Is it legal for a seller to charge the buyer penalty if they are the cause of delay so escrow went beyond 40 days? Can agent be sued also?

Asked by Ned, Cal Heights/Bixby Knolls/Los Cerritos, Long Beach, CA Wed Jul 18, 2012

Termite treatment was done very late by seller, and an additional one day delay was due to mistakes (I do not know who is responsible) on the documents prepared.

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Todd Foust’s answer
Todd Foust, Agent, Anaheim, CA
Thu Jul 26, 2012
As others have said, if you didn't agree to a per diem penalty in the initial contract then its very simple. No they won't be able to collect that.

They could however give you a notice to perform, let you try to close in XYZ hours, and cancel escrow (maybe taking your deposit) if you can't. This would all imply the fault is yours, your lenders, or somehow your agents. If the delay is sellers fault, they won't get far with this.

Agree with Gene, you probably need to read the contract again for clarification. Best wishes
0 votes
Gene Scott, Agent, Long Beach, CA
Thu Jul 19, 2012
Hi Ned, the terms of the Residential Purchase Agreement spell out each party's responsibilities. If you think are concerned about the legalities, my suggestion is to ask for a meeting with your agent and your agent's broker or manager. Your broker should have legal representation that can advise you on your particular circumstances. If that is not successful, then I would contact your escrow company and discuss the issues with them. They or the title company should also have legal counsel. If these two avenues are not successful, then you have to determine the cost / benefit of discussing the problem with your own attorney, but in most cases the problem will be solved by steps one or two.

It should be noted that most Residential Purchase Agreements call for mediation and/or arbitration prior to anyone filing a lawsuit. Start by reading your agreement very carefully.

Good luck,
Gene Scott
Loan Officer and Realtor
Shore Capital Corporation
0 votes
Michael Magaw, Agent, Torrance, CA
Thu Jul 19, 2012
The Residential Purchase Agreement will either include a provision for a per diem penalty, or it will not. If it was not agreed in the beginning, then the seller has no "right" to ask for it later. But if you agreed to close by a certain date, then you should close. If you are running past the agreed time, then the seller can ask to renegotiate or they can give you a "Notice to Perform" which could lead to various outcomes. So I do not think that the seller can "charge" a fee, unless it was agreed to by both parties.
You really don't explain how the termite treatment slowed you down. I have seen termite treatment done in the final days on numerous occasions.
A one day delay due to docs does not offer much of an explanation also. I assume you mean loan documents, and that would fall under "buyer's responsibilities".
What did the agent do that makes you think they deserve to be sued? If you lose, are you prepared to pay for the defendants legal costs?
0 votes
Harold Sharpe, Agent, LAKE HAVASU CITY, AZ
Thu Jul 19, 2012
Is it legal to sue,.....
Legal questions are best answered by lawyers.
the crucial question should be....
I want to sell or buy a home and I want to sue someone.
When you walk into a real estate attorneys office and the attorney sits you down and says so what seems to be the problem? in an adult charlie brown voice someone explains wah wah wha wah.
The attorney thinks wow ten days do they realize this is going to cost them 25 times the issue and take over a year? should I give this person a doctor to see so the doctor can prescibe prosac? Should I charge them a $5,000 or $10,000 retainer to send send out a letter. How far is this person going to go with this?
What I am trying to say is this. Sometimes things take time. Perhaps cooler minds may prevail. Just think how well your life may be if you let it go for the time necessary and enjoy yourself at work. As opposed to carrying a grudge, try to solve problems instead of creating problems. You may want to understand something. Selling or Buying a home has a fair amount of stress. There are a lot of spokes involved in making a sale happen.
can a seller charge the buyer for the delay? they can try. they can ask. they can sue. What they are trying to do is make it happen. Lean back and look at the whole picture. Even HUD charges buyers for delays. If the delay happened and you are the buyer, and it is your fault think maybe I should compensate. Blaming the agent? how is that a factor? Usually it is the buyers loan that slows the process. Did you get all the info to your lender BEFORE you started the home buying process or after? There is way too many people in the mix to really figure out who but usually the buyers lender has the crux of the issue. This is why Realtors like to suggest GOOD LOCAL LENDERS as opposed to that online lender you found or bank teller who was asked to do loans because Shelley went on a cruise that week.

Harold Sharpe - Broker
So Cal Homes
(951) 821-8211
California Department of Real Estate Broker License # 01312992
0 votes
Roberto Gosim, Agent, Signal Hill, CA
Thu Jul 19, 2012
Hello Ned,
Legal, yes. But, the only person that can explain it to you thoroughly is your agent if there's represention.
If not you can talk to the escrow company.
Escrow is a third party responsible for making sure everything in the contract, every addendum, every notice to perform,etc are done in a timely manner.
Hope this helps. Did the deal close?
0 votes
Ron Thomas, Agent, Fresno, CA
Wed Jul 18, 2012
First you have your Contract:
That is really all you have.
If something happens, and one of the parties wants to change something, or they want more;
it cannot be unilateral.

The leverage is that the other party WANTS the deal to close.
What will each party do to hold the deal together. And that would be without Lawyers involved.

Only you can answer these questions.
0 votes
Kawain Payne, Agent, Seal Beach, CA
Wed Jul 18, 2012
Hello Ned,

If the seller is charging you a penalty for closing late then the closing delay has to be due to your fault. Who made the mistakes you are speaking of and what were those mistakes?

Make sure and re- read your purchase agreement and all supporting documentation. If a per diem was to be charged the terms and conditions in which it can be aplied has to be lcearly spelled out.

As far as who can be sued, you can file a law suit against anyone you want, but in order to win you must show cause and you must be able to provide documentation to support any claim you are making.

Best of Luck to You,

Kawain Payne, Realtor
0 votes
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