Originally Posted By: Studebaker
First thing I would do is read your contract closely. Unless it says "Time is of the Essence" in regards to the closing date, then April 30 is not a drop dead date. Happens all the time. What is considered a reasonable can be determined by a judge.
The seller has to supply warrantable title. The seller can claim they are working on it, trying to do a short sale.
As far as the 8K, the agents and seller can argue you haven't lost that until they can't close in 60 days. if you walk, I think you may forfeit that claim.
As far as losses over 30 years because you lose your interest rate-get real. Not gonna happen. The only losses you can arguably claim are out of pocket expenses.
If the seller can't close, they will probably walk away from the house. They are getting divorced anyways, so rather than lose 28k they will take the dump on their credit and file bankruptcy.
If you sue the sellers and it goes to jury trial, what do you think your odds are that a jury, seeing this family split and lose their home, will award you a big judgement?
You can sue the Realtors. When I present an offer, beforehand I check the legal records to see what is owed on the home and how that lines up with the selling price. Could be though, the second mortgage was added recently and didn't make its way into the records, of the excess is fees and penalties. Either way, don't count on the E&O insurance rolling over for anything more that out of pocket expenses.
Sorry, but right and wrong aren't always the same as legal ind illegal.
The only option you have at this point is to walk away and eat your losses, or stick with it in hopes of a short sale within the 60 days. If it goes beyond the 60 days, try to negotiate another 8k off.
But what do I know?
Very valid points.
I spoke with three lawyers. the title attorney lawyer doing our closing that I summarized earlier and two other lawyers. One lawyer told me "why are you seeing me, you have an attorney at the title company!" well anyway, we talked for 30 minutes about my situation. here's the summary. I told him, sellers are defaulting on our contract. We will lose the $8k buyer credit if they don't close with us, we have nowhere to live after 5/30, I will have to pay expenses for $400 appraisal, lose $375 in home inspection, higher interest rate-to extend my lock past 5/10 I will have to pay $1500 for 30 extra days for rate lock!, I will have to pay a higher month to month apartment rent, and the sellers want us to sign this short sale affadavit and extension for them to get a 28k bank note to pay off for closing costs.
He said if we have nowhere to live after 5/30, we could move into the house, then work out details of the short sale later, and live mortgage free for awhile to recoup lost money. I don't feel comfortable with this. The bank could say we damaged the property in some way if we don't get the house and we would have to move twice.
Then he said since the sellers are divorcing, their assets will be tied up in divorce court, and he said "do you really think a bank would give a $28K bank note to the sellers, if they are divorcing!" he said if we did pursue legal action against the sellers, it would be a long drawn out process, that could take a year, and this is a complicated case, and if sellers do file bankruptcy, we get nothing. So he recommended the best option for us would be to get our earnest money back and move on. He said mentally and emotionally to walk away. I asked him if we could sue the E & O insurance that the agents carry, he said by the time we got to court in a year. It would be hard to prove what the seller's agent knew or my agent knew about the seller's short sale status. He said, it would be a "he said, she said" scenario. he recommened either walk away, cut my loses, or stick with the short sale and discount the price of the 8k buyer credit, and other costs I will lose. he said, it's the only fair option for us. The other lawyer pretty much said the same thing. If I discount the home say $30k, there's no guarantee the bank will take our reduced offer. So...what I end up doing, after talking to lawyers, my wife, and agent...
We signed an amendment to extend our contract to "close on or before 6/30". We sent that at 830am. My agent has not contacted me if the sellers have signed it and it's almost 330pm CST and today is the last day. I will call my agent shortly if I don't hear anything soon. I figure an extension is the only thing that will keep me from losing a ton of money especially if a miracle happens that the sellers get a bank note to pay the $28k difference within two months.
