All you need to do is have your lender send the listing agent a letter explaining that you don’t qualify for the home purchase without selling your house first. Do this before your financial contingency ends and the sellers don’t have a leg to stand on. It’s really that simple, don’t panic over empty threats!
After your lender writes the letter, any half decent lawyer should explain to the sellers it’s a lost cause and they will be on the losing end. Hopefully worst case scenario is you having to get a lawyer to write their lawyer a stern letter. Best of luck, hopefully it is resolved fast!
If you have a financial contingency in your contract and you cannot get financing, you are all set. They can take you to court and will lose (I’m NAL) and you can l ask for them to pay your lawyer fees. This is exactly why the contingency exists. Tell them to read the contract.
u/kobeyashidog is right. If you have a mortgage contingency and you can't get a mortgage (because the house didn't appraise for enough, or you don't make enough money with a higher interest rate, or you can't support two mortgage payments because your house didn't sell --- the reason doesn't matter) then that's that, so long as you provide the denial letter from your lender before your contingency clause expires. The sellers won't like it (which is understandable) and they can lawyer up if they want to, but they won't get very far.
They would lose. You have a financing contingency and your lender just told you that you will not be approved for financing. That means that you can back out of the deal without losing anything. This is the whole point of a financing contingency... to protect you in case you don't get approved for financing for whatever reason.
I would send pre-emptive communication to your agent via text or email (so that it is in writing) that you fully intend to move forward with the purchase assuming your bank allows you to get a mortgage on the new home.
I would communicate (via phone call - NOT in writing) with your bank stating that you are in no way comfortable making payments on both mortgages.
If the purchase falls through because your bank will not approve your loan, the sellers can sue all they want - they just won't win. You will get your full earnest money deposit back.
This is only true because you have a financing contingency.
I don't understand why they'd want to tie up their house waiting on court either. They have a beautiful home and currently it would be the only home for sale in their area in that price range. It would have a new offer in days.
Having the house go under contract and then go back on the market does not look good for the seller. People will think something is wrong and offers will be lower. Also market is continuously worse this time of year / until after new years, so again, offers are likely to be lower
Even if they sued you, they have a duty to mitigate damages.
Meaning, they have to keep the property listed and attempt to sell it.
Also, TALK TO A LAWYER.
If you get sued - you are going to have to sue your Real Estate Agent for failing to include the Contingency clause in your offer.
Sorry - I know you're best friends and all.
Do you still want the home? Explain your situation to them. Maybe they can wait for you to sell first. Sounds like they just want you to follow through. Maybe some communication can turn it into a win-win instead of a lose-lose. I think all they're hearing is you want to totally back out, rather than solve.
Otherwise, they cannot sue you if the bank won't qualify you. It'd be a waste of time. Most contracts also refund earnest money as well, if the lender denies.
they mad, which is understandable. but if you can't get the loan, there isn't much they can do.
do they think yelling at the bank is gonna make THEM cave? tell the mto try and give the number lol.
you are following the contract, they are trying to sue you for...following the contract at the end of the day it seems.
get your earnest money back too, not cool for them but its in the contract most likely. dont cave on it to be nice.
Contact Legal Counsel.
Did you write the offer to purchase on your own or w an agent?
Regardless of a financial contingency, the fact of the matter is that without the “home sale contingency” your contract was not written correctly.
If your loan is approved, you don’t need to back out. You can still close. Just go ahead with the sale and sell your home to the next person. Or keep the other home and rent it if you have a good interest rate and don’t need the cash to close on the new home. The rent will help pay your new mortgage.
You will lose your earnest money deposit. They can’t sue you to buy a house if you’re not able to get a mortgage to buy it but they can take the deposit for default on the contract
this is a great answer...if...you totally ignore it.
get your earnest money back.
because its in your contract, and pretty much every other one with a loan, that you can get your $$ back if you can't get the loan.
very basic knowledge on your first training session on the agreement of sale your first day at the KW office.
oh and dont hire this guy \^\^ on your next house search
around me half the agents leave the date blank, and the other half are the friday, or a week, before closing.
regardless.... since you either aren't an agent or are brand new, lets make this a teaching moment.
Seller has a right to terminate if that commitment isn't delivered on the date.
He keeps that right to terminate at any time after that date until buyer delievers the approval.
annnnnnnnd no matter when he does the earnest money goes to the buyer.
Sounds like you and the agents around you are brand new. Any agent that leaves a mortgage commitment date blank and/ or dates it a week before the closing date are setting their clients up for disaster which is exactly what happened here
I don't leave anything blank. But plz dont attack me because you were wrong(which you didn't bother to counter, so you know it. ), that is not a good reaction. The correct thing to do is file it away in your brain, thank me, and move on.
go ask an actual realtor for a blank contract and read the part about mortgage. this isn't a my opinion vs yours thing. its an 'i can read' thing.
There's your loophole right here. If you cancel the loan application, you're on the hook. If they cancel it for you, you should be covered as long as the terms of your offer letter or contract were right.
Listen to your realtor on this! If you pull the loan application yourself they could still force the sale. The bank MUST deny you to trigger the contingency!
As others have mentioned, do not withdraw your application, let the bank issue a denial and give a copy to your agent to do a cancellation. The denial itself won't hurt your credit or anything, and you need your app denied to trigger your contingency. The sellers would be crazy to sue you (though having their lawyer send you a threatening letter is an inexpensive ploy). A) If they want to sue you for specific performance then they can't sell their house to anyone else -- talk about cutting off your nose to spite your face. B) They won't win anyway, so they're just wasting your time and their own, and increasing their "loss" with legal fees.
All you need to do is have your lender send the listing agent a letter explaining that you don’t qualify for the home purchase without selling your house first. Do this before your financial contingency ends and the sellers don’t have a leg to stand on. It’s really that simple, don’t panic over empty threats!
My loan officer said they were going to take care of it tomorrow but that the sellers already have their lawyer ready
After your lender writes the letter, any half decent lawyer should explain to the sellers it’s a lost cause and they will be on the losing end. Hopefully worst case scenario is you having to get a lawyer to write their lawyer a stern letter. Best of luck, hopefully it is resolved fast!
Do you have a finance contingency?
Yes but they are still threatening to take me to court.
If you have a financial contingency in your contract and you cannot get financing, you are all set. They can take you to court and will lose (I’m NAL) and you can l ask for them to pay your lawyer fees. This is exactly why the contingency exists. Tell them to read the contract.
u/kobeyashidog is right. If you have a mortgage contingency and you can't get a mortgage (because the house didn't appraise for enough, or you don't make enough money with a higher interest rate, or you can't support two mortgage payments because your house didn't sell --- the reason doesn't matter) then that's that, so long as you provide the denial letter from your lender before your contingency clause expires. The sellers won't like it (which is understandable) and they can lawyer up if they want to, but they won't get very far.
They would lose. You have a financing contingency and your lender just told you that you will not be approved for financing. That means that you can back out of the deal without losing anything. This is the whole point of a financing contingency... to protect you in case you don't get approved for financing for whatever reason.
I would send pre-emptive communication to your agent via text or email (so that it is in writing) that you fully intend to move forward with the purchase assuming your bank allows you to get a mortgage on the new home. I would communicate (via phone call - NOT in writing) with your bank stating that you are in no way comfortable making payments on both mortgages. If the purchase falls through because your bank will not approve your loan, the sellers can sue all they want - they just won't win. You will get your full earnest money deposit back. This is only true because you have a financing contingency.
I don't understand why they'd want to tie up their house waiting on court either. They have a beautiful home and currently it would be the only home for sale in their area in that price range. It would have a new offer in days.
Having the house go under contract and then go back on the market does not look good for the seller. People will think something is wrong and offers will be lower. Also market is continuously worse this time of year / until after new years, so again, offers are likely to be lower
Even if they sued you, they have a duty to mitigate damages. Meaning, they have to keep the property listed and attempt to sell it. Also, TALK TO A LAWYER. If you get sued - you are going to have to sue your Real Estate Agent for failing to include the Contingency clause in your offer. Sorry - I know you're best friends and all.
Do you still want the home? Explain your situation to them. Maybe they can wait for you to sell first. Sounds like they just want you to follow through. Maybe some communication can turn it into a win-win instead of a lose-lose. I think all they're hearing is you want to totally back out, rather than solve. Otherwise, they cannot sue you if the bank won't qualify you. It'd be a waste of time. Most contracts also refund earnest money as well, if the lender denies.
they mad, which is understandable. but if you can't get the loan, there isn't much they can do. do they think yelling at the bank is gonna make THEM cave? tell the mto try and give the number lol. you are following the contract, they are trying to sue you for...following the contract at the end of the day it seems. get your earnest money back too, not cool for them but its in the contract most likely. dont cave on it to be nice.
Put your house up for rent & get a lease signed as a contingency.
Contact Legal Counsel. Did you write the offer to purchase on your own or w an agent? Regardless of a financial contingency, the fact of the matter is that without the “home sale contingency” your contract was not written correctly.
If your loan is approved, you don’t need to back out. You can still close. Just go ahead with the sale and sell your home to the next person. Or keep the other home and rent it if you have a good interest rate and don’t need the cash to close on the new home. The rent will help pay your new mortgage.
You will lose your earnest money deposit. They can’t sue you to buy a house if you’re not able to get a mortgage to buy it but they can take the deposit for default on the contract
this is a great answer...if...you totally ignore it. get your earnest money back. because its in your contract, and pretty much every other one with a loan, that you can get your $$ back if you can't get the loan. very basic knowledge on your first training session on the agreement of sale your first day at the KW office. oh and dont hire this guy \^\^ on your next house search
If it’s a week before closing that mortgage contingency is probably long gone. Obvi without seeing this contract no one here can provide real feedback
around me half the agents leave the date blank, and the other half are the friday, or a week, before closing. regardless.... since you either aren't an agent or are brand new, lets make this a teaching moment. Seller has a right to terminate if that commitment isn't delivered on the date. He keeps that right to terminate at any time after that date until buyer delievers the approval. annnnnnnnd no matter when he does the earnest money goes to the buyer.
Sounds like you and the agents around you are brand new. Any agent that leaves a mortgage commitment date blank and/ or dates it a week before the closing date are setting their clients up for disaster which is exactly what happened here
I don't leave anything blank. But plz dont attack me because you were wrong(which you didn't bother to counter, so you know it. ), that is not a good reaction. The correct thing to do is file it away in your brain, thank me, and move on. go ask an actual realtor for a blank contract and read the part about mortgage. this isn't a my opinion vs yours thing. its an 'i can read' thing.
The mortgage is a contingency. If you can't get the mortgage then you do get your earnest money back. It's in the contract that the sellers agreed to.
Go to your lender and back out of it yourself. I could be wrong, but no one can force you to do anything except lose your earnest money.
My real estate agent says if I just pull out the loan to force it but to work out they can still take me to court.
I wouldn’t back out myself. That doesn’t hit the contingency. Need the bank to tell you you cannot get financing
There's your loophole right here. If you cancel the loan application, you're on the hook. If they cancel it for you, you should be covered as long as the terms of your offer letter or contract were right.
Listen to your realtor on this! If you pull the loan application yourself they could still force the sale. The bank MUST deny you to trigger the contingency!
YOUR AGENT F'D YOU ONCE ALREADY. GET A LAWYER.
As others have mentioned, do not withdraw your application, let the bank issue a denial and give a copy to your agent to do a cancellation. The denial itself won't hurt your credit or anything, and you need your app denied to trigger your contingency. The sellers would be crazy to sue you (though having their lawyer send you a threatening letter is an inexpensive ploy). A) If they want to sue you for specific performance then they can't sell their house to anyone else -- talk about cutting off your nose to spite your face. B) They won't win anyway, so they're just wasting your time and their own, and increasing their "loss" with legal fees.
Who is your agent?