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CalAttorney2, Lawyer
Category: Real Estate Law
Satisfied Customers: 10244
Experience:  I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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I offered on a home and qualified housing development loan

Customer Question

Hi i offered on a home and qualified for rural housing development loan here in maine and onecrequirement was for me to attend a 3 day home buyers course and I did attend. I learned in class that even if RD said I qualified and they approved a subsidized mortgage I in reality am not able to maintain upkeep of a home. So I told RD that I can't go through and they said I need to tell my realtor and I did. She in turn after talking with sellers realtor the sellers no to letting me off the hook and for them to sell the home to another buyer that was supposedly on the wings. The sellers said they will go and sue me for breaching contract. I really can't afford the maintenance on a old home and I wish RD made people attend homebuyers classes when they first apply for a low income persons loan through RD. I don't have money and I am still taking classes to complete my degree so that I can move up at work. Will the sellers be able to sue me for everything? If I had money I wouldn't have applied for housing development government loans that offer 1 percent interest with no down and no Pmi.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

Thank you for using our forum. My name is ***** ***** I hope to assist you today.

While you are in fact breaching your contract by refusing to go through with the sale when you do have financing to do so, if your sellers do have another buyer that is ready to purchase right away, the measure of the contractual damages they could potentially get would be very small.

In most cases, the sellers are upset and after they make the home sale they are unlikely to pursue such a claim (again with very small damages possible) against the first buyer in any event.

If they do decide to actually follow through and file such a suit, you can try using a loan contingency clause in your sales agreement (or perhaps some other clause in your contract) as a defense - often these contingency clauses have sufficient protection that they allow buyers to withdraw from the sale due to financing beyond the loan terms alone - however how far into your sale contract you are will make a substantial difference (and I would speculate this is why your realtor had to try to negotiate a release rather than simply send a termination notice to the seller).

So, if it comes to a lawsuit, there are defenses, and the limitations on their suit will be limited to recovering the actual loss associated with the lost sale (which is going to be offset by the sale they actually do make to the next buyer). You are not liable to them for the full cost of the purchase price of the home.