I am interested as well in more specifics of your circumstances as we all learn from some of the 'strange situations' that happen in this business.

Have you sat down with both your realtor and the broker to discuss this? If you want to cancel the contract, then there needs to be a 'Notice of seller to perform' signed giving them 24 hours to execute the contract as is stated. I would also make sure that the notice is given to their lender (as you said this was a short sale).

On the surface this sounds like a situation where the seller was close to foreclosure and just looking for some free rent. I question how they are going to leave the property when they vacate. You need to get all parties (the lender, the listing agent, your agent and the brokers) discussing this. Because who's to say the lender isn't still proceeding with the foreclosure? THEN when you have all the information, consult that attorney. Stephen Beede is an excellent resource for you at http://www.bpelaw.com. But the lender has the biggest leverage to get that seller out of the property in my opinion.

I'd get on the phone right away Maria.

I followed this high anxiety drama back in August. - Maria could you come back in and post what the solution (if there was any solution) to your dilemma was?

that all depends on the the terms of the contract for legal advice best to see a qualified real estate attorny

Hello Maria. It sounds like the sellers are trying to change the terms of the contract. As far as I can tell, you are not in a position to agree to their demand even if you wanted to if your lender will not allow it. I don't know if FHA prohibits a short rent back altogether or whether they just have a time limit. Usually, the reason why you can't rent the house is because you applied for a loan based on owner occupancy which qualifies you for a lower interest rate than what you'd be able to get for a rental that's considered investment property. Even if you could rent back for a month, I personally don't like rent backs because they put the burden of getting the former owner out of the house on the new owner. If they don't abide by the purchase contract now, why would they abide by the rental agreement later?

I am assuming that the lender has already approved the offer. If that's the case, the lender's short sale approval is only good for a limited period of time. Unless the lender agrees to an extension, the whole approval goes away if escrow does not close in a timely fashion. Usually, the lender wants escrow to close no more than 30 days after the lender approved the short sale. Your contract should also provide when escrow has to close. The close of escrow date specified in the contract is not necessarily the day the lender approval expires. You should check with your agent to find out what the timelines are under the contract and how long the short sale approval is good.

Unless the contract provides that the current owners have to vacate the house prior to the close of escrow, you are in a bad spot because you essentially have to wait and see whether they are moving, which is not really feasible. Unfortunately, you may have to hire an attorney to find out what your options are given your particular circumstances. I am not sure if this house is worth fighting for. If I were you, I'd just want to know what you have to do to make sure that your deposit money is not in jeopardy. In my opinion, the main question is whether you can cancel the agreement now in light of the seller's indication that they won't perform (i.e., deliver possession to you on the day escrow closes) or whether you have to wait and see. The sad thing is, no matter what, the seller can make it difficult for you to get your deposit back even if you are doing everything right, because the seller has to sign the release of the deposit. If they refuse to sign it, the escrow company can't return it to you. I hope you'll be able to strike a compromise that works for everybody.

Maria - what is your realtor advising you to do? I can't imagine your realtor doesn't know about this already. Your realtor can run this scenario by their supervisor/manager as next step if he/she doesn't know how to handle this...

Start from there and you should be able to resolve this!

good luck, Jeff

Sue the bottom of our contract states that occupancy shall be delivered to us on the date the escrow closes.

You don't mention if your contract specified when the transfer of control of the property would occur. That's at the bottom of page one on your CA Residential purchase agreement. If you had specified some interim occupancy agreement up front then it's different....that would allow a seller to rent back for a specified time at specified terms.

If they're trying to add that now, well then you don't have to agree. The first step is to send them a Demand for seller performance. I would also be talking to the seller's bank to see where they are on the foreclosure process. You may have another dilemma if it's already up for auction while the seller is delaying your purchase transaction. If you can get them to give you authorization to speak directly with their bank, that's the best option. The reason I say that is that if it is going to auction, the bank may sell it to you directly once they have ownership. It also might lower the odds that the bank sells it out from under you after all of your efforts.

This is one reason why only 1 out of 10 short sales ever closes. Unfortanately the seller has nothing more to lose at this point, they are losing there house, they are not walking away with any money and are probabily very bitter. The first thing is not close. if you close on the home with them still in there, you will be responsible for getting them out and any damage they cause. You are limited in what you can do as the bank will set a time frame for allowing it to close before they foreclose anyway. If you really want the property, then you will have to have the listing agent arrange an extension to close to get the sellers out, your other option is to hire an attorney to go to court for specific performance in whioch you are asking the court to enforce the contract the sellers signed. Lastly if you choose not to go forward the you should have the agent type up a release do to the fact the seller has breached the contract. If the seller refuses to sign it, then ask for the agent to giv ethe deposit tothe clerk of courts, where the judge will hear your case and decide to award you your deposit back. Which ever you choose MAria, i wish you luck in your move.

In our opinion, you are asking a legal question. We would would advise you to consult with an attorney regarding your situation. Of course, you will take all paperwork to the attorney. And, our opinion would be to use an attorney who has real estate experience.

Thanks for your response, Antolin. I wish it would be as easy as just calling the sherriff to get them out. But we don't know about California law, so we are really very uneasy at this point. We don't want to cancel but it looks like it will have to be done because our FHA loan prohibits us to rent the property in the first place.

Their credit is shot, and if you rent to them for a month, it might be longer because with poor credit, they have no reason to leave until they find a new place that takes their bad credit or they are evicted. My bet is that if you agree to rent to them for a month, in reality it will be longer, and it might be hard to collect the rent.

Now I am not a lawyer, but it seems that since they would be in breach of contract, you would be able to get your money back. But to ensure that all sides see it that the seller broke the deal, agree to nothing, proceed to closing, and if they back out at closing you would totally be off the hook, you would get your money back, and they would probably owe their real estate agent as well, since it would be clear then that they broke the deal. And if they did go to closing but refused to move out, then as soon as the deal is done call the police and have them arrested for trespassing.

But don't make the move to break the deal. Let them clearly be the ones who did not close, don't back out yourself, that way it can't be pinned on you. Let them sweat, don't be the one to squirm here. You have them by the short hairs, now just keep pulling.

Antolin