Here is a challenge

[Wayne Griggs]

Here is a challenge .. see if you can help Solve this case.... who is in the right? Buyer or Seller?
Regarding Financing....

15. "FINANCING: This Agreement is subject to Buyer obtaining an approved conv mortgage of 80% of purchase price,at an interest rate not to exceed mkt % and amortized over a period of 30 years."

15-a Buyer to provide Seller with letter from lender showing that Buyer has made application and, subject to verification of information, is qualified for the loan requested within 7 days from the Effective Date of the Agreement."

The Effective date of Agreement is December 10th. Buyer has complied.


15-b "Buyer to provide Seller with mortgage commitment letter from lender showing that Buyer has secured the loan commitment within 30 days of the Effective Date of the Agreement (Effective date of agreement is December 10th)."

The buyer has not complied.

15-c "If either of these conditions, is not met within said time periods, Seller may terminate this Agreement and the earnest money shall be returned to Buyer."

The seller did not terminate this agreement. The seller acted in good faith with the knowledge and concern for the buyers. Due to the holidays, the buyer's appraisal could not be performed until January 6. The Seller allowed the contract to proceed to give the buyers time since the appraisal was done only 4 days prior to the deadline for the buyers to provide seller with a mortgage commitment letter.

The Question is... Regarding the Sales & Purchase Agreement, is item #15-b considered as being met?
If so why and if not, why not?

15-d After (a) and (b) are met, buyer is obligated to notify Seller in writing if the lender notifies Buyer that it is unable to or unwilling to proceed with the financing. Any failure by Buyer to notify Seller within 48 hours of receipt by Buyer of notice from the lender shall be a default under this agreement.

Who is in the right Buyer or Seller?


Just a little something to open up some discussion

I look forward to hearing your opinions

[nedsram]

Atlanta Realtor:

Here's my take on it!

Buyer had 30 days from Effective Date to provide seller with Mortgage Committment letter....that would give Buyer until approx. Jan 10th

Appraisal was done, albeit only 4 days prior to the Jan 10th deadline, and I assume, Mortgage Committment letter was given to the Buyer, but Buyer didn't submit same to seller??

So why didn't Buyer submit letter to Seller? Probably just got Buyers remourse and wanted out of the Agreement!

Re 15-d: It only comes into play if 15 a & b are met, and 15b was not met....even though Buyer did receive Mortgage Committment letter, it wasn't submitted to the Seller.

The wording of the conditions assumes that both parties want to proceed with the transaction......when in this case it appears that the Buyer changed their minds and wanted out.....and IMO could get out by simply not forwarding the Mortgage Committment letter!

Where was the Buyers agent in all this? Surely they wanted the transaction to proceed?

How could you avoid this?

I don't know how this would work with your State laws, but how about

Buyer agrees to obtain and submit to Seller or Seller's Agent, a Mortgage Committment letter, or a letter of Mortgage Rejection, from Lender within 30 days of the Effective Date of Agreement. If Buyer submits a Mortgage Committment letter this Offer becomes a binding and legal contract. If Buyer submits a Mortgage Rejection letter, Seller agrees to terminate this agreement and return earnest money to Buyer, in full without deduction. Buyer acknowledges that, failure by Buyer to submit either a letter of Mortgage Committment or Rejection by the specified date will result in the cancellation of this transaction and the forfeiture of the Buyers earnest money to the Seller, in full, without deduction or recourse.

Steve

[Duncan Pollock]

Wow! What an interesting way to write up an offer:

Buyer agrees to obtain and submit to Seller or Seller's Agent, a Mortgage Committment letter, or a letter of Mortgage Rejection, from Lender within 30 days of the Effective Date of Agreement. If Buyer submits a Mortgage Committment letter this Offer becomes a binding and legal contract. If Buyer submits a Mortgage Rejection letter, Seller agrees to terminate this agreement and return earnest money to Buyer, in full without deduction. Buyer acknowledges that, failure by Buyer to submit either a letter of Mortgage Committment or Rejection by the specified date will result in the cancellation of this transaction and the forfeiture of the Buyers earnest money to the Seller, in full, without deduction or recourse.

Sure does tie things down for everyone's benefit and stops any weasling out, which does occasionally happen.

Duncan

[Homesurfer]

What is a "Commitment Letter," you ask?

The loan officer goes to his computer, pulls up Microsoft Word, opens a blank page with the company logo on it, and types up something that sounds pretty good (often quoting parts of the conditional loan approval) that the buyer can give to the selling agent so that the selling agent can give it to the listing agent so the listing agent can show it to the sellers and make them feel real happy (like when you pass GO while playing Monopoly).

Oh yeah...(almost forgot)...the loan officer types "Commitment Letter" at the top of the page.

[judyo]

Terry,

You made me laugh for the first time today!

[florida property for sale]

Interesting way of writing, offcourse you need something new at every time, not bad i found unique don't no about others but i like it.

[seattle realtor]

I think a more relevant question is what is the recourse to the buyer in this situation - i.e., what happens to the earnest money? At the end of the day, this is what it really comes down to - where's the teeth in the recourse?

I most scenarios, the Financing Addendum is designed to protect the buyer.

[Malok]

I think a more relevant question is: why is a 4.5 year old thread getting bumped. :P

[pragerd]

That is quite a question! (I am new to the site, and this is why I'm just replying now.)

I tend to agree with Seattle Realtor. The goal of a financial addendum is designed to protect the buyer.

I think the buyer's agent is really at fault here. It is your job as an agent to make sure that the buyer is living up to the agreement.