Frustrated S…, Home Seller in Shingle Springs, CA

What is the liability for a seller if they back out of escrow prior to recording if there are issues with the loan for the "replacement"?

Asked by Frustrated Seller, Shingle Springs, CA Sun Apr 10, 2011

home? We are selling our home with the contingency that we are able to purchase a specific replacement home. We are having trouble with our lender requesting additional documents at the 11th hour, the appraisal not coming in high, second appraisal coming in $60,000 higher than the first, lots of concerns with the purchase. The buyers on our home are wanting to expedite. The original close date is 4/12, my lender is now saying they may be able to close on 4/14 if additional information is provided. They already told us we were approved and all that was needed was the proof of settlement on the sale of our home. Due to frustrations, we are thinking of backing out of both the sale of our home and purchase of the new one. We know we may lose the deposit on the home we are purchasing, what is the liability with cancelling the sale of our home - it is in escrow, but has not been recorded. Thank you!.

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Morgan Larson, Agent, Folsom, CA
Mon Apr 11, 2011
BEST ANSWER
I understand why you are Frustrated! Double sales almost always turn out to be tricky and frustrating. But like CJ said before, if your loan officer and their loan officer are confident that it will go through, don't back out from owning your new home. Like she said, in the big scheme of things, a couple weeks of frustration will end when you are unpacking your boxes in your new home.

As far as liability goes, it does depend on where you are within both escrows. The closer you are to recording, the more likely someone (ie buyer) is going to be very upset. And when someone is very upset, they could turn to the court system, etc. But they also might not. So talk it over with your agent and attorney before making any significant moves.
0 votes
Karen and Pa…, Agent, Cameron Park, CA
Tue Mar 1, 2016
Always remember the close of escrow date is a goal and not a promise. We all do our best to hit that date but there are so many factors involved that a day or 2 delay should be expected. It's all about being ahead of the paperwork but glitches do pop up at the last moment that need to be corrected to close.
0 votes
Morgan Larson, Agent, Folsom, CA
Wed Apr 13, 2011
Thank you! And enjoy your new home :)
0 votes
Frustrated S…, Home Seller, Shingle Springs, CA
Wed Apr 13, 2011
Thank you so much CJ, Morgan and Z Team! Your responses helped put our minds at ease. We beleive the sale of our home closed on 4/12/11, but we have not heard from anyone yet to confirm. We provided the additional information requested by the underwriter for our purchase, but have not yet heard if it was sufficient. We have calls in. We assumed we would receive better customer service when purchasing a $500,000 home in this economy, we were wrong.

We are continuing to pack and are operating under the assumption we are moving on Friday. Morgan, your comment about the frustration being over once we are in our new home put things in perspective. Wish we met you two months ago. We will be sure to recommend you, CJ, and Z Team to any of our friends considering selling or purchasing a new home!

Frustrated Seller
0 votes
Doug & Bud Z…, Agent, Placerville, CA
Tue Apr 12, 2011
Your Realtor has fiducary obligations to you and should discuss all these concerns, plus, recommend you get an additional opinion form an attorney!
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CJ Brasiel, Agent, San Jose, CA
Mon Apr 11, 2011
Frustrated -

The question of liability can only be answered by an attorney.

In this current market, underwriters are making many "jump through" new hoops that didn't exist years ago. It can be stressful but if your loan officer has confidence that all can be worked through, and you want the home, march on!

The difference between 4/12 and even a week later in the big scheme of things should be workable if all parties still want the deal to go through. Hopefully, your agent is helping to manage the buyers and building confidence based on loan approval.

If the buyer having issues with their loan, know what they are and make a decision accordingly. Again, if both parties want the deal to go through and you have simply hit some speed bumps, try to work it out.

CJ
Web Reference:  http://www.TalkToCJ.com
0 votes
Jim Walker, Agent, Carmichael, CA
Mon Apr 11, 2011
Thank you for this post. It is a good warning to any buyer or buyer's agent who is looking at a contract contingent upon the seller finding a replacement.
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