As the other agents are telling you, it is possible to cancel the sale if your contract allows for that. And most contracts do, for non performance, after a specified period following the notice to perform. Please note, that if you are using the CAR form, and you enact this clause, you also are giving up your right to keep the earnest money deposit. The clause ties these two options together.
You changing your mind is another thing altogether - and well, being that you chose to post it here, gives rise to your buyer to have a cause of action against you, potentially, if you interfere in any way, or cause any delays of your own with the buyer being able to make his deadline. It's very shaky ground you're walking on here. A good lawyer would find this post just by Googling your nameâ€¦ I know I would, if I were his agent.
Now if there is truly a problem with the loan that is 100% on the part of the buyer, then, you'll be in the clear to cancel. But I'd be exceptionally careful about doing anything that could be construed as not cooperating with the buyer if anything is asked of you by the buyer's lender to make this sale happen. If you're just tired of the process, and want it to be overâ€¦ please just have patienceâ€¦one way or the other, it will be over soon.
You state you extended the closing date until the 21st. If the loan does not fund on the 21st you can issue a notice to buyer to perform. If they do not perform within the time specified in the notice to perform, yo can cancel and possibly keep the deposit as liquidated damages, if the buyer initialed the liquidated damges paragraph on the purchase agreement.
As far as caneling JUST BECAUSE YOU have changed your mind, that will not be as easy, and you may find yourself in a very difficult position.
Best of luck to you.
Kawain Payne, Realtor
look in your contract, did you have a specific date to lift the loan contingency or the loan contingency was supposed to stay in place until funded... That will make a great difference. If the loan contingency was lifted you may be able to keep the earnest deposit as liquidated damages. The first thing you need to do is give them a notice to perform with a time frame if no reply to your demands then you can actually proceed with canceling the escrow...
I assume you used the CAR residential purchase agreement.
Did the Buyer lift all contingencies? Did they specifically lift the Loan contingency? If yes, typically, the contract has performance dates. If these dates are not met, the buyer and or the Seller can back out. However, a notice of non-performance must first be given, which generally by its nature extends the deadline by 48 hours. In this case the Buyer has extended the date. You can give them a Notice to Perform now (you are within 48 hours of the new deadline) and if the Bank has not funded by the 21st, you can cancel.
Now, technically, due to Buyers non-performance, you can keep the deposit. However that may be easier said than done. The Buyer has to agree in writing to allow you to do so. I would suspect they would challenge this. Escrow must now hold the deposit and wait resolution of the dispute. Without knowing all the facts, it seems the Buyer has "acted in good faith" and the inability to close was through "no fault of their own", so it is unlikely that you will be awarded the deposit. You may be awarded some monetary amount to cover the cost of moving or other inconveniences.
The process will take time. But since you don't want to sell the property, keeping it is most important and the penalty is secondary. The point being you can cancel and keep the property if you follow the process per your contract, collecting a penalty may not happen.
If you have a fully executed purchase agreement you are bound by the contract. However, as a seller you have the right to cancel under certain circumstances. Have you extended escrow by mututal agreement and has that time since passed? Has the buyer removed ALL contingencies? If the buyer has not and their deadline to do so has passed, you can issue a Notice to Buyer to Perform which would give the buyer 2 days to take the contract action (i.e. remove the applicable contingency)...if they do not, you as the seller has the right to cancel.
If the buyer has indeed removed ALL contingencies and you as the seller have completed all of your obligations, you can issue the buyer a Demand to Close (assuming your close of escow date has passed). Typically this would give the buyer 3 days to close and if they do not you as the seller can cancel and you may have the right to keep their deposit.
Below is a section from the California Association of Realtors Purchase Agreement which covers the seller's right to cancel. Please consult with a real estate attorney to better understand your rights and to obtain legal advice.
C. SELLER RIGHT TO CANCEL:
(1) Seller right to Cancel; Buyer Contingencies: If, within time specified in this Agreement,
Buyer does not, in writing, Deliver to Seller a removal of the applicable contingency or
cancellation of this Agreement then Seller, after first Delivering to Buyer a Notice to Buyer to
Perform (C.A.R. Form NBP) may cancel this Agreement. In such event, Seller shall authorize retum of
(2) Seller right to Cancel; Buyer Contract Obligations: Seller, after first Delivering to Buyer a
NBP may cancel this Agreement for any of the following reasons: (i) if Buyer fails to deposit funds
as required by 3A or 3B; (ii) if the funds deposited pursuant to 3A or 3B are not good when
deposited; (iii) if Buyer fails to Deliver a notice of FHA or VA costs or terms as required by
3C(3) (C.A.R. Form FVA); (iv) if Buyer fails to Deliver a letter as required by 3H; (v) if Buyer
fails to Deliver verification as required by 3G or 3J; (vi) if Seller reasonably disapproves of the
verification provided by 3G or 3J; (vii) if Buyer fails to return Statutory and Lead Disclosures as
required by paragraph 6A(2); or (viii) if Buyer fails to sign or initial a separate liquidated
damage form for an increased deposit as required by paragraphs 3B and 25. In such event, Seller
shall authorize retum of Buyer's deposit.
(3) Notice To Buyer To Perform: The NBP shall: (i) be in writing; (ii) be signed by Seller; and
(iii) give Buyer at least 2 (or D ) Days After Delivery (or until the time specified in
the applicable paragraph, whichever occurs last) to take the applicable action. A NBP may not be
Delivered any earlier than 2 Days Prior to the expiration of the applicable time for Buyer to
remove a contingency or cancel this Agreement or meet an obligation specified in 14C(2).
Jeffrey T. Sandorf
Partner, Amalfi Estates
If you wait until Sept. 21 and issue them a "Demand to Close" then they have to close within 48 Hrs. If they don't you can then seek to cancel and keep their deposit.
I suggest you discuss these options with your Realtor. If you do not have faith in them you can always seek legal council.
In reality, many escrows are closing late these days because of increased lender processing issues. We just had one close yesterday that was almost a month late and have a couple more that are also running significantly behind. Although no one likes it, itâ€™s part of the new reality forced on us by nervous lenders who are taking longer than ever to make up their mind about lending their funds to buyers. In addition, because prices are going back up, weâ€™re seeing long delays resulting from appraisal issues.
If you can prove that the buyer has been negligent in not closing on time, you may be able to get some financial recourse. You will need to have your Realtor draft an addendum with per diem fees or something similar. Unfortunately, in most cases, the delays are not the buyerâ€™s fault and buyers usually wonâ€™t sign any addendum assessing them penalties if they havenâ€™t done anything wrong.
As long as the buyerâ€™s realtor is providing you with valid contract extensions and it appears that they can still close the transaction (even though late), Iâ€™d personally hang in there until it closes.