Expert: Hans Weber, Licensed Broker Associate - 9/1/2006

Question
Hans,

Thank you VERY much for your informative response.  At least I know I have some recourse.  Will it be difficult and time-consuming for me to obtain the deposit in escrow?  

Also, do you think it would be in my favor to hire a different real estate attorney at this point or continue with the one I have?

--Cheryl
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Followup To

Question -
I am selling my house in Queens, NY through a Real Estate Company.  I hired my own Real Estate Atty.  The house went into contract (i.e.) it was signed on 7/7/2006.  The buyers selected a bank, and got the mortgage committment. Both my Atty., and the Broker felt that me moving by 8/19 as I planned was more than enough padding time for the estimated contracted closing date of 7/29/2006. When everything was just about ready for a closing date, the buyers changed their mind, deciding to seek a mortgage with another bank. Now that I have already moved, I am faced with paying the old mortgage and my new rent for a second month.  I cannot afford that. My atty said there's really nothing I can do except submit a Time of Essence document, which gives an ultimatum to the buyer to close by 9/10 or the deal is off.  Have the buyers defaulted on the contract based on the estimated closing date?  If so, will I be eligible for the downpayment they made? My attorney is not informative at all. Unfortunately, I selected the wrong person. Your advise would be much appreciated.

Answer -
Hi Cheryl,

Thank you for your question.

In New York the contrcat date is only a targeted date and the buyer and seller have 30 days beyond the contract closing date without any recourse unless a time of the essence clause is included.  It usually never is at contract signing because the buyer does not have total control of the transaction.

The buyer has to do an inspection, hire an attorney, review a contract, apply for the mortgage and the bank has to process the mortgage and do an appraisal.  Any time any document is missing it takes time to find it and submit it to the bank.  The buyers attorney needs to order a title search and if there is a problem it needs to be cleared by the seller.  So the closing date is a target only.

In your case you state that the buyer got a mortgage with one bank, so they are now fully committed to buy your home or forfiet the escrow deposit unless there are any other open contingencies.  They do have the right to try to get another mortgage if the want as long as it is within the time frame allowed.

The time of the essence letter will give the buyers a firm deadline to close or be in default.

Hope it works out for you.

Hans

Answer
Hi Cheryl,

Nice to hear from you again.

Once your attorney sends the time of the essence letter the buyers should get around to setting up the closing by the deadline date of 9/10.  They will just have to choose which mortgage they will close with if both are committed.  If only the first is then they have to use that one.

If they do not close then they are in violation of the contract and you may be able to get their escrow deposit which should be in your attorney's escrow account.  Make sure your attorney deposited the buyer's check.  Sometimes they don't!

It is probably too late to change attorneys, just stay on their case.

In all probability the buyers will close by 9/10 and it will be done.

Let me know.

Good luck.

Hans