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Can we cancel the contract?

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amywallace

Junior Member
What is the name of your state? North Carolina

We entered into a contract to purchase a home on December 8th. We were set to close on January 8th and had to have the inspection completed by December 21st. The seller is contractually bound to pay $3500 of our closing costs at closing.
Our realtor was working as a dual agent with us and the seller. We set up the inspection for Dec. 21st. The realtor said she told the sellers to have the utilities on. We also talked to them (the house is next door to us) and told them the date of the inspection. They said the utilities would be turned on. Our contract says that reasonable acces including all utilties to be working and turned on is required. The inspector arrives and finds out first that the is not security system (the realtor told us there was and it was listed with a system and have security decals on the windows and dront lawn) and that the gas and water had not been turned off. The inspector turned the water on himself but the gas was not on. because of this the heating and cooling system could not be turned on and tested. There were other things that needed repair as a result of the inspection. We drafted a response to the inspection report and the seller agreed to have all repairs completed by a professional and provide us with documentation and to have an HVAC company come out and inspect the heating / cooling system when it was operational.

5 days before closing the realtor told us the sellers were short on their mortgage pay off. she told us they are short about $5000 on the pay off and had not had any of the repairs or inspections completed yet. SHe said they were trying to come up with the money. 3 days before closing (friday, we were supposed to close MOnday 1/8/07) the realtor calls and says they are still working on getting the money and the closing would probably be pushed back until Thursday 1/11. She never set a firm closing date or put any of this in writing. On monday, the day the closing was scheduled, the realtor called and said the sellers mortgage company will not allow closing until they send their own appraiser out to see what the property is worth. If they appraise for more than the sale price they may make the seller re-list the house for what they owe on it, if it appraises below or close to the sale price they may allow them to sell short (the realtor did not explain what this means), or they may make them find financing to pay off the difference. All told the process of appraising and deciding if they can continue with the sale will take about 3 weeks. By then our rate lock will expire and it woul cost $730 to extend the lock to cover us to that 3 week mark. The realtor says we should make the seller pay that.

We told the realtor we are done, the contract is over and we offered the seller an amicable out of the contract, as opposed to going to court to recover costs. we told her we want the 1K earnet deposit back, $400 we had to pay for our own appraisal (which came back at a value of 195K, our agreement is 189K with them paying 3.5K closing costs), $380 for the inspection that we paid full price for but could not be totally complated and $125 for attorney fees to date.

The realtor said she gave our offer to the seller and they are talking abotu weather to let us out of the contract and accept the term.

My questions: Haven't they breeched the contract already by not closing on of before the date specified and by not having the utilities on or the reapirs made as per our contracts? Shouldn't we automatically be entiled to the earnest money back because they can not complete the contract. we were all cleared for closing 5 days before we were set to close. and what chance do we have of recovering our other costs?

thanks!
amy
 


PghREA

Senior Member
The hand money you should get back. (Both the buyer and seller have to sign the release form.)

The other costs incurred, inspection, appraisal, and attorney fees, probably not.
 

lcannister

Senior Member
and what chance do we have of recovering our other costs?


Come on the sellers don't have a pot to pee in and you think they are going to "come up" with funds to pay anything. How they even expected to come up with the closing costs would have been a big old read flag.

That the bank has to approve this sell and the price means it is PROBABLY in foreclosure or has been taken over by the bank meaning the sellers haven't paid ANYTHING in awhile now.

We do not know about contingencies that were in your contract or any of the mice print, and the sellers may even be headed for BK where any judgment you get would be behind all those other creditors that probably exist.
 

amywallace

Junior Member
The house isn't in foreclosure. They were fine paying the closing costs, the problem came about with the loan pay off. The bank told them they did not have to make mortgage payments as long as the house was on the market for more than they owed, and it was. However, the sellers failed to realize that interest was acrruing to the tune of about 900 - 1000 per month when they weren't paying the mortgage. So when they got the final pay off they realized they were short on about 5K on the payoff. They would have had to come up with 3500 in closing costs, plus 5K for the payoff.

We finally rec'd the cancellation papers today, we will have the earnest money back in about a week. We are considering small claims court to recoup the other 1K in expenses.
 

lcannister

Senior Member
The bank told them they did not have to make mortgage payments as long as the house was on the market for more than they owed, and it was. However, the sellers failed to realize that interest was acrruing to the tune of about 900 - 1000 per month when they weren't paying the mortgage.

Makes absolutely no sense. I have never heard of a Lender allowing one to stop paying on their obligation just because the home is on the market for more than they owe.

Others educate me you ever heard of this by Lenders?

If I want to sell my home right now the bank (if I had a mortgage) doesn't have to approve anything so again for their Lender to have to approve the sell means the bank was running the show in some capacity.

Good luck getting anything other than the EM back.
 

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