Sale of Home Fell Through

Belle25 · #1 12-06-2006, 08:48 PM

What is the name of your state? Texas

After accepting an offer from buyer, we completed the active option period and went into pending status. We were supposed to close on the 12th of December. On the 6th of December we were notified by our realtor who was notified by buyer's realtor that financing had "fallen through". They had a pre-approval letter with their offer. Thirdhand information (relayed by our realtor from their realtor) is that problems with their taxes fouled up their loan approval with the underwriter. Other thirdhand info is that they loan shopped at several banks (getting denied each time) during the escrow period after the active option was completed.

As the seller, in order to close on the 12th, I vacated my house and signed a lease at a new apartment in a very short amount of time once the active option period was over. Had the buyers indicated they had a problem and were still shopping for a loan, I would not have signed the lease at the new place, nor moved out.

Can I sue them in small claims for damages (a couple months rent at my new place)? I have not yet signed the release from contract in order to get the earnest money, because reading over the release, it looks as though I will have no legal grounds to go after them if I sign it. If all of this had been an unforseeable event such as a death, or loss of job, or whatever, I could probably just let go and take the earnest money, but to get notice that they couldn't afford the home itself 6 days before closing seems a bit fishy to me.

Any help?

Thanks!

BelleWhat is the name of your state?

moburkes · #2 12-06-2006, 08:51 PM

People often find out just before closing that they cannot get funding. A preapproval letter is just like a preappoval offer of a credit card. It doesn't mean that you will get final approval. What did the contract state if the buyer could not get funding?

lcannister · #3 12-07-2006, 05:39 AM

For others, your deed is done but one should remember things can and very often do go awry and the sell/purchase is NOT complete until all paperwork is sign, sealed, and delivered.

If the contract contains a rinancing contingency then you will not even be able to keep the earnest money barring other language in the contract.

That you took it upon yourself to do the things you did BEFORE a final closing would take many years to get financial compensation forif ever.

NandCo · #4 12-07-2006, 10:22 AM

I am gong throught the same issue. Only I amthe buyer trying to get my earnest back. The seller chose to move her belongings to FL before the closing.

I did have a financing contigency. My intentins were to assign the PA and seller knew. But that fell thru and I could not close on it myself after the fact due to credit scores dropping during this waiting period.

I feel for you on this, but people re right, a deal is not a deal until the checks are cut and docs sent to the lender.

Belle25 · #5 12-08-2006, 01:23 PM

I know that we are going to have to just deal with our situation, take the earnest money, put our house back on the market and be done with these buyers. What gets my goat is this: it said in the contract they had 10 days to procur financing (active option period). It wasn't until well after the option period ended that they admitted they couldn't get financing and had been shopping around. Now, I get their earnest money, and no it isn't their fault that I moved out of my place. BUT had they been more up front, I wouldn't have signed a lease, nor moved out. Lesson learned.

My other question is this: people say a deal can fall through right up until the day of closing. However, my understanding is that as the seller, I am supposed to be out of my house, and my house is supposed to be in move-in condition on the day of closing. So, as a seller, I obviously have to take a gamble at some point and find another place to live and move my stuff out. This time, I did that too quickly (hindsight being 20/20). When should a seller move out if they have to be out by closing? When should they find a new place to live? Do I just ask for more earnest money so that my losses are covered in-the-event-of? I have a good real estate agent, but he said in 6 years of his being licensed, this particular situation (buyer not being approved after a pre-approval, and then waiting to tell us well after the option period) had never happened to him before. I think he was asking his brokers many of the questions I had been asking him.

Can you tell I'm a first time seller?

lcannister · #6 12-08-2006, 06:08 PM

but he said in 6 years of his being licensed, this particular situation (buyer not being approved after a pre-approval, and then waiting to tell us well after the option period) had never happened to him before

Then he has not been very active in those 6 years as this is a very common occurence!

Sellers often move out in the morning and the buyer moves in in the afternoon after the close.

Those are just the chances one takes in a sell/purchase.

Oh and don't spend that earnest money just yet the potential purchasers will also have to sign off on you getting it back and they may not be willing to do so. The EXACT wording of your contract will rule but you may have to sue to get it.

nextwife · #7 12-09-2006, 08:25 PM

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