Contingent Sale

you could sue them but good luck... I'd be trying to keep the earnest money though

Just be reasonable and move on.

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If contingency is removed by buyer, all financial contingencies of this agreement are automatically removed and all other terms of this agreement remain in full force and effect."

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I personally remove this clause on any contingency deals I'm in. It makes no sense to me what the contingency agreement has to do with the financing clause that is in any standard purchase agreement. One should have nothing to do with the other. If the house cannot be financed for whatever reason, that has nothing to do with the contingency. Just my two cents.

Not usually. More specifics would need to be given. But the typical financing contingency clause states that the purchaser has X days to apply for financing once the contract is signed by all parties. Not applying within this time period becomes a breach of contract. Then the purchaser must notify the seller or seller's agent by X time on X date if he does not have a financing commitment. At that time, an extension may be granted by the seller, or the seller can elect to cancel the agreement and all earnest monies are returned to the purchaser. Everybody walks away in relative peace. But if they don't do that, then what you have is a "cash contract".

Unless this is a very poorly written contract/contingency clause, someone simply saying, "I have a financial problem" doesn't cut it. That means nothing. That could be that they found a home they like better and buying this house would be a "financial problem". Who knows? I've had people not submit a requested piece of documentation to the bank in order to kill the financing. Failure to diligently pursue financing is also a breach in my contracts, and the standard contracts in my state. It could be a case of can't get financing or it could be a case of won't get financing. I don't know.

But anyway, is this a private sale or are there agents involved? Is there earnest money involved? You most certainly can sue for performance. But it comes down to how one can judge damages and the likelihood that they can collect. An active home buyer is probably going to settle (pay damages) because the suit essentially kills their ability to get financing to purchase another home. It may be brutal and quick or it may drag out. In the end it comes down to how much you know about the buyer (you should have all pertinent info BEFORE signing the purchase agreement).

As for just letting people willy nilly sign contracts and walk away as they please, no, I don't do that. I can't walk away from a signed contract and sell to a higher bidder two weeks into the game, now can I? But I also try to gauge how much time and money I want to spend pursuing damages in all legal conflicts.

The last one I was involved with, the buyer of an investment property I had kept screwing around, didn't provide all the docs the bank requested, let the contingency expire, it became a cash contract and they ended up having to refinance another investment property that they owned (free & clear) in order to complete the purchase and not wind up in court for breach.

Once all parties put their names on the agreement, it becomes a contract and the terms have to be followed. As long as the terms are legal, the courts will usually interpret it as such and grant relief to whichever party is damaged.

Wherever you stand in this situation, best of luck working it out.

Good stuff. So you are saying that if financing can't go through, the seller can still force it to become a cash deal? That seems to go against the idea of a financing contingency, right?

I was always under the assumption that if the financing is not committed and completed by a certain date, that the contract voids and all parties go to where they were pre-contact (i.e. return of deposit).

I did have a situation when I sold my house in Texas where I had three cash buyers. About a week before closing, the offer I selected wanted to back out, because of a family issue. We called another buyer and that buyer was still very much wanting the house, so I released the first buyer, returned the deposit, and sold to the second one. I know I did not have to do that, but I felt I should earn some good karma, and it didn't cost me a dime to do that.

No, if the financing isn't committed by a certain date and the required notifications are met, then the contract expires without repercussions. The parties *may* agree to extend it, if they so choose, but it's not required. As my contracts have always been written, if no notice is given by the required date, it is assumed that the financing is in place and that the buyers are prepared to close by the agreed upon date. If they can't/won't/don't, then I've never been shy about exercising my legal rights per the terms of the contract.

Some people lie and some people don't take things seriously (leaving the seller or his agent in the dark until it's too late). In my experience, that's usually how unintended cash contracts come to be.

It's not about being unreasonable or a hard arse. But we must all learn to follow the rules... one way or another. Some people:

What does the sale contingency have to do with the financing, inspection, appraisal, or any other contingency? Whoever wrote that into existence is retarded.

Keep the earnest $. If they balk return $500 because that's what it'll cost to go to court. If they balk either take them to court or return their money and move on.

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My agent is seasoned

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In my experience that doesn't mean a whole lot, mainly that just because they are experienced doesn't mean they will take a hardline stance. Many of them are too nice.

Have defined dates and stick to them. If the buyer has an issue tell them to have their bank call you or you are moving on. If a buyer is pre-approved there's no excuse to not close in 30 days. You should be able to close in closer to 25 easy, often times 30 days is the goal but it can be done a couple days early. So if they need to push that deadline there is something wrong which often times means they are scrounging a down payment.

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Closing in 25 days with the new closing disclosure is definitely not the norm. I would say the average is 30-35

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Oh I agree it's not the norm, but at the same time it's possible if the buyer and their bank have their ducks in a row. My point was simply that in my experience pushing the deadline back is more often than not because someone is delaying it on purpose or because of laziness.