Q: Any entitlem to any monetary settlements/damages due to a change of lending programs which delays closing and funding
We are supposed to close and fund on April 16th with the buyer using a FHA loan. We found out today that they changed to a USDA loan and could possibly delay funding past April 16th. I am paying for a moving company to move to Texas, closing on a new home on April 16th in Texas, and have to start a new job on April 20th. My wife and I have already resigned from our current positions and will not have jobs if closing and funding does not take place on April 16th. I will also incur large fees for shipping and storage if we are not moved into our new home by April 20th. We will not be able to close on our new home until funding has occurred on our current home. What can we do and what if any damages are we entitled to??
A:
This is obviously a very difficult situation. The short answer is look to your contract. Unless it specifically promises you will get the damages you are describing, you are not likely to get them.
Your relationship with the buyer is tightly controlled by the deadlines in your Real Estate Purchase Contract (REPC). When a deadline is missed, the consequences are spelled out in this agreement. If a sale fails to happen by the deadline, when a buyer has failed to meet their commitments, the normal consequence is the seller keeps the earnest money put down when the agreement was signed. It usually isn't much.
Sometimes the REPC will have a box checked that says the agreement only stands if the buyer can obtain funding. I don't know why the buyer changed loans, but its possible that the first loan could not work out, and change was necessary.
REPCs are pretty standard and use the same language. Sometimes the buyer and seller will sign addendums, where a
blank page can be filled in with anything. Here a seller could say, seller's purchase in another state is dependent on Buyer's fulfillment of the agreement by the deadline. You could agree to have the money necessary to pay your damages held in escrow ready to be paid to you if they fail to meet the deadline. Without this, your only option is to go to court where the home for sale is located, and pursue damages over a case that will take several months to come to a final decision. This can't even start until they have failed to meet the deadline.
It's very rare that someone ends up in your situation and then successfully sues and gets paid for the damages you describe.
If you can survive with less money, as long as you get it by April 16, you could tell the buyer you are going to try to sell to someone else. If you don't have any room in the agreement to do this, the buyer may be able to sue you. You might be able to explain your situation and get the buyer's sympathy to let you out of the contract.
To sell really fast, you would normally have to offer a significant discount on the home in exchange for a cash buyer. This could skip the time it takes for a loan to go through.
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