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New Jersey B…, Home Buyer in 07456

How to send a "Time of Essence Letter" without to risk my deposit? Bank requested inspection before closing.

Asked by New Jersey Buyer, 07456 Tue Aug 4, 2009

We are in a weird situation. The seller missed the July 31 closing date. In the purchasing contract they stated they will remove the underground oil tank and to install a new septic. They avoided answering all the questions we asked so far. Today, August 04 we finally heard from the seller attorney that they will start working.
We asked our lawyer to send them a Time of Essence Letter stating that all the work to be done by August 13 in preparation for August 21 requested closing date(the Bank asked to inspect the property 6 days prior to closing date) Our lawyer is telling us that we cannot force the seller to finish the work 6 days before closing and if they will finish the work the day before closing it is our fault that the closing cannot be done in time.
We believe that if, in the Time of Essence Letter, we specify that the work has to be finished 6 days before closing for the Bank's inspection and they finish the work beyond the stated date than this is their fault.
PLS. HELP!

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16
Hello, Everybody!

Thank you for your answers and for your time. I agree with your logic but let me answer to some of your questions and give you some details of the deal.

-Yes, our lawyer asked repetitively the seller about the progress of the work before the July closing without any answer. The only answer was that they do not want to start anything before we have a mortgage commitment. The mortgage commitment was faxed to them on July 17th - as agreed in the contract.

-After the closing date passed, our agent told us that they are still waiting for prices from several contractors???!!!!! (they are trying to save money on our time? our time is money also!)

-Francesca, the bank will not close the deal if they do not see all the inspection papers from the town for the oil tank and septic. The bank will send an inspector also when the work is done. thank you for your concern.

-Bill, if we do not close the deal before the rate lock expires and we'll close at a later date well get, most likely, a rate of 5.5% or higher. Our actual locked rate is 4.875%.

-Bill, if I do not move out from my rented apartment this month I'll be forced to pay the rent until they find somebody else to rent the apartment, usually several months. We know, personally, people that were forced by the court to do that.

-Bill, you propose to leave the apartment with a court order. How would this be different than what the seller did to us?

-Bill, if a judge cannot filter thru the facts than we are better of replacing them with computers.

Maybe you realized already from my writing that I am an immigrant. I left my country ten years ago because it's government was/is very corrupted and the law did nothing to lawless people.
In my country today the lawless people live like kings and the hard working ones left the country already or are living miserable lives there. Do you see the similarity with my case here. The seller who has no respect for me or for the law should be rewarded and me that I did everything to be ready in time for this deal I will be punished!!!

Thanks God, now I live in the USA where the law is the same for everybody. If my experiences means something to you please listen to my advice: fight for your rights and do not let the "smart guys" to take advantages on you if you do not want this country to become my old country.

I will let you know how it ends.

Thanks again.
1 vote Thank Flag Link Fri Aug 7, 2009
Buyer: This should not be construed as legal advice. In my opinion, your attorney has already done a good job of that.

This is how I see it: Right now, with “on or about," the laggardly seller can drip along. Short of hiring a hit man, you erally can't force him to work faster. Eventually, he/she will announce to your bank that the house now can be examined in order for them to assure themselves that the house has enough value to cover the mortgage. They have asked for 6 days to organize that inspection, which seems reasonable. With the newly revised closing procedures now in place, that may not be all the time that may be needed to close anyway, even after the work is done!. It could go even longer.

You wish to jump on the seller with a Time of the Essence (TOE) letter. This can be a two edged sward, with both edges pressed firmly against you own neck! Why? Well, in the first place, if the work is not done on time, you can quit the deal or sue for damages. Who wins? Your attorney, for one. He gets additional fees. Now supposing the laggardly seller inspires his contractor to finish a day before the TOE date. The bank can't act that fast and it is now you who cannot show up at the table with funds on time. Seller can now sue you or just refuse to continue the deal. No deal, no house. Just how long have you been working on this deal to get a home? Congratulations, you've just been given the opportunity to start all over again.

All the brick a brack about lost mortgages and increased rates are, first of all conjectural. Your lender may not really add anything if conditions do not warrant it. Secondly, these are the NORMAL hazards of buying a property. Ending up with a delayed closing may mean that you place you stuff in storage and stay in a hotel or even rent. If you are moving out of rental housing, you can probably stay there, even if the landlord doesn't want you to, at least until he can get a court order. That may be all the time you need.

I'm not trying to make light of your situation but really, this is one of the things that happens some percentage of the time. I believe the best you can do is to stay on top of the repair work. Stop by daily. If things aren't going to schedule, call the seller. Hound him. He may not add you to his Best Friends Forever list but it is a business deal. The alert and squeaky wheel will get all the grease in inventory. You'll just have to be prepared in case it just isn't enough to keep on the schedule.

Best of luck.
Bill Holt
1 vote Thank Flag Link Wed Aug 5, 2009
Hi,

I am also going through the similar situation. Can you please share how did you resolve this issue with the seller?
0 votes Thank Flag Link Mon Nov 26, 2012
I cannot remember the dates exactly but we've been delayed until September or October, we've been without heat for a few weeks as we had to install the gas pipe and a new furnace. All is good now and looking back it's an interesting experience.

You have to be prepared for the worst. Unfortunately the real estate contracts are useless and the agents cannot do much. Put pressure on the seller and all the parts involved.
Good luck!
Flag Mon Nov 26, 2012
NJB:

Sorry to have added confusion, rather than clarified it.

1. No, you won’t necessarily have to pay for several months worth of rent. Usually, that is only available as an imposition if you sign another contract, although teh expired contract may have some provision to that effect. Ask your attorney but if you just don’t move, the landlord has to get a court order to get you out. (You don’t have to get one.) You would be a tenant on sufferance and perhaps liable to month-to-month rent, if the court orders you to pay. To the best of my knowledge, no police or sheriff’s officer can act to evict without a court order. I just went through this last September for a client. Our laws usually protect tenants more than landlords.

2. If you can, get the mortgage deal extended. If you can’t and you want the rate, pay points but only if you plan to stay much longer than the point payoff break even. Otherwise, as I said, sorry, but there are often these delays in getting things together.

3. My point is exactly that the judge will “filter through the facts” to apply the pertaining law. If the Time of the Essence is clearly stated and the FACT is that you are the one who can not carry through the closing, then the fact IS that you are going to be the one who might be charged for the seller’s losses or the one that finds that the seller can cancel the contract.

4. I’m glad that you find our country to be so nice. In any orderly society, there are procedures established by law and custom. Unfortunately they do not result in “fairness” in every case. If I have to pay for an expired parking meter because the meter maid came by five minutes before I arrived back to the car and, right around the corner, you park for another hour on an expired meter because the meter maid turns right instead of left, it’s not “fair,” but I’ll pay a fine and you will not.

5. One of my favorite expressions for stupid actions that cause much more harm than good is, (in a very snotty voice)” “IT’S THE LAW!”

My advice, and I repeat it, is to work through the situation, as it now exists. That means covering your losses (In law, I believe it’s call mitigating your loses) and accelerating your seller’s action to the best of your ability. You will note that I have not asked you why things got so late. It really doesn’t matter now.

Then get the best mortgage deal you can get now, not what you could have gotten months ago. (I wish I could go on margin in the stock market to the max on March 6th of this year but I can’t.)

I also recommend you stay in this country and not go back to where things are worse. You could go to a stabile country such as Germany but boy, do they ever enforce the laws there, even if you don’t like how they work out for you.

Once again, best of luck.

Bill Holt
0 votes Thank Flag Link Fri Aug 7, 2009
PS.....after reading my post, I noticed my various typos.........they drive me crazy! I apologize...I wish Trulia allowed a way of editing responses like you can edit blogs!! The only choices currently available are: delete it, let it remain as is... or delete it and retype it!

Well.....my typos will remain as is!!!!!! I guess I have to work on my proofreading!...
0 votes Thank Flag Link Fri Aug 7, 2009
HI again NJ Buyer

I am truly sorry for the difficulties you are experiencing. Over the years I have been in the business, I have seen simialr scenarios, and it's frustrating to be involved in these kind of situations. All my sympathy, however, won't make it all better for you!

You are caught between as we say is a "rock and a hard place". The sellers waited for your mortage commitment before starting the work, which sellers often do. Too bad, however, they didin't at least line up estimates ahead of time, and have the contractors in place and ready - shame on their agent for not encouraging them to do so, as the issues they need to address they will most likely need to address for any buyer. But saying "shame, shame" now won't help.

The biggest issue is your rate lock in.....4,78 is fabulous, and not readily available now........is there any way you can get that extended; pay a fee? ?

As far as where you are going to live if the date is extended...I see your point. You don;'t want to stay in the apt. beyond that date as I am assuming the apt. ahs been rented out already, and you don;t want to inconvenience another party. I applaud your thoughtfulness and kind spirit. Is it possible that the new tenants can wait, and give you an extra month to move out. I understand you don;t want to do to someone else what was done to you. Do you have any friends you can stay with? The moving companies will often hold furniture on the trucks (for a fee, of course) for a couple of weeks. That might be easier than moving, and putting things in storage. Might it be possible to move into the house, and act as "tenants" while the work is being completed?

I am sorry to say I am at a loss as far as any other solutions other than waiting and hoping the sellers will move quickly, and get the work completed in time.
Are you sure you want to proceed with the purchase of this home? You really need to have another talk with your attorney, and investigate all your options from now, moving forward, and at least have a plan in place for the "what if's" of the situation.

Sounds like our country has gained a repsonsible and upstanding citizen when you came here!
Please let us know who things work out.

Best wishes,
Debbie Rose
Prudential NJ Properties
Debbie.Rose@PrudentialNewJersey.com
0 votes Thank Flag Link Fri Aug 7, 2009
Now, I'm curious . . . from where did you immigrate? :)
0 votes Thank Flag Link Fri Aug 7, 2009
Hi NJ Buyer

I'd throw my hat into the ring, but I don't wear hats! That, however, won't stop me from responding!

You've gotten some very good advice, and I agree with much of it!

After reading your question, and the other responses, I agree (and see the reasoning behind it) that you should not have the attorney send a TOE letter. I am not giving you legal advice, but I am agreeing with your attorney. A TOE letter might put you in jeopardy if the repairs aren't completed in time for the bank to do the inspection, hence delaying the closing ....preventing YOU from being there at the newly designated closing date.. You might then be the party who is in breach of the contract.

BIll very nicely (as per usual!) summed it up.
I agree with him that you need to play this out - stay on top of it and see if the seller completes his end of the deal in a timely manner........if not, then have your attorney take whatever legal action is necessary.


I am curious, though, as to why someone on your end of the transaction didn't pursue this back in June or early July when you saw the work hadn't been started? Do you have an agent? Did your attorney send a follow up letter asking the status of the oil tank removal and septic work?

The fact that the closing date has come and gone shouldn't have been a surprise to anyone considering none of the agreed-upon work had been started. . You say they "avoided answering all questions"........were those questions asking why the work wasn't done? It probably would be helpful to have a paper trail if those requests were made in writing.

Best wishes to you NJ !
Debbie Rose
Prudential NJ Properties
0 votes Thank Flag Link Thu Aug 6, 2009
NJBuyer,

While I have briefly perused the responses of others and read and reread your question, my concern would be that not only have they removed trhe underground oil tank, but have the sellers had the appropriate DEP approvals regarding potential underground contamination. This smells like a seller who is unwilling to "do the right thing". (I've had seller's remove tanks, but not address contamination , which then become the responsibility of the buyer, which may or may not be a significant expense to the buyer.)

Frankly, I wouldn't rush this deal with a TOE, but rather ensure that there is no future liability to you, the buyer with regard to clean up. If the seller continues to drag his/her feet, then in my view, there is more to the situation than is being disclosed . . . lawyers are skillful at killing deals, I'd walk and find another suitable property.

Love and Peace,
Francesca, Realtor, ePro
Fraancesca@PatrizioRE.com
732.606.2931 (24/7)
Web Reference: http://www.PatrizioRE.com
0 votes Thank Flag Link Thu Aug 6, 2009
Hi Jersey: One thing in your clarification. We have a brand new Supreme Court Justice who has, very patiently explained, "I just apply the law." You CANNOT expect ANY judge to be understanding. TOE is just that. He only is allowed to understand what that means. Hearts and flowers are not for the courtroom.

Sorry. That's why I think your lawyer won't write a TOE letter and why I wouldn't mention it again, unless you want to kill the deal. Probably easier just to announce breach, ask for your deposit and move on, if it comes to that point.

Bill Holt
0 votes Thank Flag Link Thu Aug 6, 2009
Bill, I like your style. :)
0 votes Thank Flag Link Thu Aug 6, 2009
Thank you for taking the time to answer my question.

It looks like we have only two choices:

1. To wait patiently with the hope that the seller will be kind enough to close on 21. Unfortunately the law in NJ will consider a closing date as "on or about" If the closing is delayed beyond August 21 we start to loose money and I do not think this is fair. We already have to deal with the inconveniences resulted from a delayed closing date. As a plus, the mortgage rate lock will expire this month at the end and if forced to close at a higher rate we risk total loses of thousands of dollars.

2. We send the "Time of Essence Letter" and if we cannot close due to bank's inability to inspect in time we'll have to accept the possibility of going in court. We hope that the judge will understand our situation.

If you believe that our logic is correct you'll understand why we asked this question here and why we are not understanding our lawyer advice to wait and not send the "Time of Essence Letter".
0 votes Thank Flag Link Wed Aug 5, 2009
Hi NJ Buyer - only an attorney can provide you with legal advice, and so I offer my opinions as just that, my opinions, but not legal advice....

I do not believe that the act or content of the Time is of the Essence Letter should put your deposit at risk. In my experience the Time is of the Essence Letter has only been able to be sent once contingencies have been cleared and that can sometimes be tricky if there are delays in final response on the inspection contingency negotiations. However, nonperformance to agreed contract terms puts either party in breach of contract and it sounds to me and one of those would be closing date.

If it is the bank that is requiring 6 days prior to close for completion of items, it must be that they require that time in order to do what they need to do in fnal preparation for close. The key may be in tieing your request to the bank requirement. Generally, it is understood that agreed upon inspection matters must be addressed by closing date ~ for walk-through, but in your case, you've got two biggies - removal of underground oil tank and installation of new septic, and it may be that the bank's willingness to lend the money hinges on these being addressed properly and hence time may be needed to confirm and perhaps evaluate that prior to close. Remember that the home is the bank's collateral for your mortgage and these two items would matter greatly to the bank.

Talk again to your attorney and ask these very questions. You've hired the attorney - he/she is working for you and should help you understand the issue/process/resolution.

Good luck,
Jeannie Feenick
"Unwavering Commitment to Service"
Search the MLS at http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Wed Aug 5, 2009
New Jersey Buyer,

I must agree with Peter and his response and think you need to readdress this issue with your lawyer. With that being said, the sellers are in breach of contract from the initial closing date or did you renegotiate a new closing date? If you agreed to a new closing date, no breach. What I am puzzled about is your attorney's statement "we cannot force the seller to finish the work 6 days before closing and if they will finish the work the day before closing it is our fault that the closing cannot be done in time". Why is it your fault if the closing cannot take place? The seller has not done what they were supposed to do and if your attorney won't send the letter -- how is it your fault? I'm not quite following that.

Your attorney should be protecting your interests not the sellers and I think a time of the essence letter should be sent. If nothing is said by you/your attorney regarding a "deadline" than you have no grounds --it must be in writing and it must be sent NOW.

This is not to be construed as legal advice. Contact your attorney.

Good luck.

Gina Chirico, Sales Associate
Prudential NJ Properties
973-715-1158 cell
973-992-6363 ext 116
Gina.Chirico@PrudentialNewJersey.com
0 votes Thank Flag Link Tue Aug 4, 2009
Please don't take this as legal advice. I'm not an attorney, so this is only my opinion.

Ask your attorney whether or not your contract contains any specific performance clauses. Also, ask your attorney if your contract contains any contingencies that you could exercise now if wanted to back out. If you get a, "yes," for either question, then you'll have some leverage. If otherwise, then maybe it's time for you to break out some of your poker (bluffing) skills.

Until this transaction closes, your attorney should have told you that you can still negotiate.
0 votes Thank Flag Link Tue Aug 4, 2009
I am not a lawyer
I think you need to sit down with your lawyer Remember you are his client and he should respect your instructions. If the bank requires that the work be completed 6 days before closing then that is paramount and must be respected otherwise no loan and no deal.
I have issue with the statement that you cannot require the work be completed 6 days before the closing date. The seller is already in default on the contract and the time is of the essence letter is a perform or else statement.
0 votes Thank Flag Link Tue Aug 4, 2009
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