Can I back Out -- Buyer didn't live up to bargain

[mjknamk]

What is the name of your state? Ohio

Hi,

We signed a contract to sell our home with a buyer that was contingent upon him receiving financing.

As part of his financing contingency, he agreed to give us a letter of loan commitment from his lender by August, 20th 2004 (about 55 days from when we signed the contract). It is now September 2nd and we still have not received a commitment letter from his lender. We “hear” that things are okay, but I don’t have the agreed upon written commitment letter. Now my wife and I are thinking maybe we don’t want to move.

My question is simply this: Can we now consider the buyer in breach of contract and thus the contract invalid? Also, since the buyer caused the breach, are we entitled to go after his earnest money?

[HomeGuru]

Originally Posted by mjknamk

What is the name of your state? Ohio

Hi,

We signed a contract to sell our home with a buyer that was contingent upon him receiving financing.

As part of his financing contingency, he agreed to give us a letter of loan commitment from his lender by August, 20th 2004 (about 55 days from when we signed the contract). It is now September 2nd and we still have not received a commitment letter from his lender. We “hear” that things are okay, but I don’t have the agreed upon written commitment letter. Now my wife and I are thinking maybe we don’t want to move.

My question is simply this: Can we now consider the buyer in breach of contract and thus the contract invalid? Also, since the buyer caused the breach, are we entitled to go after his earnest money?

**A: post word for word the financing contingency as stated in the contract.

[mjknamk]

The contract reads:

"for financing within 10 calendar days after written acceptance of this Contract and will make a diligent effort to obtain financing. If Buyer's lender does not notify listing REAL TOR@ or Seller, in writing, that a loan commitment has been obtained, or waived by August 20th, 2004, then Seller may, by written notice to selling REALTOR@ or Buyer, terminate this Contract. BUYER IS RELYING ON BUYER'S OWN UNDERSTANDING OF FINANCING TO BE OBTAINED AS WELL AS THE LEGAL AND TAX CONSEQUENCES THEREOF, IF ANY."

Thanks again.
Michael

[MortgageGuru]

When is the closing date as per the contract? When was the appraisal completed? Where there any issues on the home inspection that needed to be resolved and re-inspected? A loan comitment can't be released by a lender until the package has cleared underwriting and is Clear to Close.

Did the contract require a pre-approval letter from a lender within X number of days from the date the offer was accepted?

[mjknamk]

Originally Posted by MortgageGuru

When is the closing date as per the contract? When was the appraisal completed? Where there any issues on the home inspection that needed to be resolved and re-inspected? A loan comitment can't be released by a lender until the package has cleared underwriting and is Clear to Close.

Did the contract require a pre-approval letter from a lender within X number of days from the date the offer was accepted?

The agreed to close date in the contract is September 28, 2004.
The appraisal was completed in mid July.
The home inspection was completed and the contingency waived by the buyer in late June. There were no follow-up issues from the inspection....in fact, no issues at all.

As stated above, the contract required FINAL LOAN COMMITMENT by August 20, 2004 in writing from the Lender.

Thanks again for the input.

[JETX]

Originally Posted by mjknamk

Can we now consider the buyer in breach of contract and thus the contract invalid?

Answered in your own subsequent post: "If Buyer's lender does not notify listing REAL TOR@ or Seller, in writing, that a loan commitment has been obtained, or waived by August 20th, 2004, then Seller may, by written notice to selling REALTOR@ or Buyer, terminate this Contract."

Also, since the buyer caused the breach, are we entitled to go after his earnest money?

No. You would have to refund the earnest money as the buyer is NOT in breach due to the 'contingency clause' and the termination of the contract is done by YOU.

[HomeGuru]

Originally Posted by mjknamk

The contract reads:

"for financing within 10 calendar days after written acceptance of this Contract and will make a diligent effort to obtain financing. If Buyer's lender does not notify listing REAL TOR@ or Seller, in writing, that a loan commitment has been obtained, or waived by August 20th, 2004, then Seller may, by written notice to selling REALTOR@ or Buyer, terminate this Contract. BUYER IS RELYING ON BUYER'S OWN UNDERSTANDING OF FINANCING TO BE OBTAINED AS WELL AS THE LEGAL AND TAX CONSEQUENCES THEREOF, IF ANY."

Thanks again.
Michael

**A: whoever wrote that contingency needs some lessons in contract writing.
First off, the lender does dot notify the listing Realtor or Seller directly. The lender is only supposed to deal with the borrower applicant (Buyer) and is not obligated to communicate with any of the Realtors, especially the Seller's. Next, why would the Buyer's lender waive a loan commitment. Why would a Buyer agree to have the ledner waive the loan commitment? And more importantly, why would a Buyer agree to have termination of the contract only by the Seller? In this contingency, the Buyer has no right to terminate, only the Seller does. In addition, there is no right to terminate if the terms and conditions of the mortgage loan are not acceptable to the Buyer.
Since the writer is the Seller, the writer may elect to terminate the transaction or continue to let the financing take a little longer.
Lastly, the last sentence in all capitals does not make sense.