August 9th, 2008 12:11 PM by Ron Mastrodonato
How can buyer pull out of contract without losing $3,000? August 08, 2008 By Ilyce Glink Co-written by Samuel J. TamkinInman News Q: I have a question about bids and short sales. My wife and I have put a bid in on a house and it is a short sale. We offered $275,000 and we have seen paperwork showing that the owners purchased it for around $350,000. The sellers have 90 days under the papers we signed to respond to our offer. We have not had any inspections or a survey/appraisal completed yet. The more we think about it, we are worried we jumped the gun on this offer. We might want to get out of the deal before they officially accept our offer. They have $3,000 of our cash in escrow. We would like to know if we can pull out without losing our $3,000. A: If, as you have indicated, the sellers have not yet accepted your bid to purchase their property, you should be able to withdraw your offer. But as with so many things, the devil is in the details. Some contract forms bind the buyer to the offer for some time. During that period of time, the buyer can't cancel, rescind or withdraw the offer. But if your contract doesn't have that language, you will need to send a written notice to your sellers, the listing agent and the closing agent, if there is one handling your transaction, that you withdraw, cancel and rescind your offer to purchase the home. To protect your $3,000 you might want to have a real estate attorney review your contract and send the notice to the sellers. If your sellers have accepted your offer to purchase their home, you can't rescind your offer but in some parts of the country you still might have the ability to terminate the contract. If your contract has a contingency provision allowing you to get legal advice on the purchase, that contingency may also allow you to terminate the contract as a result of having discussed the issues of the purchase with your attorney. Finally, if your contract has an inspection contingency clause, you might be entitled to terminate the contract if you find things wrong with the home and the seller refuses to fix those items to your satisfaction. In each of these instances, you would be wise to use a real estate attorney to help you navigate the legal issues involved and make sure you can get your deposit back. Q: Who legally owns the house on the day of closing in Pennsylvania? A: When you purchase a home in Pennsylvania or in any other state, either the contract of purchase or local custom will dictate who is responsible for the expenses of the home on the day of closing. When you attend the closing of the home (or, as it is referred to in some states, the settlement), you become the owner of the home at the time you receive the keys and the seller receives his or her money. Most all homes accrue expenses on a day-by-day basis. In most cases, there are real estate taxes to be paid. In other cases, there are homeowner association dues that accrue daily with utilities and other expenses. The customs vary from state to state and even from county to county. In some states, the seller is deemed to be the owner of a home on the day of the closing and that seller has to pay all costs associated with the ownership of that home that day. The opposite is true in other counties. Some transactions go as far as to state that a buyer pays all costs relating to the ownership of the home if the closing occurs before noon, but the seller will pay all those expenses if the closing occurs in the afternoon. Because this is such a local issue, and it varies by county, it's impossible to tell you what your financial responsibilities are for the day of closing. But your real estate agent or closing agent should be aware of these local customs and can guide you. If your question relates to who gets to live in and possess the home on the day of the closing, the best thing is to have the seller out of the home when the buyer is ready to tender his money to the seller. In some parts of the country, the custom is to allow the seller to remain in the home the day of the closing or even up to two weeks after the closing. However, if I were representing a buyer, I wouldn't want a buyer to close on the purchase of the home unless the seller were willing to pay for his stay in the home after the closing and would be willing to put up a substantial amount of money to assure the buyer that the seller will move out on a specific date and has the money available to pay for that post-closing possession of the home. If the seller is unwilling to pay for the post-closing possession of the home or is unwilling to put up enough security to satisfy the buyer that the seller will move out on time and will deliver the home in the condition required under the contract, then the seller should move out on the day of the closing and before the buyer delivers his money to the seller. While this view may be different than some of the customs and practices in some parts of the country, it protects the buyer from a seller who decides not to move out of the home. It also protects a buyer from a seller who damages the home after the sale or when the seller is moving out, and it encourages a seller to respect the terms of the contract and deliver the home to the buyer on time and in the condition required under the contract. To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.
August 08, 2008
By Ilyce Glink Co-written by Samuel J. TamkinInman News
Q: I have a question about bids and short sales. My wife and I have put a bid in on a house and it is a short sale. We offered $275,000 and we have seen paperwork showing that the owners purchased it for around $350,000.
The sellers have 90 days under the papers we signed to respond to our offer. We have not had any inspections or a survey/appraisal completed yet. The more we think about it, we are worried we jumped the gun on this offer.
We might want to get out of the deal before they officially accept our offer. They have $3,000 of our cash in escrow. We would like to know if we can pull out without losing our $3,000.
A: If, as you have indicated, the sellers have not yet accepted your bid to purchase their property, you should be able to withdraw your offer. But as with so many things, the devil is in the details.
Some contract forms bind the buyer to the offer for some time. During that period of time, the buyer can't cancel, rescind or withdraw the offer. But if your contract doesn't have that language, you will need to send a written notice to your sellers, the listing agent and the closing agent, if there is one handling your transaction, that you withdraw, cancel and rescind your offer to purchase the home.
To protect your $3,000 you might want to have a real estate attorney review your contract and send the notice to the sellers.
If your sellers have accepted your offer to purchase their home, you can't rescind your offer but in some parts of the country you still might have the ability to terminate the contract. If your contract has a contingency provision allowing you to get legal advice on the purchase, that contingency may also allow you to terminate the contract as a result of having discussed the issues of the purchase with your attorney.
Finally, if your contract has an inspection contingency clause, you might be entitled to terminate the contract if you find things wrong with the home and the seller refuses to fix those items to your satisfaction.
In each of these instances, you would be wise to use a real estate attorney to help you navigate the legal issues involved and make sure you can get your deposit back.
Q: Who legally owns the house on the day of closing in Pennsylvania?
A: When you purchase a home in Pennsylvania or in any other state, either the contract of purchase or local custom will dictate who is responsible for the expenses of the home on the day of closing.
When you attend the closing of the home (or, as it is referred to in some states, the settlement), you become the owner of the home at the time you receive the keys and the seller receives his or her money.
Most all homes accrue expenses on a day-by-day basis. In most cases, there are real estate taxes to be paid. In other cases, there are homeowner association dues that accrue daily with utilities and other expenses.
The customs vary from state to state and even from county to county. In some states, the seller is deemed to be the owner of a home on the day of the closing and that seller has to pay all costs associated with the ownership of that home that day. The opposite is true in other counties.
Some transactions go as far as to state that a buyer pays all costs relating to the ownership of the home if the closing occurs before noon, but the seller will pay all those expenses if the closing occurs in the afternoon.
Because this is such a local issue, and it varies by county, it's impossible to tell you what your financial responsibilities are for the day of closing. But your real estate agent or closing agent should be aware of these local customs and can guide you.
If your question relates to who gets to live in and possess the home on the day of the closing, the best thing is to have the seller out of the home when the buyer is ready to tender his money to the seller.
In some parts of the country, the custom is to allow the seller to remain in the home the day of the closing or even up to two weeks after the closing. However, if I were representing a buyer, I wouldn't want a buyer to close on the purchase of the home unless the seller were willing to pay for his stay in the home after the closing and would be willing to put up a substantial amount of money to assure the buyer that the seller will move out on a specific date and has the money available to pay for that post-closing possession of the home.
If the seller is unwilling to pay for the post-closing possession of the home or is unwilling to put up enough security to satisfy the buyer that the seller will move out on time and will deliver the home in the condition required under the contract, then the seller should move out on the day of the closing and before the buyer delivers his money to the seller.
While this view may be different than some of the customs and practices in some parts of the country, it protects the buyer from a seller who decides not to move out of the home. It also protects a buyer from a seller who damages the home after the sale or when the seller is moving out, and it encourages a seller to respect the terms of the contract and deliver the home to the buyer on time and in the condition required under the contract.
To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.