Need to get out of purchase agreement

[AP]

I entered into a purchase agreement for condo in Southern California and now, two weeks before closing, I've been informed that I don't qualify for the low-interest loan I was originally supposed to obtain. However, I am eligible for other loans with considerably higher interest rates and therefore cannot use the financing contingency to escape the agreement. Unfortunately I did not pay enough attention to what interest rate my broker put on the agreement and it was rather liberal.

My question revolve around what would occur if I default on the loan. I signed a liquidated damages clause and understand I'd lose my earnest money as a result of default. I am more concerned about the broker commissions. Would I be liable for these? The purchase agreement says I "may" be but it does not expand. Typically would I be sued in this situation even if I intend to use my broker to find another (less expensive) property? Would I be sued by the seller's broker as well? What other costs would there be to defaulting?

Thanks for any help you can give me!

 

[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by AP:
I entered into a purchase agreement for condo in Southern California and now, two weeks before closing, I've been informed that I don't qualify for the low-interest loan I was originally supposed to obtain. However, I am eligible for other loans with considerably higher interest rates and therefore cannot use the financing contingency to escape the agreement. Unfortunately I did not pay enough attention to what interest rate my broker put on the agreement and it was rather liberal.

My question revolve around what would occur if I default on the loan. I signed a liquidated damages clause and understand I'd lose my earnest money as a result of default. I am more concerned about the broker commissions. Would I be liable for these? The purchase agreement says I "may" be but it does not expand. Typically would I be sued in this situation even if I intend to use my broker to find another (less expensive) property? Would I be sued by the seller's broker as well? What other costs would there be to defaulting?

Thanks for any help you can give me!<HR></BLOCKQUOTE>

You are guilty for not confirming the details and your real estate broker is guilty for not making sure you knew. The broker should have asked what high payment and interest rate would be acceptable to you and wrote the contract accordingly. Ex. Buyer to apply for and qualify for a first mortgage loan in the amount of__________ at an interest rate not to exceed X %. If you cancel the deal and the broker sues for commission, counterclaim that the broker was negligent and breached the standard of care. Moot point if you use this same broker to buy another home.