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My husband and I recently put an offer in on a short sale home…

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My husband and I recently...
My husband and I recently put an offer in on a short sale home as our first home purchase. Our original contract called for close to occur on or before the end of October. No extention was filed. However, we did go forward with the inspection and both the seller and I signed a PAA-7A LTR (Contingency removal addendum). There were some issues with the approval from the lien holders which our broker said would have to be corrected before they would consider the contact radified for loan purposes, but as far as I'm aware we have a ratified contract. None of the repairs have currently been made, and an appraisal has not been done.

I just found out my husband has been having an affair for the past 2 years and no longer wish to purchase the home as I plan to file for separation and divorce. My real estate agent is telling me if we back out now we will be in default and face lawsuits from everyone involved in the contract (seller, broker, maybe the banks if the sellers fall into foreclosure, and the agents). I was under the impression that default forefeited the money we have in escrow. How does this work? Are we forced to go to close on a home we no longer want? What are the penalties we might face?
Submitted: 7 years ago.Category: Real Estate Law
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Answered in 21 minutes by:
12/1/2010
Real Estate Lawyer: Barrister, Lawyer replied 7 years ago
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 42,519
Experience: 17 years real estate, Realtor. Landlord 26 years
Verified

Hello,

 

If you have signed a purchase contract that has been accepted by the lenders, then you would be legally bound under it. If you were to default, the seller has several options. They could sue for breach of contract and "specific performance" which is where they get a court to order you to complete the sale or pay damages. If you are unable to complete the sale, then the seller could sell to another buyer and then pursue you for any damages if they had to accept less. They can also just accept the deposit money as liquidated damages and release you from the contract if they did not want to incur the expense of litigation. In a short sale, the seller is likely cash strapped so they may agree to just accept the deposit as damages and release you from any further obligation.

.

But in this situation, if the lenders have not accepted the contract and agreed to the price, then it is simply an conditional offer at this point subject to lender approval. An offer can be revoked at any time before acceptance by all the parties involved. So you could revoke the offer at any time prior to the bank's approval.

.

Additionally, since the closing date has long since passed, you could state that they failed to meet the deadline and the offer has expired.

.

I would opine that you have a couple grounds to recind without incurring any penalty if the lender has not approved the sale. You would want to put your revocation in writing and get it to the other side as quickly as possible to ensure they get it before the lender accepts the offer.

.

I would be a little suspicious of what your real estate agent tells you because if the sale doesn't go through, he doesn't get paid. So he has a financial incentive to convince you to go through with it.

.

.

thanks

Barrister

 

 

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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 42,519
Experience: 17 years real estate, Realtor. Landlord 26 years
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