Expert: Todd C. Menard - 6/27/2009

Question
Todd:  I have an issue and want to know if I have any recourse. My purchasers of my home were very adimate about a closing date, they would not rent back to me and I do not move into my new place for days after my expected closing date.  I did not learn until the day of closing that they did not have final underwriting approval. Now I have learded that the settlement has been postponed for 6 days. I had moved out, put my items in storage and find out that it will cost me $90 a day in intrest payments.  Do I have any recourse?

Below is the e-mail I sent to my agent explaing that i had met the terms of the contract.

Ok, I found the ratified contract (attached).  Want to let you know where I’m coming from on this subject.  I executed the contract with a closing date of June 24, 2009, I moved out to accommodate the buyers requirements that they wanted possession on June 24, 2009, after requesting a rent back (denied), I put my belongings into storage to accommodate the buyers, the house was ready to be delivered on June 24, 2009, I executed my closing documentation on the closing date (June 24, 2009), discovered that a delay in the buyers closing will possible cost me $90+ a day for every day that extends past Friday (June 26, 2009), I have added expenses for storage of my possessions, and they will be in default of the contract as of 12:00 PM (June 24, 2009). I have made many concessions to accommodate the buyers, now I learn that it could potentially cost me more money and I am being inconvenienced by having to find alternative lodging.  

I am not trying to kill this deal, but I am not willing to concede additional funding since I met the terms of this contract.  Any additional cost or reductions to the proceeds that I receive from this transaction will be the responsibility of the buyer. It is not my fault that they do not have final loan approval and were NOT ready for settlement today (June 24, 2009).  I met my commitment.  I do not want to hear that this is the way it goes with closings, there are delays.  

Another thing of note, the lack of responsibility on the realtor (their realtor) part to notify the purchaser that the purchaser had to transfer the electric on the closing date.  I found the purchaser ordering electric service on the day of closing.  Normally, Dominion Power should have had 2 work orders, one for the termination of my service and the start of the buyers service. This delay has delayed the final walk-though inspections.  Another item to delay the settlement.  I will not be receptive to any requests to fund any items that they have found in the walk-through, given they had a home inspection as a requirement of the contract.  

Please advise the purchasers not to enter the house until the settlement is completed. I hate to be this way but I have directly contributed in excess of $150,000 of personal funds toward this house and my return is $4K.   I met the terms of the contract and I expect them (the buyer) to meet terms of the contract without costing me more funds.  Hope you see what I am trying to say, if not, please contact me.


Please let me know if you think I have any recourse to recover any additional funds that I have incurred. I did not get a lot of funds from the sale of the house and now I'm having to spend more money in these bad times.

Thanks

Answer
Hello Robin - I apologize for the delay in my reply. You are correct. First, you have the right to consider the terms under which you would be willing to enter into an extension to the close-of-escrow. The fees it will cost you to delay the close is reasonable to ask for... realizing that if the buyer is not willing to agree then the buyer may be in material breach of the contract and lose their earnest money. Of course this means that they may not be closing at all... but the party who needs the closing more than the other is in the worse negotiating position. Regardless you should be negotiation these costs as your part of your willingness to go along with their extension needs. It also depends on which real estate agent/client is the best negotiator. Next, procedurally, the buyers agent should have notified your agent that an extension is necessary and explain the reason. Failure to close on the close-of-escrow (COE) day in your contract, depending on the laws in your state and the terms of your contract, is typically considered a material breach. If the buyer does not desire to lose their earnest money the buyer or buyers agent should issue a COE extension addendum for consideration. Failure to write or obtain this extension (depending on the party) may be interpreted as a violation of Article 9 of the National Association of REALTORS Code of Ethics. In addition, the failure of both real estate agent's to obtain such an addendum ignoring the procedure to get the extension in writing which could be interpreted as the failure to 'protect their clients best interest' and may be considered a violation of Article 1. If you have already closed and are looking in retrospect then your opportunity to have the buyer offset these costs associated with the delay is unlikely. If it is post close your sole opportunity may be from the agent who failed to represent your interest as described above. On the other hand, if it is still post closing and you haven't agreed to the extension yet you do have time to negotiate your additional expenses. Please remember I am not a real estate attorney and this is not to be considered legal advice, rather this is to be considered real estate information any professional REALTOR should be able to provide. I do recommend talking to a real estate attorney as laws in each state vary. You may have additional avenues and options. Usually their advice is nominal if not at no cost. I hope this helps. - Todd