I am a seller...my buyer had a change of heart 4 days before closing. Because they were so anxious to get in

Asked by Renee, Mariposa, CA Tue Dec 18, 2007

to the house before Christmas we had to place a deposit and rent another house in order to get out at close. This buyer also sent a brush clearer to our property to do work, prior to close, without our okay. Now, he doesn't want the property because he's afraid of the poor economy, and we are out two thousand dollars from the rent and deposit we had put down. My realtor says we can't get it from their escrow deposit because there is a loan contingency. Their loan contingency states they are to be able to obtain the loan. What happens to that contingency if they are able to obtain loan, but don't sign for it because they had a change of heart. Is that a legitimate way out for them?

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7
Terri Vellios, Agent, Campbell, CA
Tue Dec 18, 2007
That is a terrible situation. You need to review the contract and as the other agents said, may need to get an attorney involved. I would recommend meeting with the buyer's Broker and your listing agent's Broker. If there is a loan contingency I would ask for a letter from the lender stating the reason for failure to perform. Is it due to lack of down, cash or other reasons. The contract will state the terms of the financing contingency. Did they remove any other contingencies? Did they put up a deposit? A change of heart is not a contingency. Did you have mediation and arbitration in your contract? What about liquidated damages? Brokers and Attorneys will be able to sort this out.

My heart goes out to you. I wish you sucess in getting this resolved, and hope you'll be able to have a happy holiday.
Web Reference:  http://www.terrivellios.com
1 vote
Perry Hender…, Agent, Austin, TX
Tue Dec 18, 2007
If you are willing to sue, then you may have a chance but its probably a lost cause or at least very messy. Try asking for the oney first, maybe they'll feel a little guilty and want to help you.
1 vote
Ruthless, , 60558
Wed Dec 19, 2007
I have to agree with Terri and add,
Is the loan contingency for FUNDING or is it for APPROVAL?

Every state and every CONTRACT is different depending on WHO wrote it regarding modifications and interpretation. You could have two identically written contracts being decided by the same person. But when arbitration comes into play, the person making the decision will look at ALL the facts and hear testimony (and quite frankly they are human) and even rule based on whether their dog crapped on the rug that morning or whether the deciding person found out they were going to have a baby after years of trying. This wild card in contracts is called "intent" or "good faith".

So, what I have learned after spending TONS of time on Trulia, is that the protocol I have experienced in IL IN THE PAST is that the loan APPROVAL contingency is usually removed before the house is even considered being sold and heading toward escrow closing. But in other parts of the country (such as CA) or smart buyers or buyer's agents will leave that contingency in place until FUNDING has actually occurred. To me, this is a Catch 22. Funding occurs when the funds are secured by ownership of the property, but ownership of the property requires funding. It's a hostage negotiation. Both parties have to trust that on the count of three, the other party will trade. If one pretends to do this, the other party no longer has any leverage.

Since I really don't understand California's escrow procedures, my comments are really based on theory as opposed to practice. If the buyer's "change of heart" is due to a memo that layoffs are occurring at work and the lender requires proof of future employment, yes this IS a LEGITIMATE way for them to get out. If the buyer's simply refuse to sign the paperwork, then they are in breach of the contract and you ARE entitle to the earnest money. The big question is, is it really the buyers who are having a "change of heart" or is it the lender? Disclaimer, I'm not an attorney - please seek legal advice.

Ruth
0 votes
fu, , Hollywood Cemetery, Richmond, VA
Wed Dec 19, 2007
All else failing - since negotiation is preferable - small claims court sounds like an option. Best of luck with this.
0 votes
Durenda Fach…, , Coastal Tampa Bay area. Pinellas and Pasco Counties.
Tue Dec 18, 2007
Renee

Just an addition

Depending on the strength of the terms of your contract, sometimes a letter from your attorney (nominal cost) gets them back in line to perform

Your attorney will guide you well

best of luck
0 votes
Durenda Fach…, , Coastal Tampa Bay area. Pinellas and Pasco Counties.
Tue Dec 18, 2007
Renee

Your buyer may have other consequences depending on the written terms of your contract.

Take your contract to a local real estate attorney ASAP, and let your attorney advise you regarding your buyers apparent breach of contract

Best of luck.
0 votes
Will, Agent, Fort Walton Beach, FL
Tue Dec 18, 2007
Renee, I am sorry to read about your situation, Not knowing all the details some of what I am saying might be out of line but it is my opinion you have recourse against the buyer, The financing contingency must be valid not just the buyers change of mind. Any type of work done by the buyer should have had prior written approval.

I don't think your Realtor is stepping up to the plate on this one. Seek legal advice quickly and stay strong.
0 votes
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