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What are my options when the buyer cannot close on time? We…

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What are my options when...
What are my options when the buyer cannot close on time? We opened escrow on Jan 28 they've asked for numerous extensions last week they asked for one more extending until July 1st " to finalize loan and give Escrow time to put together documents" the
loan still has not been funded and probably will not be this week. We have lost months of rental income on the property are behind on our own mortgage because of the loss of income . We feel we have given them enough extensions already
Submitted: 2 years ago.Category: Real Estate Law
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Answered in 1 minute by:
6/30/2015
Real Estate Lawyer: Barrister, Lawyer replied 2 years ago
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 42,016
Experience: 17 years real estate, Realtor. Landlord 26 years
Verified
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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Is there any language in the contract that specifically states "Time Is Of The Essence"?
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Do you want to simply cancel the contract at this point?
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How many extensions have you already agreed to?
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thanks
Barrister
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Customer reply replied 2 years ago
Yes there is " time is of the essence" in the contract.I counted 5 extensions.I'm really not sure what to do.
They keep asking for extensions and we keep giving them and getting nothing in return. My agent mentioned per deim but never wrote that into the last extension. My agent hasn't been really helpful and we feel lost not sure what we can do
Customer reply replied 2 years ago
We had to vacate our tenants out in April by tomorrow that would have been about 7500 in income that we lost out on. We rely on that income to help us pay our mortgage but because we don't have that anymore we have fallen behind
Real Estate Lawyer: Barrister, Lawyer replied 2 years ago
Ok, in a situation like this, you have gone above and beyond the legal call of duty with what you are responsible for. First, you have agreed to multiple extensions which fulfills you duty of good faith to assist in getting the deal to close. Second, since you have the Essence clause in the contract, you didn't even have that normal good faith duty in the first place. A "Time of Essence" (TOE) clause is a "drop dead" clause that allows you to terminate the contract and potentially hold them liable for breach if they aren't able to close on or before the date in the TOE contract.
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With that said, the last critical bit of information here is if they have a financing contingency that gives them the right to back out if they can't get financed.
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If they do, then you have two choices...either give them the extension and hope they can close or refuse and terminate the contract under the TOE clause after you send them a written notice to perform as agreed. If you terminate and walk, if they have the financing contingency, then they can get their deposit back and walk away and you would be free to continue marketing the property.
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The issue here would be starting over from scratch trying to find a new buyer or are you committed to them enough so that you have to see their deal through to the end..
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But if they don't have a financing contingency, which would be odd, then you can declare them in breach, refuse any extension, and keep any deposit.
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thanks
Barrister
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Customer reply replied 2 years ago
We signed the closing documents already is it to late to cancel? They said that funding will be "soon" but I don't believe them
Real Estate Lawyer: Barrister, Lawyer replied 2 years ago
Ok, this concerns me a bit because this is called a "dry closing" if you actually sat at the table and signed the HUD-1 closing documents and the deed over to them and the loan wasn't funded within a day or two after this.
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The closing company or lender/attorney who conducts the closing is supposed to verify that the loan has been approved and will be funded on a specific date before proceeding to a dry closing.
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So did you actually sign over the deed to the property to the buyers and the HUD-1 Settlement Statement where is lists all the charges to both buyer and seller in columns on the page?
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thanks
Barrister
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Customer reply replied 2 years ago
Yes ... They said the loan was approved but they can't give us a date for funding
Customer reply replied 2 years ago
We signed at the escrow company
Real Estate Lawyer: Barrister, Lawyer replied 2 years ago
Ok, this is kind of unusual because as I said, there is usually a set date only a day or two out from the time that the closing occurs before the loan is funded.
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This makes me nervous because if you have signed the deed over, then the buyer now legally owns the house and you haven't been paid..
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So at this point, it is too late to back out now and you are kind of stuck waiting for the loan to fund.
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But I might suggest contacting a local real estate attorney to send them a letter stating that if you don't receive the proceeds of the loan by XX date, you will file suit under a breach of contract and fraud claim and seek punitive damages as well as compensatory damages because the closing should have never occurred without a fixed date for the loan to fund..
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The buyer doesn't care right now if you ever get your money because they have a deed in their name. And you aren't likely a priority with the escrow company if they have other work. So by getting an attorney involved, if only to send a threatening letter, it will make you a priority to get paid.
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thanks
Barrister
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Barrister
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Category: Real Estate Law
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Experience: 17 years real estate, Realtor. Landlord 26 years

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