Need Help
I am having a problem with the buyer's being able to close out our real estate transaction and need some advice on how to proceed...
We are selling a condo to buyer's who were approved for a loan with 100% financing. The buyers put in their offer in late September and it was accepted with a contingency from us that we wait until December 1 to close so we could avoid capital gains taxes... The buyers agreed with the stipulation that they be allowed to move in prior to close. They have been living in the condo (rent free) for approximately 1 month. Our deal that was supposed to close on 12/1 has still not closed yet, apparantly their lender will not release the funds... and my husband and I have decided to give them a 3 day notice saying if they are not able to close by Monday 12/8, they have 72 hours to vacate the property. The tricky part is I believe they have made improvements to the condo... My question, should I obtain an attorney since this could potentially get ugly, and secondly if the deal doesn't close by 12/8 will we be able to keep the earnest money? Any advice would be greatly appreciated!
A few questions comes to mind, why aren't they able to close? Why is the mortgage holding the funds? These are questions you are entitled to know the answers to. I would tell them I am getting an attorney and then get one and You should also be able to keep the depoist depending on the reason/reasons they can't close. There are a few times that allowing a buyer to move into a property prior to closing creats problems and this sounds like one of they you really should charge rent when you do this and this would stop a lot of the problems. Good luck
Terry
Thanks for taking the time to reply.
I'm still not entirely sure what the problem is with tthe loan. Last Monday I was told the reason we weren't able to close was because the lender had misplaced some paperwork and it would take a day or so to reproduce it. Now I'm being told that the lender has been unable to verify the buyer's rent history for the past 2 years...sounds like something that should have been taken care of 2-1/2 months ago when they applied for the loan. Our realtor can't even get a straight answer. It's frustrating because we are trying to buy a new home that was scheduled to close on 12/8, but now we may lose that opportunity.
Be careful here! I wouldn't jump too fast with the vacate notice. I've seen these proplems with banks several times during my carreer as a realtor. Some of the lenders are inexperienced and they don't know about what they need to get from the buyers until their underwriter tells them. Since you have a contract the best way to go may be to have your realtor write up a notice to the buyers (faxing a copy to the lender) stating that the buyers are in breech of contract due to going past the closing date and that they have 72 hours to obtain loan approval and set a closing date or the contract will be void. Talk to your realtor about the exact language to use etc. I don't think that this is a case where the buyer is trying to screw you. They are at the mercy of the bank as much as you are.
Oh, one more thing... also write an amendment to the contract on the home that you are buying amending the closing date to another date like the 15th. If it is a new home that you are buying from a builder or realtor, they would probably rather close a few weeks late than to lose the deal and have to look for a new buyer. Your agent should be able to explain the situation.