Home Buying in Los Angeles>Question Details

Gary Charlton, Real Estate Pro in Cameron Park, CA

If we are past escrow extension date, can seller refuse to sign closing docs if I dont give him $1000 more? Can he hold my Earnest Money hostage?

Asked by Gary Charlton, Cameron Park, CA Tue Aug 21, 2012

Help! It is day 54 of a 30 day closing (seller insisted). I signed off on loan contingency on day 17 (was bank pre-approved for much higher amount/ assurances they would approve by day 30. They didn't through no fault of mine. Seller signed two extensions covering up to day 44. Seller refused to sign further extensions. On day 47 Seller signed a 3 day Demand to Close (i.e. to 3pm of day 50). On day 50 I offered to pay him $50 a day for every day as of day 54. Late on day 51 (a Friday) bank finally approved loan and docs arrived on day 54 (Monday). On day 52 Seller demanded an extra $1000 or said he won’t sign the escrow closing docs... I have done everything required plus more (deposited full down payment two weeks early as loan approval was "any day now", drove 400 miles twice! to sign escrow docs that didn’t come). Note, Seller will be my Tenant after closing.

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Marilyn, not as bad as it sounded. We stayed at/visited with my sister and family nearby. Beautiful forest type area. Did it though to show good faith to seller that we were really serious. Especially the second week when he could cancel the sale at any moment (was right at time 3 day demand to close hit).

Yes Lance, we want to close. The house is beautiful ranch style, 1/3 acre, 2100 sq ft backing on a 35 acre forest between Sacramento and Tahoe. Besides we would have a fight on our hands, 400 miles from home, over the $5000 EM. Hopefully Seller works out to be a good Tenant (probably only a few months). Also, value of house has probably gone up $1-2K in last two months anyway.

Thanks again everyone for your input. I feel better about our decisions.
0 votes Thank Flag Link Tue Aug 21, 2012
Based upon your rendition of events, the seller can terminate the deal if they want. Given that the seller will be your tenant, do you want to close this deal?
0 votes Thank Flag Link Tue Aug 21, 2012
Wow, what a saga. My first thought is, travel 400 miles twice! Absolutely unnecessary. For $20, send'em overnight with trackable delivery. As always, glad to hear it was worked out.
0 votes Thank Flag Link Tue Aug 21, 2012
Thanks Douglas! Seller refused several requests to sign extensions so I cant blame my Realtor. She tried. Just found out Seller accepting $1000 off the rent. We all sign docs tomorrow.
0 votes Thank Flag Link Tue Aug 21, 2012
Good heavens! That sounds better.
Flag Tue Aug 21, 2012
Sounds like your lender owes you some money!
Flag Tue Aug 21, 2012
Thanks Cindy! Small point, this deal CAN close, was just wondering if I was stuck paying the $1000 without recourse. Seems like I shouldnt be penalized because seller changed the financial terms of the contract. But, yes, on the other hand, my inept bank forced me to change the terms (lengthen) the contract.... So will pay it, smile, and hope for the best with my new tenant.
0 votes Thank Flag Link Tue Aug 21, 2012
It seems that you are at the mercy of the seller. You let your extension expired without obtaining additional mutual written and signed extensions. If there was an agent representing you perhaps you would have not been at this unpleasant situation. Do have an agent representing you in this? Seller could forfeit you deposit for breaching contract. I suggest to continue negotiating with seller or / and get legal advise. You could offer your new tenant which is your seller one month free rent.

Goo luck!

http://plpc.info/askalawyer
0 votes Thank Flag Link Tue Aug 21, 2012
One more thing: There is no "government rule" about the loan contingency being 17 days, this is just what is a part of the CA purchase agreement, in fact there is a little box that if checked would have NOT removed your loan contingency until the day your loan has actually funded.

I almost always will check this box & let the listing agent respond to it. Many times, like just in the past month, it helped my buyer out when the listing agent demanded we remove the loan contingency & I said "No Way, see that little box checked on pg. 2?,,yeah, that one, my buyer is safe until his loan is funded, so there! " He responded "shoot, I missed that, if I had been paying attention more, we would have countered that right from the start". Yeah for us, we closed!

I don't look back on this same Trulia thread for answers posted after mine.


EmilyKnell1@yahoo.com
562-430-3053 c
Realtor Since 1996
Realty One Group
0 votes Thank Flag Link Tue Aug 21, 2012
Thanks, Jane, Janey and Emily! Bottom line from all this is since we are out of contract, Seller can legally be a jerk (Escrow Officer wont deal with him--has her boss handling his signing). Will counter with rent credit. BTW--Not a lease, just month to month. Thanks again!
0 votes Thank Flag Link Tue Aug 21, 2012
Certainly doesn't bode well for a tenant/landlord relationship, but the seller has a right to ask for whatever he wants, and yes, he can hold your earnest money hostage. He has paid the mortgage for 24 days past contract date.

While I understand this is not your fault...but you are still legally responsible for the legal purchase agreement which you signed. If this deal folds because you couldn't close, the seller is due some damages - after all, it's been off the market all this time while the seller is still paying.

Best of luck to you.
0 votes Thank Flag Link Tue Aug 21, 2012
Here's a thought: Your first mortgage payment won't be due until Oct. 1st, even though technically this is still you losing $1k, why not offer the seller / your soon to be tenant $1,000 off his first month of rent, or offer $800 or $500 off 1st month rent?

This way he gets what he wants, more or less, he allows you to close escrow, you are the new homeowner & the day is won.

This seller sounds a little jerky, but then again I don't really know your situation & honestly I would be a bit perturbed by your lender that they couldn't close in even 45 days. I personally don't feel like i would want this guy as my tenant locked into a 12mos lease. Consider signing a lease with this guy that includes a "probationary period", like first 3 mos, then if he screws up at all, you can kick him out. Ask your Realtor about this. These are my opinions based on your question.

I don't look back on this same Trulia thread for answers posted after mine.


EmilyKnell1@yahoo.com
562-430-3053 c
Realtor Since 1996
Realty One Group
0 votes Thank Flag Link Tue Aug 21, 2012
Seller rejected my $50 day offer and demanded $1000 or else no close. My Realtor has generously offered to pay half out of her commission, but I only want to accept if no choice. Seller probably wouldnt mind starting over as the market has gone up in the last two months. He is not planning on moving for several months. Plus he can hold my $5000 earnest money hostage until an arbitor, mediator or judge rules on the money. Seller not really out much, he gets all the principle he paid on the one extra payment back, tax credit for the interest and doesnt have to pay me $50 day rent. But I still might lose some or all of the $5000. BofA totally screwed up the paperwork but they wont help. On a side note, the government really needs to lengthen the 17 day loan contingency sign off. The vast majority of loans are not getting final approval in 17 days.
0 votes Thank Flag Link Tue Aug 21, 2012
Your Realtor is the best advisor since they know all your particulars. What happened after the Demand to close? Did he accept the $50/day - in writing or verbally? If not work it out with him. You are going to have an ongoing relationship and peace is better than resentment. Does it seem like he really wants to cancel and start all over with someone else? Who messed up the docs - lender or escrow? Maybe they can contribute something to assuage him.

You've come this far so work it out. Point out that the delay has saved him rent money..
0 votes Thank Flag Link Tue Aug 21, 2012
This is an awkward situation and your agent is the one who is going to have to negotiate this. Did you put the $50 a day in writing? If so the weekend would technically be included in the amount, and the seller is not entitled to an extra $1K. If not then the seller cannot arbitrarily demand an amount to close. If the seller is going to be your tenant one can only hope that he or she is going to get over the heat of the moment and act reasonably.
0 votes Thank Flag Link Tue Aug 21, 2012
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