Home Selling in 33901>Question Details

Moncris, Home Seller in 33901

As a Seller, am I obligated to sign the Release and Cancellation of Contract for Sale and Purchase, if the Buyer failed to qualify for financing?

Asked by Moncris, 33901 Wed Mar 31, 2010

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Do you want to be in a contract with someone who can't qualify to buy your house? Or, would you like to be able to sell your house to someone who can pay for it? Yes, you need professional advice on signing the release, but keep your eye on your goal -- selling your house. You can't sell it to anyone else without releasing the first contract.
3 votes Thank Flag Link Wed Mar 31, 2010
Maureen Fran…, Real Estate Pro in Birmingham, MI
John the buyer can withdraw from the contract but if Florida is like most areas it requires a mutual agreement signed to release ernest money. If the seller does not sign the release they can not truly market the property without an attorney opinion that the contract is void because they have not released a prior contract.
The buyer could place a lis pendis on the property pending resolution of a court hearing on return of earnest money and tie up any future closing on the property if the seller does not return it.
Not legal advice jusr what I have seen
Web Reference: http://www.Find1Home.com
1 vote Thank Flag Link Thu Apr 1, 2010
Depending on the finance contingency, the deposit either belongs to the buyer or you & your agent. As long as their loan denial was within the loan commitment deadline the buyer is entitled to the deposit. Go over the contract with your agent with a calendar on hand.
1 vote Thank Flag Link Wed Mar 31, 2010
The answer to your question really depends on timing within your contract. If the buyer failed to qualify for financing within their finance contingency period, the buyer will need your signature to release the funds from escrow. On the other hand, if they have passed their finance contingency period, you may be entitled to those funds and I recommend you speak to a real estate attorney to help you through the process.
1 vote Thank Flag Link Wed Mar 31, 2010
Hi Moncris,
In your terms, you are NOT "obligated to sign the Release and Cancellation of Contract for Sale and Purchase if the Buyer failed to qualify for financing[.]" However, whether you SHOULD sign the release depends on many of the issues already addressed below.
The threshold question is whether there is a financing contingency in your contract? If so, was the buyer within the financing contingency period when they delivered their intent to cancel? If there was no financing contingency contemplated in your agreement, the Buyer's failure to qualify for financing would not necessarily give them the right to cancel your contract.
The answer to this threshold question should be pretty clear. If not, you should seek the counsel of an attorney experienced with these issues.
Hope this helps.
Chris Black
8695 College Parkway, Suite 1041
Fort Myers, Florida 33919
P: (239) 985-4142
F: (239) 425-3518
W: http://www.wingedfoottitle.com
W: http://www.shortsaletitlesolutions.com
0 votes Thank Flag Link Thu Apr 1, 2010
You should talk with an an attorney if you are unclear about the terms of your contract.

I'm not an attorney but on a standard florida contract "contingent" on the buyer obtaining financing, the buyer has a responsibility to notify you by a certain date if they are not able to obtain financing.

If, let's say your contract was to close in January and yet you're only getting notified right now that the buyer couldn't get financing, you may have a good case for retaining their deposit. This is not legal advice... I am just aware of a small claims case where an owner retained a deposit due to the buyer's negligence in reporting they couldn't qualify for financing in a timely manner.

So hire an attorney for a quick review of your contract. Depending on the amount of the deposit and the length of time you kept the house off of the market awaiting the buyer to close, it may be possible that you can keep the deposit.

Also look at your listing agreement and it may say that the listing agent gets to keep the deposit.

Hire an attorney to review your contract if your listing agreement entitles you to keep 100% of deposits and the deposit is over $500.

This is an excellent Florida firm:
0 votes Thank Flag Link Thu Apr 1, 2010
help me understand James.
If the contract states should buyer fail to obtain financing, they can withdraw from contract, deposit to be returned;
how does seller not signing release keep buyers in contract?

I have always thought once a buyer withdraws from contract, as provided for in contract, contract is over.

You have a new view, and I would like to learn more about it.
0 votes Thank Flag Link Thu Apr 1, 2010
Moncris check with your Realtor® but you have a couple of options in my opinion. The first is that you could keep the property pending until the buyers qualify for financing because without signing the release you are keeping them in the contract. Another choice is that you could do owner financing and carry the loan understanding that companies that are in the bussiness of making loan swill not give them one. The third and possibly best option is to sign the release and sell your home to someone else who can buy it.
Web Reference: http://www.Find1Home.com
0 votes Thank Flag Link Thu Apr 1, 2010
If the contract was Contingent upon buyer obtaining financing you do.
0 votes Thank Flag Link Thu Apr 1, 2010
and Maureen is exactly right!!! Well said
0 votes Thank Flag Link Wed Mar 31, 2010
If you signed a FAR residental sale and purchase contract, and the first page of the contract line 32 is checked, they you have to sign that release and cancellation of contract. The buyer was making you aware of the fact that they intented to apply for a new mortgage. If they cound not obtain financing in the specified time frame, then they are able to cancel the contract. The buyers agent should have proof of denial from the bank for you.
Good Luck,

Best regards ,
Susan Callahan, ABR, CNS
Coldwell Banker Residential Real Estate
CELL: 239-896-6342
FAX: 800-217-6506
7205 Estero Blvd # 724
Fort Myers Beach,FL 33931
0 votes Thank Flag Link Wed Mar 31, 2010

In general, nothing requires you to sign anything you don't want to.

more than likely the contact had a clause that gave them time to see if they can get loan. and then cancel because they could not get loan and to get their deposit back.

Now if they did as required, and you do not do as contract says, then of course they just may sue you ( I would)

To defend you might spend 10 to 20 grand on legal and then have to pay them and then maybe their legal fees. So you need to find a Lawyer and see how your case might stand up
0 votes Thank Flag Link Wed Mar 31, 2010

You may not be obligated to sign the release- but it would make the file complete. The contract appears to be subject to financing. The buyer is entitled to the deposits if any.
0 votes Thank Flag Link Wed Mar 31, 2010
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