Expert: Toni Yates - 11/2/2007

Question
QUESTION: I was going to close on a home purchase on 10/31.  However, seller did not complete all repairs by this date and closing is now scheduled for this Monday.  However, I found out that I cannot get homeowners flood insurance at a reasonable rate.  I would therefore like to cancel the offer.  Can I do this and get my refund back, given that the contract expired on 10/31?

ANSWER: Hi Julie- Good question. A lot depends on your contract. Did it read "on or before" 10/31 or "on or about?" Did you agree to the extension in writing? That being said- flood insurance was still most likely not a contingency to the contract, therefore that is not a legitimate reason to cancel. Try shopping around with other insurance providers and also ask who the seller had his insurance with. In my opinion, you could lose your earnest money deposit and/or be sued for "specific performance" depending on the answers to the above. You also may have a right to sue the seller for failing to meet the contract if you didn't agree to the extension but that could be expensive and generally not worth it. You would need to check with an attorney to be sure. What does your agent say? I would try to work through it, if possible. Good luck and best, Toni

---------- FOLLOW-UP ----------

QUESTION: Thanks for your reply.  The contract says:  "the closing of this contract will take place on or before October 31, 2007."  We did not make any agreement in writing to extend the contract.  You are correct: there is no contingency provision for insurance.  Thank you!!

Answer
Well Julie, based on your response and if you are determined not to go through with the deal- you would appear to be within your rights. It would seem the seller is then at fault for not completing the repairs on time. If you are sure you do not want this house and it is not just a case of last-minute jitters, I would have your agent prepare a release of contract ASAP directing the earnest money to go to you. No one can force you to close, in my opinion. Do you have expenses you may be liable for such as lender costs (appraisal, etc.)? They may still charge you if you do not settle. Obviously as a broker, I am sympathetic to the agent(s)as it would seem they did their part and will not be compensated for their efforts. I have had to help clients in similar circumstances before and a true buyers agent will work as hard to get their client out as they did to get them there. I hope this helps, Toni