Short sale- Seller backing out a day before closing

Asked by 2vegas, 48105 Mon Jun 11, 2012

Bank accepted offer. Told us we had to close on or before today. Had a closing date of last friday but the sellers wouldn't let the inspector into some room which delayed until this week. They had me sign for occupancy..but today..I read the terms and Chase does not allow the sellers to be tenants nor was their agent allowed to even draw one up. Email back from my agent was that if the sellers cannot have occupancy-they cannot sell!? the "ouch" . I sold 2 homes in order to get this one..$3000 in moving costs from Las fees..appraisal fees.. They even signed a "non-cancellable" clause.. Now I moved out in 48 hrs so I know its possible...What do you think damages/remedies are? I also called Chase and left a message with the processor letting the know I was ready to close and they backed out thinking they may call for an extension...I can have a free lawyer through Hyatt that pays for everything regarding the purchase of a primary home but curious your take...

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Stephen Connolly’s answer
Stephen Conn…, Agent, Birmingham, MI
Tue Jun 12, 2012
Your agent received an occupancy letter and had you signed something like that and your agent sent it back to the sellers agent? WOW. It is possible that you may have to evict the sellers! But if they only want a couple of days to move out after closing then by all means, work with them, after all they are losing their home. You certainly do not want to incur any potential damage to the home.
Yes, talk to your free lawyers, as Realtors, we are not allowed to give any "lawyerly" advice.
Best Regards
0 votes
Andy Hargrea…, Agent, Plymouth, MI
Tue Jun 12, 2012
I personally think you're perhaps misreading the language from Chase.
You're not purchasing this as an investment or rental property, which I believe is what the language from Chase states.
They are protecting your loan (owner occupant with less restriction) against an investment purchase, which is riskier with more hurdles to jump through on approval.

Essentially, if you purchase and they're still there, you do indeed in language have landlord/tenant rights, but this isn't something that needs to be recorded - ie, you could grant them a few days free of charge in order to move out, etc.

I'd closely review the paperwork with your attorney and Chase and call your Chase advisor to let them know this is not an investment purchase, etc.

Good luck!
0 votes
Thank you! Nope..want the keys at closing. Don't want to put myself in a position to evict. They have had a few months to move and not budging. The Arms said such an agreement was not allowed and both of my agents drafted a 45 day occupancy. Chase doesn't talk to the buyers..but I was allowed to leave a message. Thank you!
Flag Tue Jun 12, 2012
Kathy Persha, Agent, Birmingham, MI
Mon Jun 11, 2012
I'm a little confused. Were you planning to occupy the home or rent it back to the sellers? And if you were planning to occupy, how did the sellers get the idea that they could remain in the property?

In a short sale, most lenders will require both the seller and buyer sign an "arms-length affidavit" as part of the short sale. I'm surprised that you did not sign one. That affidavit will state that the buyer cannot sell the property back to the seller and the seller cannot remain in the property as a tenant. Anyone experienced with short sales knows that this is standard with the lenders. Both agents should be aware of this.

Also, the short sale approval letter would have stated the terms of the short sale. Again, the seller and both agents should have been privy to these conditions when they received the approval.

Kathy Persha, Realtor
Keller Williams Realty
0 votes
I signed for them to have 45 days occupancy after closing..Today, I read the "arms-length" and was I questioned it. Their response was if they cannot have occupancy..they cannot sell. We were supposed to close Thursday. I went with the short sale experts..both my agent and the listing agent would not let me out of occupancy and I was miffed (at myself) for not covering myself incase of non-payment or eviction and say this as a biggggg blessing.
Flag Mon Jun 11, 2012
Reichard Tom, Agent, Traverse City, MI
Mon Jun 11, 2012
The seller should have know from the get go that they couldn't stay in the home and somewhere in all the short sale paperwork it probably made that clear as well. There is no way that I know of to force someone to close on the sale of a home. The only recourse you would have would be to use your free lawyer to sue for non performance on the purchase agreement but you need to read the purchase agreement closely to see if damages are limited in some way too. Consult your attorney!
0 votes
You would think...but I missed it as well until today so possible they didn't. Nope..nothing on limiting damages. so was hoping someone could list possibilities of remedies so I have a backup for my lawyer or things to run by him..REALLY would like my $3000 moving fees from Nevada storage fees.. I sold 2 homes for these deadbeats and even bid higher because I liked the layout..they were lucky to get my price but instead of an apartment..foreclosure..and practically the day of. yep..the Arms length clause was signed...but my own agent was telling me I had to give them occupancy..Email is out to the attorney..sob.
Flag Mon Jun 11, 2012
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