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P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
Satisfied Customers: 34314
Experience:  12+ yrs. of experience including real estate law.
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I have a son who was approved for a USDA Direct Home Loan,

Customer Question

I have a son who was approved for a USDA Direct Home Loan, He wanted to purchase a small cabin located on 1 acre property. He aggreed through their program to hire a contractor to do required repairs. They close on the the house then have a conference call with the contractor who is informed that they can not pay until the work is complete. The contractor bowed out and my son is left with a loan for a certain amount to pay for repairs but has no contractor to do the work because none want to work with no down payment. The USDA says they can not rewrite the loan for the lesser amount but they have not fulfilled their end of the contract, what should he do???
Submitted: 11 months ago.
Category: Real Estate Law
Expert:  P. Simmons replied 11 months ago.

Hello! My name is ***** ***** I am a licensed attorney with more than 18 years of experience. I am here to assist you with your questions. Please understand that if I ask you for additional information, you are NOT charged again and our communications are NOT timed. So please see this as a relaxed conversation between friends. I am here to help

Also, if you would like to chat on the phone, let me know and I can make that happen.

I am sorry for this dilemma. But not sure I understand your specific question. Does his contract require USDA to release money prior to the completion of work? In other words, the contract requires USDA to release the money but they are refusing to do so (so they are in violation of the contract terms)?

Customer: replied 11 months ago.
The mortgage contract is for $25000 (purchase of property) which was paid out but the $22900 which was to be paid for repair has not been released. We were not informed that the repair payment would not be released till work was completed until after the documents were signed and closed. The contractors in the area are not interested in working this project because of not being paid a percentage up front, so there is no way of hiring a contractor to complete the work. He has already made two payments on his mortgage, what should he do?? He can't keep paying for something that has not been recieved.
Expert:  P. Simmons replied 11 months ago.

But what does the contract say about this? I understand you were not informed...but is this addressed in the contract language?

Customer: replied 11 months ago.
The contract is a mortgage contract, I don't recall anything in the contract relating to this. I just know that the contractors were not informed and that they should have had a conference call before closing on this. The problem that exist is that the USDA won't pay for repair work up front, but they also can't ask my son to continue paying on a loan that has not been completed.
Expert:  P. Simmons replied 11 months ago.


The issue will be the contract language. By law, the contract MUST be in writing. Period. So you will want to take a very hard look at the contract terms. IF the contract terms required a partial distribution (so they pay a portion of the loan prior to work completion)? And the lender is not honoring this requirement? You son can demand they do so...and if they refuse can sue them to force this issue.

But if the contract language does not require this (does not require a partial distribution)? He is not going to be able to force them to do so

Please let me know if you have more questions. I am happy to help if I can. Otherwise, please rate the answer so I may get credit for my work.

Customer: replied 11 months ago.
what you are saying is that even though his mortgage is only $25000, they can expect him to pay for the other charge of $22900 even though he never recieved those funds???
Expert:  P. Simmons replied 11 months ago.

That depends on the contract terms. The statute of frauds covers the contract (the contract that both parties agreed to) will determine the rights and obligations of both parties.

If they agreed to a partial distribution, then he can force them to do just that (provide money for the contractor to start work). But if there was no agreement to partial distribution, they can demand that the work be complete before the money is disbursed.

Expert:  P. Simmons replied 11 months ago.

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Thanks for your understanding

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