Charlestown, IN asked in Real Estate Law for Indiana

Q: Can I do anything about a buyer who doesn't disclose financial information?

We had a contract to sell our house. She didn't qualify for a loan. 2 weeks later she buys an even more expensive house. Can she legally withhold financial information to prevent the sale from proceeding?

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1 Lawyer Answer
Michael R. Smith
Michael R. Smith
PREMIUM
Answered
  • Indianapolis, IN
  • Licensed in Indiana

A: If I understand correctly, you are a bit suspicious that the buyer may not have disclosed all of her financial information in applying for a loan precisly so she would not qualify and therefore could get out of the purchase agreement. A couple of thoughts....

Most purchase agreements that are contingent on the buyer obtaining financing require the buyer to apply for financing within a certain period of time and to make a diligent effort to obtain financing. If she withheld information so she would not qualify for the loan, it seems likely that she would have breached her obligation to make a diligent effort to obtain financing. Without addressing the difficulty in bringing and winning such a lawsuit, I'll just point out that, even if she did breach, you have an obligation to mitigate damages, which means you'd need to put the house back on the market. If you can find another buyer who will pay the same amount, your damages from the first buyer's breach will be fairly minimal, probably not enough to justify a lawsuit.

My second thought is to ask if the buyer has actually obtained financing for the second house. It's possible she really didn't qualify for a loan for your house, and she won't qualify for a loan for the next on either.

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