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socrateaser, Lawyer
Category: Real Estate Law
Satisfied Customers: 39027
Experience:  Attorney and Real Estate broker -- Retired (mostly)
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My son is buying a house. Will try to keep this short. His

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My son is buying a house. Will try to keep this short. His loan will be with Rural America. The lender cannot meet the closing date of 8/30 due to the extra paperwork. The sellers' realtor is saying the lender should have caught that immediately and extended the closing date. The sellers' realtor also said if she had examined the paperwork better, she would have known as well that the date could not be met. My son's realtor said he had no idea this type of loan would have taXXXXX XXXXXer. The sellers are now demanding $35 a day for each day the closing is delayed. I understand that they moved out and had to rent a place to accomodate the closing date. However, should the three professionals (two realtors and one lendor) take some responsibility as well.

Issues such as this are becoming much more frequent, because of the extensive requirements necessary to successfully document a loan, since the 2008 mortgage crises occurred, and the laws were changed to protect investors and borrowers from unscrupulous lender practices.

The real estate industry hasn't caught up to the reality that meeting the same closing dates that were once routine, is now generally impossible.

So, the answer is "yes," the agents should be telling their clients that the lender is not likely to be able to perform in the time allotted -- and the lender should be legally liable when it agrees to fund a loan in a timely manner, but fails to do so.

Unfortunately, there are no statutes or regulations that impose any requirements such as I describe. They are all simply giant loopholes in the federal real estate settlement laws (collectively termed, RESPA).

The seller's demand for additional compensation, if it is not expressly provided for in the contract, is unenforceable. And, if the seller cancels the deal, then that means the seller will have to find a new buyer. So, the seller really doesn't have much leverage here, if the buyer simply refuses to pay anything more than the contract price.

That said, if I were your son, I would tell the lender and my agent, that if I'm charged one penny more than the contract price for any of these delays, when everyone involved almost certainly knew in advance that the sale wouldn't close in time, that I will sue both agents and the lender, for breach of fiduciary, and I will complain to the real estate commission.

And, then I would kindly ask that everyone throw in some dough to assist the seller, because they are the ones who have created the crises.

Please let me know if I can be of further assistance.

Hope this helps.
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