. Closing was not scheduled yet, but was supposed to be on or before 12/15. My main concern is the earnest money ($30K).
Customer reply replied 11 months ago
the fact that now the house is back on the market and I continue to pay taxed, insurance, etc. in a house we have now moved out of...
Lawyer: Barrister, Attorney replied 11 months ago

Right, unless you used the clause I mentioned, that is a "soft 30 days" with the financing clause because as long as he is acting in good faith in trying to get financed, you have a duty of good faith to extend the deadline a reasonable amount so he can get an answer from the bank.

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But again, I would definitely refuse to release any deposit unless he comes up with an actual rejection letter from the lender that was issued within that 30 days (or very close to it).

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And I have been a licensed Realtor for over 13 years as well as a real estate attorney for over 16 so I have seen this type of thing come up from time to time.

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Customer reply replied 11 months ago
k Thanks. I will see how it goes tomorrow with agent and title company. Appreciate it!
Lawyer: Barrister, Attorney replied 11 months ago

You are very welcome. Happy to help any time.

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And it sounds to me like he manufactured something because he knew the 30 days was up... So he probably won't be able to get something legitimate from his bank that is within the 30 days or slightly over...

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It was my pleasure to work with you and help with your question. If you ever need me in the future, you can post a new question with "For Barrister" in the caption and the JustAnswer employees will get it to me.

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If you feel your original question and any related follow ups have been answered, I would very much appreciate a positive rating by clicking on the stars, smiley faces, or numbers on your screen as that is the only way I receive credit for my work.

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Have a great evening!

Barrister

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Barrister
Barrister
Barrister, Attorney
Category: Legal
Satisfied Customers: 38,661
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Experience: 17 yrs practice, Civil, Criminal, Domestic, Realtor, Landlord 26 yrs

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