Lender refuse to accept 60 days letter resulting in delay of closure. Seller agent is demanding us (buyer) to compensate seller, is this legal?

Asked by Csp, Houston, TX Tue Oct 19, 2010

(This is a repost to the right location)
We recently got a shock when we found out the day before the closing (from title company) that the lender had problem accepting the "60 day letter" lien subordinate stuff from the HOA of the property we are purchasing. So we were refused loan last minute. I quickly got another lender who agreed to accept the "60 day letter" and proactively trying to get the loan approved with the new lender as soon as possible (8 days after disclosure). Mean the seller agent is demanding compensation to the seller since we did not close on time. They would not sign another extension letter (they signed only 1 week, but loan application takes at least 8 days) unless we compensate the seller. What should we do? We are very stressed! It wasn't our fault that we did not close on time and we didn't know until the day before, even then we had no idea what was "60 day letter" and the serious impact behind it. We are applying for fixed conventional loan, not FHA. Help!

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4
Brandon Jenk…, Agent, Sugar Land, TX
Tue Oct 19, 2010
I would have to agree with Lynn. Its just too much of a situation to sort out without your paperwork. I will say this your sales contract should have stated that you would need lender approval of this deal. Your agent should know this
0 votes
Nadine Cius, Agent, Houston, TX
Tue Oct 19, 2010
Csp,

I agree with Guy. It does appear from what you have said that you did breach the contract by not closing on time, even though it was not your fault. The part in your post that is not clear is "the seller's agent demanding compensation to the seller." Compensation for what? Does the seller want to terminate the contract and have you release the earnest money to them for breach of contract? Does the seller want you to put up additional earnest money for assurance that you will close soon? Does the seller want to be compensated for their inconvenience?. Obviously, it will depend on the wording of your contract.

My recommendation is to have your new lender contact the seller's agent to confirm that you are approved and give them the date they will be able to close your loan. If the seller wants you to compensate them for breach of contract and inconvenience, then negotiate that amount and make sure whatever amount you agree to give them gets credited back to you at closing. Currently, it's a buyer's market. It is highly unlikely that a seller would let go of an approved, willing and able buyer to take the chance of having to find a new buyer. There is no guarantee that a new buyer will not run into similar or other issues unless it is a cash buyer. Hopefully, you have an agent that can assist you with all of this. A good agent will not only provide this assistance, but will make the process less stressful for you. Most of time these situations can be worked out for the mutual benefit of all parties.
0 votes
Guy Gimenez, Agent, Austin, TX
Tue Oct 19, 2010
Do you not have an agent representing you? If so, what advice is he/she giving you?

While I haven't read your contract, it appears you MAY have breached the contract (based solely on your comments). It may not be your fault, but it's certainly not the seller's fault either as they were apparently prepared to close and you were not able to perform.

The likely remedy will be to release the earnest money to the seller as damages and have both parties release one another from any further obligations under the contract. Of course, you may wish to consult with a real estate attorney or competent real estate agent to cover the contract terms and make sure the seller did not previously default by failing (accidentally or otherwise) to meet their obligations. In other words, has the seller provided all the appropriate notices (HOA, WCID, MUD, etc.) required by the contract?
Web Reference:  http://www.phgbrokers.om
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Oct 19, 2010
All is governed by the executed sales agreement signed by all parties. Confer with your buyers agent.

No one can render an opinion unless all paperwork is furnished

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
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