Home Selling in Indianapolis>Question Details

adrienne.man…, Home Seller in Indianapolis, IN

Compensation for seller if deal falls through at closing on buyers end?

Asked by adrienne.manley, Indianapolis, IN Thu May 24, 2012

We sold a home in Indianapolis. Moved out because buyer was to have possession at closing. A week later still no closing. Deal stilll in underwriting, problem with buyers lender. We put everything in storage and discontinued our cable, electricity etc.. If this deal ends up falling through, what compensation do we have as sellers for all of our moving and storage fee?
We are so frustrated! So if anyone could help and let us know our options that would be great!
Thanks Adrienne

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Hi Adrienne:

Your frustration is one that many have felt. You will have to look into the contract to see how the timelines are spelled out. You would want to contact your REALTOR and potentially a real estate attorney to address any compensation towards all the moving costs, storage, and of course for your inconviences. I'm assuming financing is a contingency of purchasing your home and without it the buyers are unable to close. It may be difficult to obtain compensation unless the buyer knowingly affected his abilities to gain financing. (this would be a rare instance and I've thankfully not encountered this).

If you are working with a REALTOR, I would talk with her to find out what the current issues are with the financing. If they all appear to be things that will be worked out, just in due time, you'll want to wait it out to close. It's always a tricky situation with a buyers occupancy date being the same as the closing date. We normally ask for a few days post occupancy, for the seller to begin moving their belongings. This ensures that once the seller does begin the process of moving, they know they have in fact sold their home. As other agents have mentioned, most purchase agreements do require you to keep the utilities on until the day of closing, unless a different arrangements has been made between buyer/seller.

I wish you the best of luck and I hope everything works out for you - hopefully sooner rather than later!

Mallorie Wilson
Associate Broker
Century 21 Diversified
317-590-3434 direct
317-585-7748 office
317-845-7726 fax
0 votes Thank Flag Link Tue May 29, 2012
Unless the time for closing & possession is written " OR x days following final mortgage commitment, whichever is later", the buyer is out of contract, so you have no agreement. If that is the case, but the buyer still wants the house, you may be able to negotiate some compensation via a contract amendment (which you'll need to adjust the closing date anyway). But talk to the lender to find out the chances of eventual approval. If it's not good, you should not waste time and instead look for another buyer.
0 votes Thank Flag Link Sat May 26, 2012
All 7 of the previous comments are good advice. Please contact an attorney to give you some assistance. I've been in real estate for over 40 years, and giving possession at closing on an occupied house is always very tricky. If it's written in the purchase agreement that the seller has to pay the buyer a per diem rent for X number of days AFTER closing as long as they can stay in the house for those number of days, at least it will prevent the inconveniences you are suffering. Hopefully things will work themselves out in the next few days to a week. It is not that unusual this time of the year for lenders to get bogged down with documentation. Best wishes and good luck.
0 votes Thank Flag Link Fri May 25, 2012

Could it be that you didn't use a Realtor? And why did you turn off utilities?
Every purchase agreement I've used and seen, as sanctioned by the state
of Indiana, states that the seller will keep utilities on Through the Date of
Possession. Unless you stipulated otherwise in your agreement.

Have you or your agent or attorney spoken with the lender in this case?
I have seen instances in which closing is held up a week ... maybe 2.

Speak with an attorney to discover what recourses you have. And speak
to the lender who will tell you how confident they are about getting a 'clear
to close' on this file.

Best of Luck,

0 votes Thank Flag Link Fri May 25, 2012
This is a legal question and should be dicussed with an attorney. Your sale contract may have language in it giving you specific rights. I'm very sorry to hear that you're in this situation. I don't know all the details, but both your agent and the buyers agent (assuming their not the same) appear not have done a very good job in terms of communication. You should not have moved out without knowing the buyer had final loan approval.

I hope things resolve themselves and the buyer is able to close.
0 votes Thank Flag Link Fri May 25, 2012
First of all Adrienne, no Realtor should be giving you legal advice. We aren't attorneys. Contact an attorney. If you need a recommendation here in the Indianapolis area you can email me. I am happy to help. Also, if you aren't using a Realtor to guide your transaction....shame on you!
0 votes Thank Flag Link Fri May 25, 2012
So sorry to hear you're dealing with such a frustrating situation. I've dealt with this problem personally, and had to go through all of the expenses. I can tell you that it does very much depend on how the contract reads, however you could be entitled to keep the earnest money if the deal falls through and you could be entitled to a fee per day past the agreed closing date, depending on what the purchase agreement says and any ammendments you've signed to extend that closing date.

Sometimes, it isn't the buyer's fault. I've seen a number of cases where it was the lender trying to push through a closing with the wrong loan structure or a lender who has failed to obtain all the necessary information. If you have an agent, ask them to have a frank conversation with the loan officer and if necessary, the underwriter. They can't give you personal details without the buyer's express written consent, but they can help you understand truly why the closing has been delayed.

In the mean time, I would spend some of your time calling a couple of attorneys, with your purchase agreement in hand, to ask about your options. It really depends on how the purchase agreement reads.
0 votes Thank Flag Link Thu May 24, 2012
This is why I never allow possession at closing on any non-relo listing. It forces you to move out before closing. If you used a Indiana State Purchase Agreement 99.9% of the time is it checkmarked that the offer is subject to buyer obtaining financing. I am not an attorney, but it will be a challenge to fight a failed financing event.
0 votes Thank Flag Link Thu May 24, 2012
Thanks for the input. i thought so.
Flag Thu May 24, 2012

Sorry you're having a tough time on this transaction. If you don't have an agent, I'd be glad to share my experiences and refer you to a local, qualified real estate attorney.

Good luck!

Joe Shoemaker
Principal Broker, REALTOR®
MacDuff Realty Group, LLC
317 413.8501
0 votes Thank Flag Link Thu May 24, 2012
Why does it sound like you are trying to do this without an Agent?
I don't think you would be asking this question;
You would know about the parts of your Contract dealing with "per diem", and Arbitration/Mediation, and "Notice to Perform".

As Dr. Phil would say; "How's it working for you?"
0 votes Thank Flag Link Thu May 24, 2012
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