Home Buying in 07081>Question Details

SMA, Home Buyer in Astoria, Queens, NY

Can seller delay closing date?

Asked by SMA, Astoria, Queens, NY Thu Jan 15, 2009

Hi, we signed a contract for a property in Springfield in NJ which was supposed to be closed on 12/24/08. On 12/17 we were told by our attorney that there is a judgement against the seller and we can not close until seller settles this issue. Since then almost a month has been passed and nothing progressed. Our attorney says that since the closing was on or about 12/24, the sellers has time until 1/24. But now we were informed that even we wouldn't be able to close on 1/24.

My question is since this is a binding contract, does seller need to settle his issue and close by 1/24 or we need to wait indefinitely until the seller choose to settle his issue?

Also, if I cancel this deal after 1/24, how quickly seller should return our 10% deposit? And is the seller responsible for reimbursing our costs for this deal (home inspection, legal cost etc) since this is due to his non-performance to this binding contract?

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BEST ANSWER
SMA: In NJ, because lawyers are often (but nor always) involved in closing, the date of closing is "on or about," because they need time to answer immediate calls to court. IN PA it's "Time of the Essence," which means date fixed, time certain. You can change the NJ closing to Time of the Essence by having your attorney write a letter. There are specific lengths of time before the fixed date, so I would get the attorney to tell you how to manage this to your best advantage.

The problem you state is that a lien exists on the property. That means that someone is owed some money and has a right to have the property sold to pay off the loan. These can range from the mortgage, which may be as much as the selling price, to a small plumbing job that didn't get paid. Both are easy to fix. Some major problems can exist where it is found that a sum is owed from years ago and the lien holder cannot be found to clear the loan! If the amount is not considerable, you might be able to get the title company to insure "around it." I believe that this means that you will have to pay off the loan, if the lender/owner of the lien can ever be found. The problem is then with the mortgage company. Do they wish to accept the property as security for the loan with the lien in place? They may be willing to do so if money to pay the lien off is put in escrow. It should be the seller's money, because the lien is his responsibility.

Why the sale and closing has dragged for a month, I can't say. I've seen it happen but I knew the specifics of what was happening and what the time frame was. If that is the case, you might as well be patient.

Your case may be different. There may be no known end to the problem, especially if the loan is large and the lien holder has been found and wants his/her loan paid off. The seller may not be able to do it. Your attorney should be counseling you as to what is the situation and how to make the best of the situation. If he is letting things slide, knowing or hoping that thing will get straightened out, you should know that and then you should act on the basis of what you know and give your attorney marching orders as to what you want done.

Attorneys are very knowledgeable but in the end, they do work for you. Sometimes it begins to feel that the client is at the attorney's sufferance but that's not the way it should be.

Find out what's going on; decide what YOU want out of the deal and act. If moving on to another house is your best move, do it!

Best of luck.
1 vote Thank Flag Link Thu Jan 15, 2009
Although dates in NJ are "on or about", one cannot indefinitely delay a closing. In the NJAR (NJ Association of Realtors) standard contract, there is a provision which states the amount the seller shall be liable to the buyer if the seller is unable to deliver clear title. Often those terms are "actual" and you have to prove those damages. The cost of proving those damages can often exceed the actual amount of damage....because attorneys are not inexpensive.

Your decision is currently one of determining whether you should wait it out or terminate the deal and seek a return of your earnest monies. What you need is information, and you need to be very assertive in setting forth your demands for that information.

Ask both your attorney and your buyer agent to reach to the seller's attorney to provide you an explanation of the circumstances. For lack of a better way to say it, you need to be a very loud squeaky wheel so you can get the information that you need.

In most instances, the collection of damages is minimal or does not exist at all. You could be the exception, not the rule. Mostly, you want information that lets you make a decision to wait it out or go forward.

Also, judgements are public information. You can obtain details about the judgement from the courhouse. Visit them and ask them to search the system. They can search both the local county and the entire state. Don't go close to lunch or closing time. You will find more help if you avoid those times.

Good luck
Deborah Madey - Broker
Peninsula Realty Group
1 vote Thank Flag Link Thu Jan 22, 2009
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Hi SMA,

Terribly frustrating. If going through normal channels has simply not worked after giving it adequate time, I would show up at the seller's door around dinnertime and speak to him in person. Sometimes the lawyers and the listing agent are inadequately proactive and you just have to do an end run and get the information directly from the source. You might ask your buyers agent if they would be willing to do that. You need information, and only the seller has it.

-Marc

Marc Paolella
Relocation Director
Member, Worldwide ERC
Licensed Realtor NJ
Licensed Appraiser NJ & NY
Century 21 Joe Tekula Realtors
Agent of the Year 2008
Owner: Sands Appraisal Service, Inc.
Phone (direct): (973) 584-4235
web: http://www.marcpaolella.com
1 vote Thank Flag Link Tue Jan 20, 2009
The seller can be charged a daily percent of the purchase price for not closing on time. The liens need to be cleared before the transfer or the funds need to be taken from the seller at closing and held with the title company to satisfy any judgment on the property. It is then the seller can dispute the liens and file the dispute with the courts. If the creditor does not response with In So many days the seller receives the funds withheld back from the title company. There is no real reason not to close unless the property does not have enough equity to support the lien(s) if your lawyer failed to tell you this maybe inform him of the law so he/she knows next time.
0 votes Thank Flag Link Thu Jan 1, 2015
Did you buy the property? If not would you please tell us why-not? Regards,
0 votes Thank Flag Link Sat Feb 25, 2012
Hi SMA, if there is a judgement against the seller that involves the property, then it most likely must settle in order to transfer a clear title. If the deal collapses, then it is up to the attorneys to agree on returning the deposit monies. Your attorney is your best resource on this question. If you are in the position to cancel the contract, and your attorney can best advise you on this point so seek his/her counsel, you should recoup your deposit monies, but highly unlikely that you will recover inspection and legal fees. These are a cost of doing business. If you wanted to pursue, you may have to litigate and I would imagine that your legal fees would far exceed your inspection and attorney fees.

Good luck,
Jeanne Feenick
Unwavering Commitment to Service
Find success at http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Mon Feb 22, 2010
SMA: Having been blessed with the "best" answer to date, I guess I'll have to continue with the advice, now that you’ve clarified your position somewhat.

Remember, I can't give you legal advice, that's what your attorney is for. However...

NJ contracts are “on or about," meaning that no specific date is set. That means you can wait forever, I guess. There is a way you can demand a change. You ORDER your attorney to send a "Time of the Essence" letter. In the letter, a specific time is set for the closing. Be there or be in default. This applies to BOTH parties.

If the deal goes into default, the defaulter is open for suit for damages, what ever you may decide that they may be and a court agrees.

Your attorney has had NO RESPONSE from the seller to a letter asking for details of the $30,000 lien and it's satisfaction. He has told you so. Now, what you can do and, if you had a good Realtor, you would be advised to do, is posit the question, can the seller pay off the lien at closing? In almost ALL cases, the biggest lien, that of the prime mortgage, are paid off at closing. Will the seller get enough out of the net proceeds to pay off the secondary lien as well? If so, problem solved. The closing agent (your attorney or the title company he hires to do his closing for him) simply pays off the secondary lien and clears the title record at the time of the closing.

If, on the other hand, the seller cannot get enough out of the closing to pay off all the liens, he has to bring cash to the closing, cash that he gets from other sources. If the seller has no other sources and can't pay off the liens, you really have only one alternative. That is that you pay off the liens from assets that you have. If the amount is small (as would happen in the case where the proceeds pays off 90% of the second lien, you might want to chip in your own money above the written deal in the contract. I'm sure that you might find the place worth a couple of grand more than your original deal. It would be too small a percentage to argue about, if the seller was out of funds.

The only thing that might be feasible is that, rather than cash from some of your own assets or sources (Hi dad, you won't guess what I need right now...) you might add the extra amount to your mortgage, if your mortgage bank will hold still for a slight increase. While time are a lot tougher in this regard than before, if you qualify and the house appraises, you may be in luck and at today's rate, every thousand extra on the mortgage will be far less than $7.00 a month!

Hope you get the home of your dreams and soon!
0 votes Thank Flag Link Tue Jan 20, 2009
Thanks everyone for answering my query. I was told that the seller owes about $30,000 on that property which needs to be cleared before we can close. But the frustrating thing is that it has been one month and we haven't received even any indication from seller that they are doing anything to resolve this issue. No response whatsoever. When I contact our attorney all I receive is "we left a message and waiting for a response". We can't make any decision without a clear idea about whats going on.
0 votes Thank Flag Link Tue Jan 20, 2009
HI SMA, William nails it - a lien will encumber the title and without clear title you cannot close. Delays in closing are annoying for sure, but unfortunately they happen. Talk to your attorney about a "time is of the essence" letter to try to rein in and define the timing for you.

In terms of reimbursement of your expenses if you terminate the contract, that is for your attorney to address. For all of the questions you ask, including timely return of your deposit monies if you terminate, your attorney will be your most important resource.

Good luck.

Best,
Jeannie Feenick
Search and connect at http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Fri Jan 16, 2009
Sometimes closings are delayed for various reason. But in this case you don't want to close until this issue is settled. Depending on the judgement, it could take a while to get settled. If they continue to put the closing off you can ask to terminate the contract and get you earnest money back.
0 votes Thank Flag Link Thu Jan 15, 2009
Hi SMA,

(Disclaimer: Consult your attorney, as you are asking questions of a legal nature. This response should not be construed as legal advice.)

You basically have to wait until he settles the issue so you can obtain clear title. To sue over it would probably not be cost effective. If you cancel the deal, you should get your deposit back in a few days. Once they violated the contract by not closing, even after the grace period, you are within your rights to cancel and get your money back promptly.

Probably not a bad idea, since the market has been declining and you might not even want to pay what you agreed to in the first place given the falling values.

As for your costs, realistically you will have to eat them. Again, consult your attorney on this, but it's probably not worth it to sue for $1,000 or so. If it's much more than that, you might want to go after it and maybe put some sort of lien on the property so he can't sell it to someone else without paying you.

Very frustrating!

Good luck

-Marc

Marc Paolella
Relocation Director
Member, Worldwide ERC
Licensed Realtor NJ
Licensed Appraiser NJ & NY
Century 21 Joe Tekula Realtors
Agent of the Year 2008
Owner: Sands Appraisal Service, Inc.
Phone (direct): (973) 584-4235
web: http://www.marcpaolella.com
0 votes Thank Flag Link Thu Jan 15, 2009
GREAT QUESTION: your buyers agent and attorney should be able to provide you guidelines and review terms and conditions executed contract which governs what if's of buyer and seller. If you request for escrow money returned amendment needs executed by buyer/seller/brokers forward to title company to release your funds.

Why does the title company NOT place money in dispute in escrow account, obtain a release of lien, allow your closing take place.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Thu Jan 15, 2009
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