Residential real estate transactions are usually time-sensitive. Sellers are eager to get the proceeds of the sale, which may affect their purchase of another property. Buyers are anxious to move into their new home, perhaps faced with pressure to vacate their present rented or owned premises. Getting to the closing table on time takes effort and cooperation. But buyers often encounter obstacles, which must be surmounted efficiently.
These are some of the factors that can delay closings on residential real estate:
Lender appraisals — Home mortgage lenders want to make sure the value of the property is sufficient to cover its loan. Many lenders insist on using their own appraisers, which may lead to backlogs and resulting delays.
Financing commitments — Lenders demand detailed financial information from borrowers before committing to make a home loan. Any problem with the credit verification process can delay the financing and therefore the closing.
Related transaction — In many instances, a home buyer depends on the sale of one property in order to have enough money to purchase another. If the sale of the buyer’s current home gets delayed, that can jeopardize the closing on the second property.
Lender errors —In some cases, the lender does not send the buyer’s attorney all the necessary closing documentation or the loan money is not wired in a timely fashion. These problems often arise just before the scheduled closing.
Often these difficulties are completely out of the buyer’s control. However, the buyer can still be held personally responsible for any resultant delay in closing. The potential consequences for delays attributed to the buyer include:
Daily penalty — Some contracts call for a daily monetary penalty for any delay in the closing date.
Expired lending commitment — Home mortgage commitments are time limited. If the commitment expires, the buyer may have to get a new one at a higher interest rate, or may not be able to get a new commitment at all.
Loss of purchase/deposit — A delay attributed to the buyer may allow the seller to cancel the contract. In addition, the buyer may lose the deposit (also known as earnest money) as a penalty.
Legal action — If a deal falls through, the seller might be able to sue the prospective buyer for breach of contract. Depending on the terms of the contract, the buyer can be held responsible for monetary damages exceeding the amount of the deposit.
Home buyers should engage a qualified real estate attorney to protect their interests. Among the measures a lawyer can take is to include in the contract contingency clauses that protect the buyer in case specified problems arise.
Gesmonde, Pietrosimone & Sgrignari, L.L.C. in Hamden and East Haven represents buyers and sellers in real estate transactions throughout New Haven county. Contact us online or call 203-745-0942 for a free initial consultation.
Gesmonde, Pietrosimone & Sgrignari, L.L.C. is located in Hamden, CT and serves clients in and around North Haven, Hamden, Waterbury, Bethany, Milford, Wallingford, Prospect, Woodbridge, Northford, Madison, Beacon Falls, Branford, Cheshire, North Branford, East Haven, Naugatuck, Meriden, Ansonia and New Haven County.
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