Don't take any one's online advise on a sensative matter like this. Not even mine!
The truth is when you get close to the close of escrow date you are sometimes at the mercy of the seller to either give you a written extension or to be subject to this kind of last minute demands. While there's nothing in the contract that says that you have to pay for the redraw, there's also nothing in the contract that gives you a contractual extension past the 9/30 COE date. My guess is that the seller may be bluffing, but I would not bet any money on that guess as I know that sellers and buyers sometimes make very emotional decisions. Although you believe that the seller had not intention of going through with the sale because the wife took a job in Los Altos and the new house is in Grass Valley (my neck of the woods), I am thinking that the seller would not have waited till the last minute to get out of the contract. If the circumstances had changed some time during the escrow period, I think the seller would have tried to get out of the contract sooner.
If the seller insists on not releasing for recording after Monday, you have the option of either giving into his demand or call his bluff knowing that you may end up losing your deposit. Being in this kind of a catch 22 situation is a very uncomfortable place and that's when you have to try to keep your emotions out of it and do only what will be in the best interest for you in the long run. Losing your deposit is not in your best interest.
Lets hope that you will not have to cross that bridge, but I wanted to prepare you for the worst case scenario.
I responded to your other question yesterday, but i did not see this question where you stated that the seller is losing out on his loan condition because it is past the loan lock period. This gives a totally different light on the situation.
Unfortunately, it does not matter whether he is smart enough to lock in the loan or not, your contract stated that you will close escrow on September 30th, yest, that's a Sunday and people can't close on Sunday because the county office is not open. So, there somebody's fault for first not get a loan early enough to close prior to that and also, for somebody to state that the property will close on September 30, when it is a Sunday.
Unfortunately, in the California Purchase Contract, you will see that it allows for a 24 hour notice to perform for all the other time of essence issues, but it specifically make an exception for close of escrow. - see CA Purchase Contract Item 14.C.3 Seller Right to Cancel; Buyer Contract Obligation - the last sentence, highlighted - Seller is not required to give Buyer a Notice to Perform regarding Close of Escrow.
Your agent should have extended the COE date as soon as he found out the mistake, but he did not.
So, if the sellers want to cancel due to the fact that you passed COE date, he has every right to do so.
If I was you, I would negotiate and see if they seller will split the fee to drawn up a new loan - hopefully he can get a favorable term for the new loan. Or, I would even pay the whole thing, because you are in danger of losing your deposit and have the contract cancelled.
Remember, in this situation, the seller had the loan locked in with the good faith that you will close on or before September 30th, but you did not.
All other personal situation on the seller's part is really irrelevant because what's on the contract is what rules. .
I want to add a disclaimer here - as I don't know the detailed information on your transaction and what has transpired so far, my answer is only in response to what you had written so far. You should go back to your Realtor and find out where it went wrong. He should be able to help you to some extent.
I hope you can get it all together and close your escrow!
What are your agent and the seller's agent saying about this--or did you bypass agents? The answer to your question depends on your contract terms (did it say it was contingent upon the other sale, etc.) Generally each party is responsible for their own loan costs unless a specific provision was made (often a seller credits a buyer for closing costs).
Is this re-draw fee the only obstacle to completing all of the paperwork and transactions?
Today is 9/28--why did anyone write a contract for a closing date of 9/30 when that's a Sunday and it's impossible to record on a weekend? Sounds like talking to your agent(s) is definitely in line--and while you're negotiating the re-draw fee, if you want the home you'll need to sign an extension of contract.
Re: the wife job contract, lots of people buy and plan to commute, or it could be a contract or remote-access job. Best wishes.