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Can I cancel an accepted offer to purchase a fannie mae homepath

property on the second day...
Can I cancel an accepted offer to purchase a fannie mae homepath property on the second day of contingency? I sent in the escrow check but told the realtor to hold off depositing it. She is waiting for the pre-approval. The preapproval came in too low to cover any funds for renovation so I don't want to waste time and money with an inspection since Ii can't finance the repairs regardless of what the inspection says. I put a stop on the check, but now am worried there will be problems. What should I do?
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Answered in 2 minutes by:
5/2/2013
Tina
Tina, Lawyer
Category: Real Estate Law
Satisfied Customers: 33,167
Experience: 17 years of legal experience including real estate law.
Verified

Hello and welcome.

My name is XXXXX XXXXX my goal is to provide you with excellent service today. I am sorry to hear of your difficult situation. Before I can give you an accurate answer to your question, please provide the following additional information:

What is the contingency in the contract--that you obtain financing?

I look forward to assisting you as soon as I have received this information. Thank you.

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Customer reply replied 4 years ago

Yes, there is a contingency to obtain financing for a certain amount. The pre-approval came out to about $900.00 less than the mortgage amount in the offer, and this is the base before renovation financing, which is supposed to be added to that amount.


 


There is also an inspection contingency where buyer can terminate after inspection - I made an appointment with an inspector but cancelled it after getting the pre-approval since no matter what is found I will not be able to finance it. We already know it needs a kitchen, all appliances, some windows and the water is shut off because of some problems with plumbing and heating.

I see. Thank you for clarifying the situation for me.

If there is no written agreement signed by both parties, then arguably there is no binding contract yet to cancel since the statute of frauds typically requires that an agreement involving real property must be in writing to be enforceable.

In addition, even if there is a written contract, where the contract is conditioned on the buyer obtaining financing for the property and the buyer is unable to obtain the financing through their reasonable efforts and through no fault of their own, then the buyer may typically terminate the agreement without recourse by the seller since the condition has not been met.

This appears to be the situation here, whether the contract is in writing or not, the buyer could normally terminate it because the contingency has not been met through no fault of their own. The notice to terminate for this reason should be communicated to the seller in writing.

I hope this helps clarify the situation for you. Please remember to rate my service once you have all the information you need. If you have any other questions, please ask me – I’ll be happy to respond. Thank you!

Tina

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Customer reply replied 4 years ago

Thank you, XXXXX XXXXX a preapproval alone enough to satisfy the failure to obtain financing at the stated terms? My realtor is insisting I need to actually apply and be rejected before I can get out of this.

Hello again, Camille.

Yes, if there is a written agreement signed by both parties, then an actual rejection must typically take place after you have applied for financing. Rejection of pre-approval is not normally enough to satisfy your obligation to take reasonable efforts to obtain financing and avoid legal recourse by the seller. I understand your concern about incurring additional costs, such as for the inspection, but you could incur more costs if you terminate the agreement prematurely.

If the contract allows for it or you gain cooperation from the lender, they could possibly provide you with a letter indicating that you will be rejected for financing at the amount needed to finance the purchase before you must incur costs for the inspection.
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Customer reply replied 4 years ago

What about the Pennsylvania opt out law I read about online.


 


Section 3406 of Title 68 of Pennsylvania's Code defines a right called "Purchaser's Right To Cancel." It gives the buyer until 15 days before the property closing to cancel the contract for any reason whatsoever.


Hello again, Camille. This section of the code would not typically apply in a private sale, but only to sales of condos or timeshares where a public offering statement is required under Section 3401.

Here is a link to the language contained in 3406:

http://www.legis.state.pa.us/WU01/LI/LI/CT/HTM/68/00.034.006.000..HTM

Of course, if this applies to your purchase, then you could exercise the right to terminate the contract.
Tina
Tina, Lawyer
Category: Real Estate Law
Satisfied Customers: 33,167
Experience: 17 years of legal experience including real estate law.
Verified
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Thank you for your positive rating of my service. It has been my pleasure to assist you and I hope you will ask for me should a future legal need arise.

When you receive your Customer Satisfaction Survey from JustAnswer, please do rate me highly (9-10). It benefits my ability to assist you and other customers, and would be tremendously appreciated.

Thanks again and all the best to you.

Tina

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