buyer backed out

State: NJ
Hi there,
I am a first time home seller, so I am new to this game. But I would like to explain my situation just to see if it was dealt with properly.
First off, I must tell you I was not aware of the fact that we had a certain amount of time for the buyer to present a loan commitment from his lender or we could have backed out in said time. Now I know this..but was not aware of the fact when it all happened.
We signed contracts, and everything was going smoothly..my realtor repeatedly told me not to worry, the buyers had thier loan and everything was fine.
Well.. 5 days before we were supposed to close, I received notice from buyer's lawyer stating they were backing out of the deal because the loan interest quoted by thier bank was too high for them.
Is this legal?
I stopped showing the house after the contracts were signed, being told by my realtor that this was a done deal. I had already moved out 75% of my belongings into storage, and we were ready to move. Luckily we were just moving in with my mom until we found a house, we didn't buy another house yet (thank god!)
I also had a lawyer throughout this process by the way. When all was said and done, nobody took the blame for not making sure that the buyers did in fact have a loan commitment. Am I wrong to think it was the lawyers job, and also the realtor's job to make sure the loan commitment was there, way before 5 days before closing? The lawyers said "sorry, I forgot" thats it.
I got out of my contract with my realtor as she was very rude about the situation and I don't feel she handled it properly.
Now that I am better informed about the fact that we had a certain amount of time to back out without proof of loan commitment, I will be better prepared for the next buyer.
So was it legal for them to backout? They did in fact get a commitment from their lender, it just wasn't the percentage they wanted. How rude to tell me 5 days before closing, aah!!!
I still haven't signed off to return thier earnest deposit, though I do plan on returning it to them..legally do I have to?
I just want to avoid this situation from ever happening again.
Thanks for letting me vent and please advise on if this situation was handled properly.

[HomeGuru]

[quote]Originally posted by houseseller
[b]State: NJ
Hi there,
I am a first time home seller, so I am new to this game. But I would like to explain my situation just to see if it was dealt with properly.
First off, I must tell you I was not aware of the fact that we had a certain amount of time for the buyer to present a loan commitment from his lender or we could have backed out in said time. Now I know this..but was not aware of the fact when it all happened.

**A: then I guess you either did not read the contract you singed or read it and did not understand it. NEVER sign such a contract unless you fully understand every single sentence in the contract. Hire an attorney if need be to review the contract and explain all the conditions to you. If you do not understand something, ask. DO NOT depend on what your Realtor tells you. Go by whatever is in writing on the accepted contract.
*********
We signed contracts, and everything was going smoothly..my realtor repeatedly told me not to worry, the buyers had thier loan and everything was fine.
Well.. 5 days before we were supposed to close, I received notice from buyer's lawyer stating they were backing out of the deal because the loan interest quoted by thier bank was too high for them.
Is this legal?

**A: read your contract. If there is a financing contingency, then it is perfectly legal for the Buyer to terminate the purchase based on lack of financing at the contracted rate and term.
************
I stopped showing the house after the contracts were signed, being told by my realtor that this was a done deal. I had already moved out 75% of my belongings into storage, and we were ready to move. Luckily we were just moving in with my mom until we found a house, we didn't buy another house yet (thank god!)

**A: now you know not to rely on verbal statements from your Realtor. You now know that the verbal advice was in conflict with the written provisions in the contract.
***********


I also had a lawyer throughout this process by the way. When all was said and done, nobody took the blame for not making sure that the buyers did in fact have a loan commitment. Am I wrong to think it was the lawyers job, and also the realtor's job to make sure the loan commitment was there, way before 5 days before closing? The lawyers said "sorry, I forgot" thats it.

**A: you had an incompetent Realtor and an idiot attorney.
**********
I got out of my contract with my realtor as she was very rude about the situation and I don't feel she handled it properly.
Now that I am better informed about the fact that we had a certain amount of time to back out without proof of loan commitment, I will be better prepared for the next buyer.
So was it legal for them to backout? They did in fact get a commitment from their lender, it just wasn't the percentage they wanted. How rude to tell me 5 days before closing, aah!!!

**A: again read the contract.
********
I still haven't signed off to return thier earnest deposit, though I do plan on returning it to them..legally do I have to?

**A: again read the contract. In my opinion you must return the deposit since the Buyer terminated the contract.
**********
I just want to avoid this situation from ever happening again.
Thanks for letting me vent and please advise on if this situation was handled properly.

**A: I am glad that you got rid of that Realtor. Now find a better attorney.

"you had an incompetent Realtor and an idiot attorney."

LOL...thank you homeguru for you answers and for that response. At least now I know I am right to think they weren't doing thier job well!!
You are right, I should have read the contract more carefully, but I expected my high priced attorney whom we have used before would have explained it all for me. Thankfully I didn't have to pay him for any of this since it fell through, and I will never use him again.
I learned the hard way, but at least now I know what to avoid.
..The laws on this don't really make any sense to me..I think there should be some rule or law in place to prevent things like this from happening at the last minute. IMO the buyer shouldn't be able to get his earnest money back, he should have found out that the interest was too high long before 5 days before the closing date. But I will be nice and give it back, since it is the right thing to do. I just wish they would structure things better so stuff like this didn't happen.
I did get a new realtor, who so far seems much more competant.
Thank you so much for your advice, it is truly appreciated!!
Have a great day

[HomeGuru]

You are welcome and good luck to you.