Home Buying in 20171>Question Details

Hellohouse, Home Buyer in 20171

Does the bank have rights to cancel my ratified contract for a short sale house? If so under what kind of conditions they can do it.

Asked by Hellohouse, 20171 Wed Oct 14, 2009

I have a ratified contract with the seller, waited for this house for almost 3 months. Two days ago the listing agent told us, the bank has approved this shortsale.The next day, seller agent unilaterally withdrew my ratified contract by giving an excuse "for not submitting documents ontime" (Same day we submitted the needed ducements the listing agent requested, the agent never gave us a clear deadline for submiting those documents).We really don't know what's going on, the seller agent has told us that bank is working on backup offer now. No time line was given to us in writing or verbally to submit the needed documents. Listing agent representing the seller has unilaterally withdrew this contract, I have never sent a withdrawl request.Questions:1.Does the bank has rights to cancel my contract by picking up another backup offer?Where as we have submitted all the documents needed.2.we have contract signed by buyer and seller, does this mean nothing? 3.shall I approach relief to State

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Vicky Chrisner’s answer
Without reading your contract, we really can't answer these questions. But, here's what it boils down to you pick your agent, you pick the house... but you didn't choose your seller or sellers agent, or their bank. With a short sale, most of the risk falls on you as the buyer. If they don't treat you fairly, what can you do? Sue them? They have no money that's why they are in this situation, and if you tie up the home sale in litigation, the bank will own it soon b/c of foreclosure. It's such a mess. I am sorry, but I think I'd give it a shot asking for a broker to broker discussion and review of the paperwork and if that doesn't work, move on. Cut your losses.

Lesson to all short sale buyers - don't get emotionally attached.
0 votes Thank Flag Link Mon Oct 19, 2009
Hellohouse,

I'm sorry to hear about your situation. Even though you have a ratified contract with the seller, it is contingent on the banks approval/acceptance of the terms of that contract (there's probably some verbiage in your contract to that affect).

Review your contract regarding the contingencies and under what circumstances either party can withdraw. You indicated that the listing agent verbally notified you of acceptance but you did not recieve any written confirmation. If the listing agent is not experienced or knowledgable about short sales she may have misunderstood or miscommunicated the situation.

The bank may have approved the short sale (meaning they have agreed to allow the sellers to sell the home for less than what is owed on it) however they may not have accepted the terms of the contract you have. Often when they send back a short sale approval it also is accompanied by the terms under which the short sale must be concluded.

Thus although you had a ratified contract, the bank can reject it since it didn't meet their terms. They could have come back to you with a counteroffer but since they had a backup offer in place already, which was possibly better than your offer, they decided to reject yours and move on to the other offer.

As for the listing agent stating that contract was being terminated because you did not submit documents "on time", request that she/he provide you with further information on what documents were not provided in time as well as the applicable section of the contract or addendums that clearly stated that you would provide whatever these documents were and by when. If she/he can not show how you breached the contract, then she can not withdraw on that basis. However, they can still terminate it based on the bank rejecting it.

Again, a ratified contract does not guarantee you will close. There are many contingencies in a ratified contract and if those contingencies are not removed, they can lead to termination. For example, if the contract is contingent on you obtaining a loan, and if for some reason you can not get a loan, well than you would have to terminate for not being able to meet that contingency. The seller can't force you to buy the house if you can't get financing.

I hope this information was helpful.
0 votes Thank Flag Link Wed Oct 14, 2009
Though I respect the answers below..I do not agree in entirety. I do however agree with the following quoted from Sonal "It is quite well known that some of the short sale listing agents are unscrupulous and do things that are very wrong." I have written about this before. The fact is short sales are really a new phenomenon for most agents and they are learning on the fly. So not to get hammered by my colleagues I will also say that some agents handling short sales are good...just not abundant.

Hate to sound harsh but better to tell the truth up front. Perhaps your agent did not tell you what to expect or gave you false hopes of your short sale offer. Legal help...I think is a waste of money..Broker to Broker..a waste of time. They may get answers for you..but it's highly unlikely they will help you get the house. Furthermore if your agent is any good..they don't need to cry foul to the broker..they should be able to handle anything themselves.

Let's look at the reality..It is a short sale..requiring 3rd party approval. If you are the bank and you have multiple offers..would you not try for the highest and use any loopholes or legal strategies to make that happen? If you are the seller...and ultimately responsible for the shortage..would you not do same?

I am not sure of the solution..but I think it's a big mess. If my clients try a short sale offer..I tell them simply not to expect much and we continue our search as if the short sale will never happen. This does two things...motivates the listing agent some..(because we have an out) and allows my purchaser to move forward without obligation.

Wish you the best of luck.

Kind Regards,

Erik J. Weisskopf, ABR, CRS, GRI
Erik@AskMeAboutHomes.com
Listing and Selling New and Resale Homes Since 1987
0 votes Thank Flag Link Wed Oct 14, 2009
u need to take ur buyer agent's help and may be legal help.
rgds,
Rmesh Chandra
703 635 8209
mepcigroup@gmail.com
0 votes Thank Flag Link Wed Oct 14, 2009
I would recommend that your agent's broker speak with the other agent's broker to get this resolved ASAP while you still have a chance to get the house - ie, before the other one is finalized. This is the first step in escalating the issue.

The next step after that would involve seeking the advice of a real estate attorney.

It sounds to me like they had a back-up offer that was higher and just provided some excuse to go to the back-up offer. It is quite well known that some of the short sale listing agents are unscrupulous and do things that are very wrong.

Push the broker-to-broker issue; don't take no for an answer and make sure it happens today if at all possible.

Thanks,
Sonal
0 votes Thank Flag Link Wed Oct 14, 2009
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