Can buyer cancel purchase contract if lender did everything possible to secure loan and lender has approved but not produced loan docs after 45 days?

Asked by LoanToLong, East Palo Alto, CA Fri Feb 24, 2012

Duel rep agent favoring seller due to ongoing relationship. Escrow was to close in Jan. Extended to Feb. Seller only agreed if buyer would sign off on loan contingency - so 3% now lost. Loan company kept promising production of docs but nothing. Can seller walk away without lender decision? I know out of contract but agent should have known funding would take 45 days or more and did not account or advise about this. Does it make difference if buyer is in his 80s?

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Roland Barcos’ answer
Roland Barcos, Agent, San Jose, CA
Sat Feb 25, 2012
Hi LoanToLong,
This is a really unfortunate circumstance you've gotten into and it sounds like you could lose your deposit. However, funds cannot be released from escrow without the consent of both parties (seller and buyer).
From what you say, it seems that you have gotten some very bad advice both from the agent and from the lender, but you are the one who chose to use them in the first place. It's not really ethical for other agents to advise you in this situation, so you really need some good support from someone looking out for your interests, and at this point, this is probabaly going to have to come from an attorney - not just any attorney, but an experienced real estate attorney. Three good real estate attorneys in Santa Clara County that you may want to talk to are Ron Rossi, Anthony Ventura, and David Hammerslough (you can Google them). Your contract includes a provision for mediation of disputes, and if necessary, either binding arbitration or litigation. Agents can explain this process to you, but only an Attorney can advise you on how to deal with these issues.
Since you also raise the issue of age, you may also want to consult with the Santa Clara County District Attorneys office and the department that deals with elder abuse issues.
Best of luck to you and I hope things all work out okay for you.

Roland Barcos
1 vote
Hassan Sabba…, Agent, Campbell, CA
Sun Feb 26, 2012
You need to read your contract and see a real estate attorney. You could call Santa Clara Association of Realtors and get some information regarding real estate attorneys who regularly have some education classes for Realtors.
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Terri Vellios, Agent, Campbell, CA
Sat Feb 25, 2012
There really is too much going on here for us to give you our opinion. I'll focus on the limited information provided.

Dual agency you have discovered is not in your best interest. If there is a Broker Manager of your agent get them involved.

It's not unusual for a Seller to request removal of contingencies if the Buyer is asking for extension to close. Contingencies are in place for the protection of the Buyer's earnest money. So when a contingency isn't fully satisfied then the Buyer is at risk. If the LENDER told you to remove your contingency to you have that in writing?

The other layer is who is the lender and what type of financing? If you have something in writing from the lender telling you to remove your contingencies you could to talk with the manager of the lender.

In your contract there are mutual understanding between you and the Seller. If one of the parties is in default there are methods as to how that is to be handled. Look for request for performance.

If the Buyer is in his 80's the question I would have is qualifying for the loan. Does the Buyer have income to support the loan payments? This goes back to the question on the type of financing. Was it conventional, VA, FHA, FHA 203K, Reverse Mortgage? Each come with their own guidelines and timelines.

Ronald gave you a good resource for an Attorney to assist you through this. Before contacting the attorney formulate in your mind what your intended outcome would be of this situation. Do you want the house? Your money back? Out of the contract? Then go from there.

I wish you all the best to a successful resolve.
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0 votes
LoanToLong, Home Buyer, East Palo Alto, CA
Fri Feb 24, 2012
Contingencies were removed. Even the one for the loan because seller would not extend contract to push back escrow unless all contingencies were removed. Lender said to sign because docs would come following business day. Docs never came. It has been several weeks since the extension was granted and now it is expired. Lender assures it wll be funded yet still Nothing and buyer seller wants out. Agent did not manage timeline realistically. Lender upset agent did not give enough time for loan to work its way through the system. The lender states loan will be funded. Thank you for your response.
0 votes
Ted Canto, Mortgage Broker Or Lender, Scottsdale, AZ
Fri Feb 24, 2012
If there were no contingenices removed and the lender provides a decline, then you typically should receive your EM money back however it comes down to what is written on the contract.
0 votes
LoanToLong, Home Buyer, East Palo Alto, CA
Fri Feb 24, 2012
No we are buyers. Agent favoring seller because seller has many properties listed with agent. Now out of contract while still waiting for lender. Lender assures loan docs will be prepared everyday but nothing, then so much time passed lender needs all new updated info so it never ends. Seller now wants more $$ and for buyer to assume existing loan to finish deal.
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Fri Feb 24, 2012
So the "dual agent" favored YOU and you're complaining of lack of information? Wow.... how'd the agent do helping out the other side? I'd say read your contract, and then contact an attorney.
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