Home Selling in Omaha>Question Details

Pennan, Home Seller in Omaha View, Omaha, NE

Purchase Agreement stated cash “no financing required”. 24 hrs b4 close buyer needed financing, missed closing, will not sign cancellation

Asked by Pennan, Omaha View, Omaha, NE Sun Mar 6, 2011

Our Nebraska Purchase Agreement stated cash “no financing required”. 24 hrs before close our realtor notified us that buyer now needed financing and would postpone closing with no date provided. Buyer did not request extension - missed closing and canceled contract. Buyer refuses to sign cancellation of Purchase Agreement, wants the house and to close in 1 wk. According to our attorney we no longer have an executable contract since buyer missed closing (with no extension requested and no communication to closing agent or our realtor) our contract is expired and we should retain buyers earnest money. We reslisted our home, and have another contract lined up (another person who really wanted our home initially)... if buyer does not sign release or canellation of contract and impedees the sale of our home to another party, what are our otions??

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Dean Uhing’s answer
I recommend that you now ask your attorney whether or not you will be able to provide clear and marketable title to the new purchaser. This will be a key component in your ability to to sell your property to a new buyer.
If your attorney is not able to give you this guarantee then you may have a cloud on your title until it is resolved. And if you are not able to provide clear and marketable title to the new prospective buyer, you would need to disclose this as an adverse material fact to any prospective buyers.
Please review this with your attorney as you do not want to compound the problem with a new buyer.
If you can pass clear title to the new buyer at time of closing, you should be okay with relisting and selling your property. And you can resolve the issue with the current buyer with whom you have a dispute as a separate issue.
Please bear in mind this is only my opinion as a real estate agent. We have been discussing a lot of contractual law issues here. You need to rely on legal counsel now.
Let me know how this all concludes. Yours is a situation that we can a learn from.
Thanks for sharing your experiences with the rest of us.
Dean Uhing
Prudential Ambassador Real Estate
0 votes Thank Flag Link Mon Mar 7, 2011
Thanks Dean - Needless to say we wish we had you guys as our original realtors... appreciate your thoughful reply.

In late November we entered into a Purchase Agreement (PA) for the sale of our home with a set close at 9:00am 3/4/11 (purchashers choice of date not ours). Under Section 7 of the PA, the purchaser noted, “all cash… no financing required” all parties agreed and signed the PA.

On 3/3/11 we received an email from our realtor notifying us purchaser needed to seek financing and would have to postpone closing. We subsequently learned purchaser ran into financial problems. Upon examination of the PA, we noticed the term “approximate” closing date of 3/4/11. We have been informed that under Nebraska Law, a reasonable time to delay a closing is granted if the problem is no fault of the parties or something unknown or unexpected occurred (accident on the way to closing, medical instance, unable to get to the bank for funds etc.) That was not the case here since the buyer originally agreed to the purchase our home without financing - and noted this under section 7 of the PA. The purchasers assumption of financial risk, or current financial burden or responsibility is a controllable factor by him and is therefore not a reasonable cause of delay or postponement.

We received no written request for an extension by the Purchaser at any time.
Based on the email provided by our realtor, we agreed that an extension would be provided if the Purchaser placed the homes utilities in his name by 9:00am 3/4/11 (as he would have normally done) and assume any additional cost we incur as a result of the delay. We requested this agreement be signed by Purchaser NLT than COB 3/3/11 accepting the terms of our extension. We did not hear from the Purchaser or his representative. A check with the utility company noted no request to assume responsibility for the property by the Purchaser. Later on 3/3/11 we sought legal counsel from a Real Estate attorney who reviewed our PA and drafted a letter on our behalf to provide to buyer through our agent. In the letter we noted our intent to cancel the contract and retain his Earnest Deposit of $5,000 should he fail to consummate the PA and close at the prescribed time of 9:00am on 3/4/11. We further noted the PA does not provide for an extension and no extension was official sought by the buyer. We further noted the he was not to seek financing for the purchase of our home under the PA.
Friday March 4, 2011 buyer failed to show for closing, made no notification to the closing agent or our representative.
We signed a cancellation of PA and sent it back to our realtor who provided it to the Purchaser’s realtor. Our realtor emailed us to inform buyer is refusing to sign the request for cancellation of PA, has placed the contract in dispute and intends to close on our house sometime next week.
According to our attorney, we do not have an executable contract currently between us and the buyer since the he failed to consummate closure of the contract at the prescribed date and time and did not request an official extension, contract is expired. We have the right to re-market the house to prospective buyers and retain any earnest funds placed by buyer (buyer will not release earnest monies to us) A couple who saw the house and who were late on making an offer on it, now want the house but the buyer will not sign for release… we are confused though…

Basically one cannot alter contractual terms without consent by all parties, the buyers attempt to seek financing substantively alters the terms of our contract and he is in breach. Although he will not sign release and will not provide us the earnest funds… The guy is a nut-case but sadly holding us hostage to an expired and voided contract…. NE laws are crazy! Our realtor never provided us buyers evidence of funds when we asked for it upon signing the contract.
0 votes Thank Flag Link Sun Mar 6, 2011
Why did you accept a contract without verifiable funds? You said you asked for it but never received it, yet you signed the agreement. Curious why you did this? This whole situation could have been avoided by requiring this proof of funds before signing the agreement.
"Cash" is another interesting concept. What does that actually mean legally? Cash can be argued to mean
getting money from the bank or getting money out of my personal account. Care needs to be shown in clarifying the situation when determining if you have a bonafide offer from a prospective buyer. Real estate
agents are not required to determine the verification of funds. They are required to disclose the buyer's financial situation only if we know for a fact that they are unable or unwilling to complete the sale. Have you
substantitiated yet that the buyer is unwilling or unable? From the things you wrote the buyers position is not
established either way.
Also contracts oftentimes use the term " approximate" for a closing date. If "time is of the essence" then the
contract should clearly state this and indicate what the penalties are for not meeting that date. Do you recall such a reference in your contract?
I get the impression that your buyer still wants to buy your house, if your buyer is able to put the cash together in a week or two, wouldn't that be better than going through the whole sales process again.
You also indicated that you had another buyer previous to the current one. Why was the sale not made with that person.? Or did that person come on the scene after the current buyer.
I think because of these unresolved issues, you are having a difficult time with this current purchase agreement. Once you surrender your "right to dispose" of your property to another person, you give them equitable title to your property. A right that can be defended legally.
The purchase agreement form you are referring to as coming from Nebraska. Where was this form obtained? Was this the form used by your real estate agent or was the form one designed by the Brokerage company with the approval of an attorney.
Sorry about all the questions. Now that you are in this situation, keep working with your attorneys. You need to rely on their expertise known as contractual law. Both you and the buyer are bound to the contract until the proper releases are granted. And unless this release is mutual, it may take some time. I know this is frustrating for you, but try to keep the emotions out of the agrument - it only escalates the situation even more. Reasonable people best solve complicated problems. Working with a mediator who can understand and present both sides can bring about a consensus between parties.
If none of this works, then the courts may have to decide..
Best of luck
Dean Uhing
Prudential Ambassador Real Estate
0 votes Thank Flag Link Sun Mar 6, 2011
Also... needless to say our realtor IS AWFUL we believe he has been terribly unresponsive and lacking professional integrity. We asked him to verify funds on purchaser and he never did... Never called on the day of closing only sent an email saying "Buyer refuses to cancel contract, we advise you seek an attorney, best of luck - let usknow if we can so anything else...

Who does this in today's marketplace???
0 votes Thank Flag Link Sun Mar 6, 2011
Buyer will not release the $5k earnest money... says we still have a contract and he wants the house... crazy!
0 votes Thank Flag Link Sun Mar 6, 2011
It sounds to me like you are doing everything you can. You can not make the buyer sign the release. It was very smart to contact your attorneys and it sounds like they have given you good information. Anytime you change the terms of a contract it needs to be agreed to by all parties in writing. I hope there was a decent earnest deposit to help pay for the time that has been wasted. I will talk with my sales manager about this and see if there is anything else you could possibly do.
0 votes Thank Flag Link Sun Mar 6, 2011
Thanks Jerod, we have two attorneys and both concur we no longer have an executable contract in place between us and the buyer; since we notified buyer of our cancellation of contract due to his missing the close and for his breach of the original agreement of no financing required. Since buyer failed to request a suitable continuance he futher released his right to a continuation on process. The other party is eager to get underway and on Monday we will send off notice to Buyer, should he fail to sign cancellation he will be sued for the cost of the lost contract and other issues. Question is -- is there anything else we should be or could be doing?? Nebraska Real Estate law does nto favor sellers....
0 votes Thank Flag Link Sun Mar 6, 2011
You do have options, but for legal reasons, it is best to seek the advise of an attorney.

Jerod Evanich
Prudential Ambassador Real Estate
0 votes Thank Flag Link Sun Mar 6, 2011
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