Seller defaults on closing

[azzirnyw]

What is the name of your state (only U.S. law)? Maryland

Hello, my family is in dilemma right now and any advice from you will surely help. We're first time home buyers, excited to own our first home. We originally put in our offer to the house we're under contract in right now in 6/2008 and was accepted 2 days after. We're using VA loan and our original closing date was 7/26/2008. The first 2 floors of the house was just perfect - everything was brand new. It was put in the market in Feb 2008. The former seller's agent turned off the electricity sometime February-March and no offers were received in the house due to the lockbox not being placed in the property. Due to the electricity being turned off, the basement grew mold but we were assured by the sellers that it will get fixed before closing. The seller basically invited bids to do the basement rehab, stripping all the drywall, treating the walls from water damage and spraying treatment for the molds, then, put back new drywall and carpeting, etc. The seller is a corporation - professional flippers, based out of Utah. Two weeks before closing, no work was done to the basement, our agent initiated to add an addendum extending the closing date 30 days after on 8/26/2008. Come 2nd closing date, still, no work has been done to the basement rehab. The seller's reason is they have not chosen a contractor to do the basement. Our agent initiated the third extension for the closing date on 9/26/2008. Finally, after the 3rd extension of the closing date, work on the basement started. The walls were stripped off, including the insulation in the basement, ceiling, etc. While the walls were bare, we had our home inspection, just last week. The contractor found out that the studs in the basement were poorly done (crooked, incorrect sizes, etc.), so they will have to redo the studs and the frames before they put the dry wall back. This was not part of their original contract with the sellers. The contractor quoted them more, obviously to do the repairs. Now, the work is on hold and we just turned in our notice to our the apartment complex that we will be vacating on 9/30/2008. Our agent gave us a few options:

1. Sign another extension and HOPING that they will do it within the timeframe the sellers say they would.
2. Offer the sellers to leave the basement unfinished and cut $20,000 from the purchase price of the home.
3. Back out of the contract.

For us, these are NOT options. Either way, we lose on these. On our 3rd extension, we did include a clause that if they delay again, they would pay $300 extra to cover for the difference in our current rent because we went from a one year contract to a month-to-month. The sellers crossed it out, then, signed the extension. In Columbia, MD, there is not much inventory of houses that buyers can really choose from. We do not want another house. We fell in love with this house, the size is just right for us and there's room to grow, the location is good both for work and school, and the school system is very good for our kids.

We wanted to know based on all your experiences and expert opinion, if:

1. My family has the right to litigate the sellers for extra expenses that we shouldn't incur due to them causing the delay in the reconstruction of the basement. By the way, it is in our contract that THEY will fix the basement before closing date. At the end of this month, we will literally have no place to live.
2. If the seller is the cause of the delay, should it be the seller's agent initializing all the extension addendum for the closing date?
3. What are the buyer's rights when the delay in closing is due to the seller?
4. Can we sue the sellers for breach of contract and charge them with damages?

Thank you for all your expert opinion.

Desperately seeking your advice,

Azzirnyw

[HomeGuru]

Originally Posted by azzirnyw

What is the name of your state (only U.S. law)? Maryland

Hello, my family is in dilemma right now and any advice from you will surely help. We're first time home buyers, excited to own our first home. We originally put in our offer to the house we're under contract in right now in 6/2008 and was accepted 2 days after. We're using VA loan and our original closing date was 7/26/2008. The first 2 floors of the house was just perfect - everything was brand new. It was put in the market in Feb 2008. The former seller's agent turned off the electricity sometime February-March and no offers were received in the house due to the lockbox not being placed in the property. Due to the electricity being turned off, the basement grew mold but we were assured by the sellers that it will get fixed before closing. The seller basically invited bids to do the basement rehab, stripping all the drywall, treating the walls from water damage and spraying treatment for the molds, then, put back new drywall and carpeting, etc. The seller is a corporation - professional flippers, based out of Utah. Two weeks before closing, no work was done to the basement, our agent initiated to add an addendum extending the closing date 30 days after on 8/26/2008. Come 2nd closing date, still, no work has been done to the basement rehab. The seller's reason is they have not chosen a contractor to do the basement. Our agent initiated the third extension for the closing date on 9/26/2008. Finally, after the 3rd extension of the closing date, work on the basement started. The walls were stripped off, including the insulation in the basement, ceiling, etc. While the walls were bare, we had our home inspection, just last week. The contractor found out that the studs in the basement were poorly done (crooked, incorrect sizes, etc.), so they will have to redo the studs and the frames before they put the dry wall back. This was not part of their original contract with the sellers. The contractor quoted them more, obviously to do the repairs. Now, the work is on hold and we just turned in our notice to our the apartment complex that we will be vacating on 9/30/2008. Our agent gave us a few options:

1. Sign another extension and HOPING that they will do it within the timeframe the sellers say they would.
2. Offer the sellers to leave the basement unfinished and cut $20,000 from the purchase price of the home.
3. Back out of the contract.

For us, these are NOT options. Either way, we lose on these. On our 3rd extension, we did include a clause that if they delay again, they would pay $300 extra to cover for the difference in our current rent because we went from a one year contract to a month-to-month. The sellers crossed it out, then, signed the extension. In Columbia, MD, there is not much inventory of houses that buyers can really choose from. We do not want another house. We fell in love with this house, the size is just right for us and there's room to grow, the location is good both for work and school, and the school system is very good for our kids.

We wanted to know based on all your experiences and expert opinion, if:

1. My family has the right to litigate the sellers for extra expenses that we shouldn't incur due to them causing the delay in the reconstruction of the basement. By the way, it is in our contract that THEY will fix the basement before closing date. At the end of this month, we will literally have no place to live.
2. If the seller is the cause of the delay, should it be the seller's agent initializing all the extension addendum for the closing date?
3. What are the buyer's rights when the delay in closing is due to the seller?
4. Can we sue the sellers for breach of contract and charge them with damages?

Thank you for all your expert opinion.

Desperately seeking your advice,

Azzirnyw

**A: simple, just terminate the contract.

[azzirnyw]

Thanks for your response, homeguru.

The thing is we don't want to terminate the contract. We have not found another house that is comparable to this one, price-wise, and based on our wish list. Had we found one within our price-range and with everything that this house has to offer as well, we would have terminated the contract after the 1st closing fell through. All the delays are caused by the seller and from the beginning, they did tell us about the mold and that they will do the basement repairs. That is also part of the contract.

We just wanted to know if we have a case to sue them for the damages.

Desperately,
Azzirnyw

[HomeGuru]

Originally Posted by azzirnyw

Thanks for your response, homeguru.

The thing is we don't want to terminate the contract. We have not found another house that is comparable to this one, price-wise, and based on our wish list. Had we found one within our price-range and with everything that this house has to offer as well, we would have terminated the contract after the 1st closing fell through. All the delays are caused by the seller and from the beginning, they did tell us about the mold and that they will do the basement repairs. That is also part of the contract.

We just wanted to know if we have a case to sue them for the damages.

Desperately,
Azzirnyw

**A: you do not have a strong case since your out could have been to terminate the contract. If you want the property you would need to sue for specific performance.

[azzirnyw]

Specific performance as to doing what the sellers are supposed to as stated in our contract?

The sellers, from the beginning told us that they will fix the basement. However, within the first closing date, they only gathered bids but nothing happened to fixing the basement. On the 1st extension, same thing. They always tell us through our agent that they are still deciding on who to award the bid. On the 3rd extension, this is during the beginning of Sept., they finally did something, stripped the basement wall, however, they found out themselves that the studs behind the dry wall were incorrectly installed, not according to standard. Initially, the contractor would tell the sellers that, they will have to redo it as it was written in our home inspection report that the studs needs to be repaired and installed properly. Due to that, now, they are waiting again for another bidding to finish the job.. which is ridiculous!!! Now, coming from our agent, she doesn't think that we will be able to close next week.

I apologize for venting... this is due to the frustration. My husband and I offered the sellers not to finish the basement but they will have to treat it with mold, and waterproof, plus, a price reduction of $20,000 which is lower than the cost of finishing the basement.

Thanks for your comments and help...

Desperate and Frustrated,
Azzirnyw

[seniorjudge]

What exactly do you want to happen here?

[azzirnyw]

Hello Senior Judge,

We want to close on the 26th of September which is next week. And if the seller's can't finish the basement, we did offer them to just reduce the purchase price by $20,000 but they will have to clean up the garage and have the basement waterproofed and treated for mold as the VA appraiser will reject if they see that the house is unlivable. All of these are in the contract. If they want to finish the basement, all we ask is that we're given a date as to when will everything be likely done, and should be added as an addendum.

Thanks.

Desperate and frustrated,
Azzirnyw

[seniorjudge]

Originally Posted by azzirnyw

Hello Senior Judge,

We want to close on the 26th of September which is next week. And if the seller's can't finish the basement, we did offer them to just reduce the purchase price by $20,000 but they will have to clean up the garage and have the basement waterproofed and treated for mold as the VA appraiser will reject if they see that the house is unlivable. All of these are in the contract. If they want to finish the basement, all we ask is that we're given a date as to when will everything be likely done, and should be added as an addendum.

Thanks.

Desperate and frustrated,
Azzirnyw

And what do you have to give up or trade?

[azzirnyw]

We will have to settle for an unfinished basement. I am not sure which trade you are referring to but we gave the sellers all the time they need to do the rehab of the basement at full asking price.