Q&A: Seller is requesting Escrow Extension, what are my options?
Question by Vincent: Seller is requesting Escrow Extension, what are my options?
Hi, when I purchase my home in CA, the seller agent included "close of escrow" date to be contingent in the offer letter. But they promised to close escrow in 45 days, which was supposed to be May 25, 2009.
Now, they are giving me an extension form to extend the close of escrow 1 month later, which is June 26. My questions are:
1) Do I have to agree to the extension since they have "contingency" on the original offer letter?
2) Let's say I agreed to extend the close of escrow date to June 26, 2009, can they still come back with another extension?
3) What rights do I have as a buyer in a situation like this?
4) Since the seller is having problem moving out and is not able to surrender the house, do I have the rights to cancel the deal? If I cancel the deal, do I have to be responsible for all the fees incurred from this transaction?
I am frustrated that the whole process is taking this long since my loan is already approved, and everything is ready to go. As much as possible, I do not want to do extensions. My real estate agent is not very helpful to help me with my rights. So if anyone can help me with my questions, I greatly appreciate it. Thanks in advanced.
I know, but the thing is, on the offer letter, we agree on contingent-until the seller found a house. Can we still force them out of the house?
Answer by L.G.
I've been in your situation, more or less, in that I agreed that the Seller could stay in the house for 3 weeks after the closing of the sale.
If you do this, be sure you do 2 things: have a "per diem" amount held out of the sale proceeds (that is, divide your monthly mortgage payment by 30, then multiply that answer times the number of days you agree the sellers can stay in the house; have that amount held by your or your bank's attorneys until the sellers move). If they move out before the number of days withheld, they will get a check for the product of the daily rate times the remaining number of days in the agreed term. ALSO, and MOST si-highlight--primary, hold back another 00 (at least) as a security deposit to ensure against any damage to the property while they are still there. My closing attorney also represented the bank and he DID NOT include that step. I was left with magic marker writing on the walls of 2 rooms and a leak at the oil drum - none of which was there at the time of the inspection upon closing. If I had had the security deposit withheld, I could have deducted from it the costs of painting the rooms and repairing the oil pipe.
Also, some mortgages require by their terms that you be in the house within a set period of time, so you can use this to your advantage if necessary. In my case, I had to be living in the house within 3 months of closing; I spent those 2-1/2 remaining months cleaning and making repairs before I could move in.
So, yes, you can still close BUT be sure that the seller doesn't get all the purchase price until they have vacated the premises, the premises have been inspected a second time, and deductions have been made for the number of days they stayed and for any necessary repairs for damages they caused after the closing inspection.
Also, it may be that you have a rate tied in for a limited period of time with your banks; that can be a deal-breaker if you don't close on the agreed date. Talk with your banker and ask his advice as well.
If the seller realizes that it will actually cost him something off his sales price - that he's not going to have a rent-free extension, he may get his butt in gear and move sooner. DO NOT have the utilities changed to your name until AFTER the sellers have moved. If when you call the utilities you find they already changed the service to your name, inform them that you have not yet moved into the property and that they need to take another meter reading because you don't intend to pay for anything prior to your date of occupancy.
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