Seller right to cancel due to delay? (2 week pass escrow close date)

Asked by Kevin, Orange County, CA Thu Apr 5, 2012

Hello,

This is my situation at the moment: Seller want to cancel due to delay. Escrow close date is March 23rd and today is April 5th. The delay is mostly bought on by the appraiser making several mistakes causing us a 3 week delay. Seller claim each day pass the end of March is costing him money (loan interest) and want to cancel the transaction unless we compensate him.

I've read around and some place said the seller have the right to cancel and some said the seller can't cancel. One site said the escrow close date isn't set in stone while other site said once its pass the escrow close date the contact is no longer valid. I am looking for more definite answer.

PS we never apply for an extensive since we both side assume it would be finish within the month on March and didn't think it would go into April. There was never anything in the contact about closing at the end of March.

We are pretty much in the final stages and looking to close within the week.

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24
Matthew Bart…, Agent, Glendora, CA
Thu Apr 5, 2012
BEST ANSWER
Hello Kevin,

The Seller's are clearly upset. Put yourself in their shoes. This delay is costing them money they were not planning for. They do not have confidence that the escrow is going to close, and they possibly might even think that you're not taking your responsabilities as agreed to in writing seriously. Now it's my opinion you do care and you want to close this escrow. Otherwise you would not have aksed your question. Amended escrow instructions should have been completed and signed by you and the Seller's once it was determined that escrow was not going to close on time. You should know that the contract is still binding even thou the close of escrow date has passed. The Seller may also send you a notice to perform, in this case requiring you to close escrow within a certain time period. If you do not perform to the Seller's notice they may cancel the escrow. You do not want this to happen. This will only make the entire situation worse. It appears this deal can be saved and closed if cool heads can prevail. It would not make sense for the Seller's to cancel at this point in the process and start all over and spend even more of their money if you and your Realtor can prove to the Seller's that the deal can and will be closed. Speak with your Realtor, Broker, and Lender and determine a new date you WILL close escrow by. Then your Realtor & Broker can negotiate this new close and any additional terms with the Seller's. Once a new agreement is reached, amended escrow instructions can be drawn up by Escrow and signed by you and the Seller's. Now you're the only person who can decide if you wish to split the cost with the Seller's due to the delay. That being said, it would be a great gesture on your part to offer to help the Seller's with half the cost for their added fees and this could calm them down and encourage them to sign the extention and close this escrow. I hope this helps you and good luck.

Matt
http://www.matthewbartlettrealestate.com
2 votes
Thank you for this Matt. I doubt this thread is still active but if so we are in need of support. We are sellers and the buyer and her agent have pushed the close date 6 times. We are 6 weeks beyond the original close date. Some things we were reluctantly understanding about: sewer work delays, appraisal delays, oil tank delays, but all the work was done weeks ago and current delays are all the buyer. We have paid way over what we agreed on when sewer and oil tank costs exceeded quotes (by thousands). We agreed at the start of escrow to give a $7k credit to the buyer (to assure the sale would happen). Now nearly 20k later, she forgot to order her w2 which delayed 2 weeks and now, she seems mia when the close docs are due, today! We already took the ernest money to survive on (we are moving out of the country and quit our jbs based on the original close) and she wont get that back. We think the deal will close but that the out of state buyer doesnt give a hoot about our timeline. Help!
Flag Tue Oct 25, 2016
Thank you for this Matt. I doubt this thread is still active but if so we are in need of support. We are sellers and the buyer and her agent have pushed the close date 6 times. We are 6 weeks beyond the original close date. Some things we were reluctantly understanding about: sewer work delays, appraisal delays, oil tank delays, but all the work was done weeks ago and current delays are all the buyer. We have paid way over what we agreed on when sewer and oil tank costs exceeded quotes (by thousands). We agreed at the start of escrow to give a $7k credit to the buyer (to assure the sale would happen). Now nearly 20k later, she forgot to order her w2 which delayed 2 weeks and now, she seems mia when the close docs are due, today! We already took the ernest money to survive on (we are moving out of the country and quit our jbs based on the original close) and she wont get that back. We think the deal will close but that the out of state buyer doesnt give a hoot about our timeline. Help!
Flag Tue Oct 25, 2016
Does earnest deposit only works for buyer not seller? Buyer makes delay under terrible appraiser and lender...Agent says they are working out. But seller feels no confidence. It will be fair for seller to keep a deposit if buyer didn't close on time or waste of sellers time.
Flag Mon Feb 22, 2016
John Anderson, Agent, El Dorado Hills, CA
Thu Apr 5, 2012
Hi Kevin, I hope this helps. I have been in this situtation before as the buyer and the seller. You should pay the seller his per diem cost per day until it closes. Don't you think that is fair? It is costing the seller money every day Taxes, Insurance, HOA?, cost of funds. Why should the seller pay when you agreed in writing to close by a certain day. Get the lender, buyers agent and buyer all together and pay the seller what is fair. Or cancell the contract. The seller should send you a notice to perform, prior to the notice to cancell. However in the event there is no other interest from other buyers you could try to compromise it with the seller because there is down time in getting another buyer. Time is money, good luck!
3 votes
Buyer has acted in good faith in accordance with the terms of the contract signed. Circumstances outside of Buyer's control have delayed closing at no fault of his own. Buyer is not legally responsible for per diem costs of the Seller, and if the Seller wanted such per diem costs to be included if there was a delay in closing, the Seller and Seller's attorney should have explicitly written that into a Rider and had the Buyer sign. When the Seller signed the agreement without explicitly including that into a Rider, the Seller was signing a document that did not legally bind the Buyer to pay such costs should the deal not close on time. Buyer may not have signed, and may not be able to afford such costs. Seller should have understood this risk is present in just about any transaction that relies upon financing. What party caused the delay, and was the delay unnecessary? If so, go after that party and not the innocent Buyer, whom you have no case against.
Flag Thu Jun 30, 2016
They didn't choose to delay it, the appraiser caused delays. There was no malice. I agree with Mr. Bartlett that a good faith gesture would be to offer some of the costs. Make the appraiser pay for some of it since it's his fault! =)
Flag Thu Mar 14, 2013
Pinkjelly1234, Home Owner, Long Beach, CA
Mon Feb 22, 2016
Most appraisers are women who doesn't know anything. I'm a women and may be sort of feminist. But in work, most women brings emotion to their work and make work delay and unprofessional.
Me, appraiser didn't ask to remove stuff in the closet for attic. Seller stays home at her visit.
Terrible.
2 votes
Learn the English language, Pink, you sound like an idiot.
Flag Wed Aug 16, 2017
"Listed" .
Flag Tue Apr 25, 2017
Addendum:I am an owner, not a renter.I do not know why this site has me lister as a renter.
Flag Tue Apr 25, 2017
That's an incredibly sexist comment.It's hard to believe that made that comment in 2017.Do you also believe that female physicians, attorneys, nuclear physicists, Prime Ministers, etc, "doesn't know anything."


"Most women brings emotion to their work and may work delay and unprofessional."
Wow. Apparently, you don't understand the term feminist, though you claim to be one.

While you insult women, you apparently can not write or use grammar correctly.
Flag Tue Apr 25, 2017
I take exception to your comments regarding women working as inspectors. It is difficult enough to gain respect as a professional female and your comments have no factual basis and is gender oriented.
P
Flag Sun Jun 5, 2016
No actually as a realtor for 25 years most appraisers are men. About 90%
Flag Sun May 1, 2016
Wow! You are uneducated and just plain stupid!
Flag Fri Apr 29, 2016
Well you cannot write grammatically so I do not know how smart you are, regardless of your gender.
Flag Tue Apr 12, 2016
I never comment on things, but this is the most sexist thing I've read in a while--even iif you're a woman and feminist.
Flag Sun Mar 6, 2016
Jeri Creson, Agent, Studio City, CA
Fri Apr 13, 2012
Lots of good answers here - and I see by your further notes that you have either resolved this, or are well on your way to doing so - congratulations!

I'd like to pipe in here, though, and make a critical point. This is so, very, very common, and often is a case of lethargy and in-action on the part of the real estate agent, or agent(s). It's never ok to just assume that, because a seller has overlooked a deadline and given extra time before that this will continue indefinitely. Extensions are important, and a proactive approach is needed. Bottom line, things happen, outside of your control as a buyer. Appraisals are late, HOA docs take forever to arrive, additional inspections are needed, documentation delays in loan approval happen… it never ends. And in most cases, the seller, and seller's agent will work with you, as long as the lines of communication remain open and honest. However, sometimes there is a compelling reason that they would prefer to "lose" you as a buyer and move on to someone else. Maybe someone is offering a more attractive back up deal.. maybe they are just tired of your brand of drama and delay (nothing personal…I'm saying this in general) … in any event, the seller CAN give you a notice to perform and cancel the contract if you don't. Under the CAR language, they have to return your deposit if they decide to do so, however, read VERY closely if you are doing a bank REO… often there are clauses in their addendum that allow them to cancel AND keep your deposit.

Bottom line: Communicate…don't be lazy, agents, about getting those extensions in writing, and be proactive about protecting your client's interests (and your own commissions, by the way…)

Be safe out there : )
2 votes
Scerving, Home Buyer, Los Angeles, CA
Wed Jan 25, 2017
I would remind the seller that any other buyer coming in now will need at least three to four weeks to close and they will be out more money.
1 vote
Tom Bashe, Agent, Temecula, CA
Sun Feb 2, 2014
Ultimately before they cancel you will most likely be going to Mediation per the CAR Purchase Contract, so I wouldn't worry as they cannot easily undo the contract. If this was helpful to you, please click BEST ANSWER & enjoy your day! Tom Bashe l Broker l SCA Real Estate l 951.547.0705 l Tom@SCARealEstate.com
1 vote
Matthew Bart…, Agent, Glendora, CA
Thu Apr 5, 2012
Hi tjbhayes,

You should never sign a purchase agreement or any other contract for that matter if you do not understand what it is and what it means that you're signing. If you find yourself in this position you should speak with an Attorney who specializes in Real Estate Law. Good luck!

Matt
http://www.matthewbartlettrealestate.com
1 vote
tjbhayes, Renter, Carson, CA
Thu Apr 5, 2012
What happens if you signed a purchase agreement without full understanding, this you were making an offer on property.
1 vote
Janey Bishop, Agent, Encino, CA
Thu Apr 5, 2012
This is where a good realtor will assist you. Your contract probably does call for a closing date, either directly or indirectly, which is reiterated in your escrow instructions. The realtor would be your advocate fighting and negotiating for your position. Have you received a notice to perform?

Does this Seller want you to close or do they have a higher offer in the queue?
1 vote
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Thu Jan 26, 2017
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0 votes
Donna Kearney…, , 86336
Sun Feb 2, 2014
So many good answers and opinions on the question! Thank you all!
0 votes
Steve Quinta…, Agent, Albuquerque, NM
Fri Apr 6, 2012
You have to read your purchase agreement to see what it says about terms of default. Once you read and understand those terms, you will know if the seller has the right to terminate, who gets the deposit, who gets to sue, and how much you have to beg or pay to close.
0 votes
Herbert Rivas, Home Seller, Los Angeles, CA
Thu Apr 5, 2012
Dead line extentions are very important in Real Estate... Good luck in your negotiation with Seller.
0 votes
Ray Fernande…, Agent, Cerritos, CA
Thu Apr 5, 2012
Kevin,

Seller has right to cancell at any time; However, if seller wants to charge your buyers a per diem, than first and foremost, speak with your lender and your buyers before agreeing. My hope is that you have not removed your appraisal contingency nor have realeased the EMD, right?

If this is the case, than your lender should compensate the seller by agreeing to paying the per diem eithe by crediting the buyer towards their closing costs or lowering the buyer's interest rate. Who picked the lender? I hope it wasn't you! If the lender was picked by the buyers, you are off the hook...If it was picked by the seller or seller's agent, as is recommended most of the times now a days, good for you too....BUT IF YOU REFERRED THE LENDER, you might have to compensate the seller as is of no fault to the buyers NOR the sellers.

Bottom line, is all about money. Find out what the per diem is and negotiate it.............I would!
0 votes
Kevin, Home Buyer, Orange County, CA
Thu Apr 5, 2012
Thanks to everyone who respond! All your input was very valuable.

Since I don't have that extensive going to try and meet the seller halfway while also getting an amended contact sign by both party with a new escrow close date. Hopefully everything work out.

-Kevin
0 votes
Thank you for good words Kevin! Good luck!
Flag Thu Apr 5, 2012
Douglas Perez, Agent, Los Angeles, CA
Thu Apr 5, 2012
Hello Kevin,
Besides what other sites says, you must go by what you agreed in your signed purchase contract. And never assume the other party knows what's going on; get it in writing and amend escrow instructions with your signature and Seller's signature.
In most transactions, your got two agents working for you, your real estate agent and your loan agent. Both of them should be watching over your transaction on your behalf on their respective duties.
I know this must stressful and frustrating for you. Most likely you're going to close within one week. But Seller is right; what guarantee him that you are going to close within a week? At this point communicate with your agents and negotiate with Seller for an extension in writing.

Have a blessed day,

Doug
0 votes
Irina Karan, Agent, Aventura, FL
Thu Apr 5, 2012
Hello again,

The most important part is to close asap.
Then, the compensation proposal won't be on the table anymore...
Once you know the date of closing, you can sit down with your (and seller's) agent and explain
that the delay was not really caused by you (and give her the letter from your mortgage co on that). If he/she does not feel that you are right, you may want to ask for a meeting with his/her broker, asking for help and find resolution for this situation.

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes
Deborah Brem…, Agent, Los Angeles, CA
Thu Apr 5, 2012
Hi Kevin;
Once again, this is a situation where having your own buyer agent, negotiating expressly for yur best interests, makes all the difference in the world. The agent cannot negotiate strongly for you when he is negotiating for the seller. Your interests are diametrically opposed.
In point of fact, before the seller can cancel, they MUST give you a 48-hour notice to perform. Until then, continue to act "as if" the property will close.
In reality, the seller will not want to cancel IF he is confident you can close. It will cost him MORE money to find a new buyer and wait for that buyer to close. So if you really can close, and if there is no higher backup offer waiting in the wings, the seller will wait. It's in his best interest.
Don't be bullied, especially by someone representing the seller. Go to a broker or manager for representation, and if your agent is the broker or manager, get an attorney to write a letter for you. Express your firm intention to close as soon as possible, as per the contract.
And in the future, get your own accredited buyer agent (ABR).
Best of luck,
Deborah Bremner
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
(D) (310) 800-2954
http://www.thebremnergroup.com
Accredited Buyer Representative|Certified Distressed Property Expert |Pre-Foreclosure Specialist Certified
I want you to know that I appreciate any referrals from friends and associates who may be in the market to buy or sell real estate. You can count on me giving them the same high-quality service I provide to all of my clients.
0 votes
I like your answer.
Flag Thu Apr 5, 2012
Blair Thomps…, Agent, Sherman Oaks, CA
Thu Apr 5, 2012
The fact that a Notice to Perfom has not been given to you is in your favor right now. You usually have 48 hours after that to close the deal and it sounds like you are close to closing it. The seller is not being unreasonable expecting the deal to be closed therefore it may be fair for them to expect you to pay some of their "damage" for the late closing. While it is not directly your fault for the delay, it is your lenders (appraisers) fault so the blame falls on you. But the big picture here is closing the deal. I doubt the seller wants to kick you out of escrow unless they have something else in the wings. That is for you to figure out from the agent. A dual agency may be working in your favor here as the agent really wants this deal to close and that may be why the notice to perform has not been given yet. But be careful, once that notice is filed, your deposit may be at risk.

Your best bet is to put huge pressure on your lender to close things ASAP. You may even look to them to pick up part of anything you have to pay for being late. Just the fact that you are asking this question on here raises concerns about the communication you have with your agent. Open it up, express your concerns to them and find out exactly where you stand. Go to the office manager if you do not get satisfaction from your agent.
0 votes
Tim Jarnot, Agent, Los Angeles, CA
Thu Apr 5, 2012
Kevin-

I appreciate the difficult position you are in.
If you are using a standard CAR contract in this sale than the escrow close date is specified in Paragraph 1, section (D).
If you are using a non-standard contract than you would have to have an attorney or broker review that contract to see what it says about a Closing Date. One important fact - a contract to Purchase Real property MUST have a specified date of performance (i.e. Closing Date) it cannot be "open-ended". If it truly has no specified closing date than it is probably non-enforceable and the seller can cancel at any time.
I have direct experience with your problem in a case where there is a Closing date specified - and unfortunately you won't like it. I was involved, as Asst. Manager for a major brokerage, in a case just like yours. The fact is that unless an extension is agreed to the Seller has the right to cancel a transaction if escrow does not close on or by the date specified in the contract. UNLESS it is because of the Seller's own non-performance that the escrow is delayed.(for example, the owner has not delivered a signed Grant Deed to escrow)
In your case, it is because of mistakes made by parties not connected to the seller. Therefore, if the seller has performed his part of the contract and you are unable to perform yours the seller can cancel.
Again, the appropriate action on your part is to consult an attorney who can review your contract and present you with viable options. Either that, or have your Broker negotiate a signed extension of escrow that gives you a chance to close under your current contract.

Best Wishes,

Tim Jarnot – Broker
Westline Properties
DRE # 01274482
Direct: (310) 795-7807
http://www.TimJarnot.com
0 votes
You need to learn the difference between than and then...
Flag Mon Sep 11, 2017
Tammy Hunt, Agent, Beverly Hills, CA
Thu Apr 5, 2012
Hi Kevin,

Normally your Realtor and escrow company would have an extension in place signed by all parties so that the seller is aware of any delays. If this wasn't done then the seller should have made everyone aware they would cancel ahead of time if it had been delayed past closing date for any reason.

Tammy Hunt
Nelson Shelton & Associates
355 N. Canon Dr
Beverly Hills CA 90210
310-990-9005
http://www.tammyhunt.com
Lic# 01275416
0 votes
Kevin, Home Buyer, Orange County, CA
Thu Apr 5, 2012
Hello,

I'm not sure if my realtor is on my side since he is also the agent for the seller. He is the one who contacted me about the seller's interest compensation.

I think the seller want to close with us by want to divide up the cost of the delay with us. I haven't gotten a notice to perform yet. This was all perform over the phone on March 31st nothing in writing yet. I will try to reach the title company in the mean time.

We just don't like this ultimatum they put on us of either pay or we'll be force to cancel =(
0 votes
Irina Karan, Agent, Aventura, FL
Thu Apr 5, 2012
Hello Kevin,

It's really strange about the date of closing not being in the contract, and you were supposed to get the extension signed before the contract expiration date. Now, it is up to the seller, if he agrees to the extension. This should be negotiated now asap - try to sign the extension addendum, and have your mortgage person write a letter explaining that the delay was not caused by you, but by the mortgage person and the appraiser. This would help to negotiate with the seller...

You have to decide if you want this property - because the seller can request compensation for the time of the extension (foreclosures charge $100 per day). However, with the help of a good realtor, and I hope you have one working with you, you might be able to convince the seller not to charge for the extension period. If you don't want to pay, and the seller does want you to pay, then you might choose to walk out on this property. The next question will be if you have passed the mortgage commitment day already. If you did, without extending this commitment date, you might be on the hook for the escrow money. I hope for your sake this is not the situation right now

If that's the case, push your mortgage person to finalize his approval asap, get the explanation letter, and negotiate with the seller to either not pay or pay a minimum for the extension - and sign the extension addendum asap.

Good luck,
Irina Karan, CDPE
IrinaKaran@gmail.com
Beachfront Realty, Inc.
0 votes
Does florida have different laws in keeping to the closing date? My house that I am selling is being delayed due to Tenant issue and will not close until at least 2 weeks after the contract date on the Florida property I am stressing any suggestions
Flag Wed Jun 15, 2016
Shaukatali K…, Agent, Katy, TX
Thu Apr 5, 2012
I would first contact your Realtor as to where you stand.
You should have extended your option period.

Than I would contact the Title company and they normally have a good
answer after reading your contract.

Good Luck
0 votes
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