Good Faith Deposit

[shasha01]

California, LA County

I entered into a purchase agreement to buy a duplex in Whittier, CA. Teh agreement was to close on or before November 6, 2009. Well the loan docs weren't ready in time. The seller agreed to an extension, but there was no written amendment to the contract. Loan docs were finally ready on December 7, 2009. By that time I had issued instructions to cancel escrow and teh purchase agreement. Teh sellers want to reatin my deposit ($3,500) beacsue I ultimately recieved loan approval. However I needed to close before the end of November, and am citing the "time of essence" clasue as the justification for return of my deposit. I feel I have a legal case to keep my money. The contract specified a date that was not met, thereby creating a breach on contract. While not the seller's fault, it's not my fault either.

 

[Zigner]

California, LA County

I entered into a purchase agreement to buy a duplex in Whittier, CA. Teh agreement was to close on or before November 6, 2009. Well the loan docs weren't ready in time. The seller agreed to an extension, but there was no written amendment to the contract. Loan docs were finally ready on December 7, 2009. By that time I had issued instructions to cancel escrow and teh purchase agreement. Teh sellers want to reatin my deposit ($3,500) beacsue I ultimately recieved loan approval. However I needed to close before the end of November, and am citing the "time of essence" clasue as the justification for return of my deposit. I feel I have a legal case to keep my money. The contract specified a date that was not met, thereby creating a breach on contract. While not the seller's fault, it's not my fault either.

Yes, it WAS your "fault" - you have no case to recover the $3,500.00

 

[shasha01]

Explanation or Second opinion?

Can you please explain how I am at fault for loan docs not being prepared in a timely manner? If the bank was unable to process the loan in expeditious fashion, when I gave them everything they needed when it was asked for, how does that make me culpable for the deposit. Every part of the contract is just as valid as any other, so if the date for closing isn't met, and there is no written agreement to amend the contract by both parties, how is it legally binding?

 

[FlyingRon]

Unless your contract has a provision for ducking out at the last minute if financing doesn't come through, you're on the hook for what you committed to REGARDLESS of the fact that to perform you have to rely on other parties. It was your PROMISE to the seller to perform.

You can't just cancel the purchase agreement. The "time of the essence" doesn't allow you to cancel because YOU are late. It allows the sellers to cancel when YOU are late.

You are clearly in breach and the sellers can get damages and I suspect the contract permits the deposit as liquidated damages.

Why don't you go through the purchase. THere's something here you're not telling us.

 

[shasha01]

The contract is contingent on financing. That contingency must be removed prior to close. The contract can be extended by both parties by mutual agreement, but it wasn't. Per my understanding it can only be extended an additional 30 days, the financing came thru on the 31st date, so even if we had a agreed in writing to extend the contract it would have expired on December 6, 2009.

The closing date is a crucial part of the contract, once that date passes, the contract is considered expired. So why would that mean forefeiture of the deposit?

As to the response that time of essence only pertains to the seller, that doesn't hold water, because all parts of the contract are legally binding on both parties, as both parties sign the contract.

 

[Zigner]

The contract is contingent on financing. That contingency must be removed prior to close. The contract can be extended by both parties by mutual agreement, but it wasn't. Per my understanding it can only be extended an additional 30 days, the financing came thru on the 31st date, so even if we had a agreed in writing to extend the contract it would have expired on December 6, 2009.

The closing date is a crucial part of the contract, once that date passes, the contract is considered expired. So why would that mean forefeiture of the deposit?

As to the response that time of essence only pertains to the seller, that doesn't hold water, because all parts of the contract are legally binding on both parties, as both parties sign the contract.

Oh, you know everything already...why are you here again?

The sale didn't occur because YOU didn't perform as YOU were supposed to. It's really that simple.

 

[Mass_Shyster]

That contingency must be removed prior to close.

However, the contingency is automatically waived on the "contingency date". On or before that date, you must notify the seller that you cannot meet the financing contingency, and are terminating the contract for that reason.

OR

You can both agree to extend the contingency date.

It sounds like you did neither.

 

[shasha01]

Hi Steve,

Thanks for your helpful input. It's true that me nor the seller extended the contract, there was verbal agreement, but no amendment to the contract.

The fact of the matter was that I wanted to cancel escrow at that time, but was warned by my broker that I would lose my deposit. So I kept trying to get financing and make the purchase happen. I continued to provide the broker additional items that they asked for the day we were originally supposed to close! The final walk through had occured and I was told that loan docs were imminent, well that turned out to be wrong, beacuse at the last minute, the underwriter asked for additional documents.

So that delayed the whole process by another few weeks. In the meantime I had to get ready to return some money I had borrowed from my dad short term for the transaction. I was counting on the deal closing by early November. That would give me enough time to file and recieve $8000 to return to my dad by Dec/Jan.

However, with the date being pushed so far back, there is no way I can recieve the credit that quickly, and at the same time my dad needs to be repaid, so he can keep up with his own finances.

So I want to cancel the purchase, because if it had closed when it was intended to I could have bought it, but the delay was unforseen and out of my control.

So I am asking for my full deposit, I know the seller doesn't want to rpovide it, but I don't know what the legal basis for him keeping it would be?

 

[Zigner]

The sale didn't occur because YOU didn't perform as YOU were supposed to. It's really that simple.

It's really REALLY that simple. How many times do we have to say it?

Hi Steve,

Thanks for your helpful input. It's true that me nor the seller extended the contract, there was verbal agreement, but no amendment to the contract.

The fact of the matter was that I wanted to cancel escrow at that time, but was warned by my broker that I would lose my deposit. So I kept trying to get financing and make the purchase happen. I continued to provide the broker additional items that they asked for the day we were originally supposed to close! The final walk through had occured and I was told that loan docs were imminent, well that turned out to be wrong, beacuse at the last minute, the underwriter asked for additional documents.

So that delayed the whole process by another few weeks. In the meantime I had to get ready to return some money I had borrowed from my dad short term for the transaction. I was counting on the deal closing by early November. That would give me enough time to file and recieve $8000 to return to my dad by Dec/Jan.

However, with the date being pushed so far back, there is no way I can recieve the credit that quickly, and at the same time my dad needs to be repaid, so he can keep up with his own finances.

So I want to cancel the purchase, because if it had closed when it was intended to I could have bought it, but the delay was unforseen and out of my control.

So I am asking for my full deposit, I know the seller doesn't want to rpovide it, but I don't know what the legal basis for him keeping it would be?

 

[shasha01]

Spoke to a qualified individual

For anybody that might face a similar predicament, I consulted a real estate lawyer. So if you're ever in a similar situation, breath easy.

If the transaction fails to close because a contingency was not satisfied, such as a financing contingency, then both parties are absolved of their contractual obligations. A contingency is a “condition precedent” — i.e. a condition that must be satisfied before the contract binds the parties. So, if the contract includes a financing contingency, and the transaction fails to close because the buyer did not get financing in time, then neither party is in breach of the contract.

The contract simply expires. So there was no contractual breach of contract, meaning the seller has no right to my deposit.

As to the above poster that states he's not a lawyer, yet feels compelled to write a response, get a life. If I wanted the opinion of reatrded blowhards I'd watch Fox news.