Buyer refuses to close on schedule

[Cymru]

What is the name of your state? CA
We entered into a purchase agreement with buyers who had a pre-approval letter from their mortgage company with details stated such as amount approved , down payment and interest rate. We are scheduled to close in 5 days. Two days ago our realtor contacted us to say the buyers were not happy with their interest rate and are starting the finance process with a new lender. It could be several months. I have incurred numerous expenses such as veterinary certifications and horse transport deposit for my horses, along with a deposit on a moving truck. And we are scheduled to close on our new home next week. Our realtor has not gone to bat for us and basically said we have no recourse. Our purchase agreement is very specific that the buyer was to start financing arrangements within 3 days of accepted offer. What recourse do we have?

 

[LdiJ]

What is the name of your state? CA
We entered into a purchase agreement with buyers who had a pre-approval letter from their mortgage company with details stated such as amount approved , down payment and interest rate. We are scheduled to close in 5 days. Two days ago our realtor contacted us to say the buyers were not happy with their interest rate and are starting the finance process with a new lender. It could be several months. I have incurred numerous expenses such as veterinary certifications and horse transport deposit for my horses, along with a deposit on a moving truck. And we are scheduled to close on our new home next week. Our realtor has not gone to bat for us and basically said we have no recourse. Our purchase agreement is very specific that the buyer was to start financing arrangements within 3 days of accepted offer. What recourse do we have?

It is in your best interest to get a consult with a local real estate attorney. I am not suggesting that you need to hire one at this point, but a consult with one, who can review the purchase agreement and give you your options, is in your best interest.

I doubt that you have no recourse, nor do I think that you are required to potentially wait several months to close.

 

[adjusterjack]

Our realtor has not gone to bat for us and basically said we have no recourse.

No surprise there. Never take legal advice from a realtor. All they care about is getting the commission, even if it's delayed. What they don't want is for you to walk away and not pay them anything.

Our purchase agreement is very specific that the buyer was to start financing arrangements within 3 days of accepted offer.

Specific that he start financing arrangements within 3 days or specific that he HAVE financing by such and such a date? If the latter, you may be able to cancel the sale and keep his earnest money.

Yes, consult an attorney. Whatever you do, you'll need to do it in writing and that's best to come from an attorney in an effort to scare the buyer into accepting his interest rate and closing on time.

 

[BuyLowSellHigh]

The pre-approval letter doesn't mean much. After reviewing the specifics of the buyers finances the lender may have become aware of additional factors that changed the details. Maybe the buyer ended up getting rejected. Has the buyer supplied any evidence of a final approval for the loan?

So the real estate agents recommendation is to wait around up to several months and hope the buyer actually closes next time? Is this an unusual property or a great offer such that you would want to do this? If not, I would call the supervising real estate broker, explain the situation, and ask to be released from the listing agreement if the property doesn't close by the date specified in the purchase agreement.

 

[zddoodah]

What recourse do we have?

One would need to read your contract, but I suspect you have the right to terminate the contract and seek a new buyer. Depending on whether you end up selling for more or less than the contracted price, you could then sue for any shortfall plus costs incurred. I'd suggest consulting with a local real estate attorney.

 

[quincy]

Did your purchaser have in their purchase agreement a contingency on financing? If so, the wording of such a contingency could make a difference in whether you have recourse or not.

Although real estate sales often will go without a hitch, closing dates frequently must be changed or sales agreements can fall apart at the last minute. It is best not to think the sale is final until the sale actually closes and the property officially changed hands.