Can seller (bank) back out of accepted offer?

Asked by Wantahouse, Long Beach, CA Sun Apr 19, 2009

In escrow on a bank owned prop. Seller is the bank and accepted my offer in writing. Loan is FHA and approved with bank's preferred lender. Appraisal report completed. FHA requires seller to complete unfinished attached unit to garage. 30 day escrow expires in two weeks and very likely it wont' get finished. Can bank/seller legally reneg by not wanting to fix the work? My realtor/listing agent hope to hear from bank within the next few days. What are my legal recourse if bank backs out or drags beyond the 30day mark even if lender will extend rate lock and escrow? Don't have extra money for an attorney.

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CC, Home Buyer, 04401
Thu Jan 26, 2017
Odd generally the selling bank does not get involved with the financing so I question your comprehension of the facts.

A seller can always refuse to fix anything your lender is making repairs a condition of the loan they cannot force a seller to fix anything. Nor will they if they are the bank it is not the business they are in. They might accept less money though
1 vote
Rbeja, Agent, San Diego, CA
Mon Apr 20, 2009
I understand and feel for you in this situation. The reality of bank owned properties is their addendums/contracts have most everything written in their favor. They don’t have to fix a thing.

So where does this leave you? There are 4 scenarios that can play out.
1. You either have to pay out of pocket to get the work completed.
2. Try to convince the seller(bank) via the listing agent that it’s in the bank’s best interest to complete the repair work.
3. See if your FHA lender is ok having escrow set aside the money for the completion of the unfinished attached unit to garage, so it won’t hold up the close of escrow. Now depending on the cost required to complete this, if there are any other offers on this property, how long this listing agent had is property listed. You maybe able to work out something between your buyer’s agent, the listing agent and yourself to make this happen.
4. Or walk away from this property and look for another one what will pass FHA lender requirements or a seller who is willing to work with you.

Best of luck,

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Michael Magaw, Agent, Torrance, CA
Mon Apr 20, 2009
I agree. If the bank did not agree to the repairs, then they can't be forced to do them. Even if they did agree, it is difficult to force the seller to make repairs. It would be too much trouble for you to force the issue. How much are the repairs estimated to cost? If you want the house that much, you may consider helping out towards the repair costs. That would probably be much less expensive, less time consuming, and less stressful than searching your legal recourses.

Good luck,

Michael Magaw
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0 votes
Dyanna, , California
Mon Apr 20, 2009
If the bank takes longer than 30 the 30 days to fix the garage, consider yourself lucky because it is getting completed. The bank has thousands of properties that it needs to "fix" before the close of escrow and it is time consuming to get approvals and updates.

Now if they just refuse to complete the repairs, unless you have a written contract stating they will complete the repairs, you have no legal recourse. The contract you signed after the acceptance of your offer most likely states "as is".

These are things your agent should have told you before writing up the offer. An agent can take a look at a property and see that a garage is unfinished and KNOW it won't qualify for FHA EVEN if the bank accepts the offer. The bank is in another state (usually) and has no knowledge of the property's condition.

Good Luck,
0 votes
Steven Ornel…, Agent, Fremont, CA
Mon Apr 20, 2009
Wantahouse, I completely agree with Debbie on this situation. The Seller does not have to agree to any corrective actions. The requirement to complete the unfinished attached unit to the garage is a lender requirement; if the Seller will not do the work (I assume you made a Request for Repairs?) then you can cancel the contract by exercising your Loan contingency. You may be out some inspection fees, but these are costs that would be dwarfed by legal expenses if you chose the path of litigation.

Best, Steve
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Debbie Saund…, Agent, Punta Gorda, FL
Mon Apr 20, 2009
The simple answer is yes they can. You could press the issue legally but that would mean an attorney and probably a lot of time and you have stated you can't go that route. It sounds like the bank had agreed to do the work but have they stated that now do not intend to complete it? If the bank fails to meet the FHA requirement you can withdraw your offer and move on or if they are still willing to complete the work within a reasonable amount ot time you could seek an extension to the contract. In most instances getting involved in a legal battle over this type of issue is not worth the time, money and effort and perhaps that is what the bank is counting on.
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