Seller extending the closing date indefinitely

[tantrik25]

What is the name of your state (only U.S. law)? WA
I am a first time home buyer and in the process buying a new town home and have an accepted offer from the Seller(builder). The town home is a model home and is already in move in condition. As per the contract, the closing date is on Nov 3. Two weeks after the contract was signed, the builder is telling us that the agreed upon offer price is less than the release price(the total amount the builder owes to the bank for the town home). Consequently, The bank has to approve the sale and the approval process would not be complete by the closing date. They are not able to provide a definite date for closing either. If the closing date extends beyond Dec1st, I would not be able to qualify for $8000 first time home credit.

I am considering suing the builder for not disclosing to us about the precondition(approval of the sale from the bank) at the time of showing. Had I known about the precondition, I would not have considered buying the townhome.

I found the following clauses related to closing date in the contract that I signed.

"Seller may at its option extend the initial Closing Date with no penalty whatsoever following substantial completion of the Home as evidenced by a certificate of completion issued for the Home. In no event, however, shall the Closing Date be extended beyond 60 days after the initial Closing Date identified""

"Buyer is hereby informed that sales of Homes within the Condominium may be subject to certain pre-sale requirements established by
FHA, Fannie Mae or other secondary market lenders. Accordingly, Seller reserves the right to extend Closing Date in order to meet such pre-sale
requirements."

Is the builder within his rights to extend the closing date ?
Is the bank within its rights to not approve the sale ?
If the bank does not approve the sale, can the seller back out of the sale ?

[HomeGuru]

Originally Posted by tantrik25

What is the name of your state (only U.S. law)? WA
I am a first time home buyer and in the process buying a new town home and have an accepted offer from the Seller(builder). The town home is a model home and is already in move in condition. As per the contract, the closing date is on Nov 3. Two weeks after the contract was signed, the builder is telling us that the agreed upon offer price is less than the release price(the total amount the builder owes to the bank for the town home). Consequently, The bank has to approve the sale and the approval process would not be complete by the closing date. They are not able to provide a definite date for closing either. If the closing date extends beyond Dec1st, I would not be able to qualify for $8000 first time home credit.

I am considering suing the builder for not disclosing to us about the precondition(approval of the sale from the bank) at the time of showing. Had I known about the precondition, I would not have considered buying the townhome.

I found the following clauses related to closing date in the contract that I signed.

"Seller may at its option extend the initial Closing Date with no penalty whatsoever following substantial completion of the Home as evidenced by a certificate of completion issued for the Home. In no event, however, shall the Closing Date be extended beyond 60 days after the initial Closing Date identified""

"Buyer is hereby informed that sales of Homes within the Condominium may be subject to certain pre-sale requirements established by
FHA, Fannie Mae or other secondary market lenders. Accordingly, Seller reserves the right to extend Closing Date in order to meet such pre-sale
requirements."

Is the builder within his rights to extend the closing date ?
Is the bank within its rights to not approve the sale ?
If the bank does not approve the sale, can the seller back out of the sale ?

**A: I suggest you have an attorney review your contract in totality.

[gkisystems]

Originally Posted by tantrik25

If the closing date extends beyond Dec1st, I would not be able to qualify for $8000 first time home credit.?

This is technically wrong. If the closing date extends beyond November 30th, you will not qualify for the $8k credit.

[sniper111]

Should have had TIME IS OF THE ESSENCE clause in the contract.
Consult with a RE attorney.