The mortgage process can be a time-consuming, frustrating process, often subject to delays for a variety of reasons. But when the closing date finally approaches, there is certainly welcome relief and excited feelings of anticipation to be felt. Both the buyer and the seller and their real estate agents will meet, the purchase contract and other related documents will be signed, and the home sale will be complete!
Unfortunately, this is not always the case, and many real estate transactions face delays in the closing process at the last minute for unexpected reasons. Sometimes, the house closing delayed by the seller, and when that happens, it can be very frustrating indeed.
Why Would the Seller Cause Closing Delays?
More often than not, it is either the buyer or other circumstances causing delays in the closing, such as issues with the loan approval or title search, problems found in the home during the final walk, or an appraisal that is lower than the purchase price.
But when the house closing is delayed by the seller, it could be for number of reasons, from simple problems with the seller’s work schedule to a more serious issue of the seller getting cold feet or not wanting to honor the sale price. The buyer’s recourse will ultimately depend on what the actual reason is for the closing delay, so the first step is to discover exactly what that reason is.
Sometimes the seller’s real estate agent will be able to explain the situation. Perhaps the seller had to delay the closing because a family member was sick, or perhaps they just couldn’t get time off work until a later date. Whatever the reason, so long as it is something simple like the aforementioned situations, chances are it could be resolved easily and a new closing date can be scheduled.
The real estate contract typically includes contingencies for occurrences related to reasonable delays, because, understandably, reasonable delays do happen. Review the details in the contract to see what the allowable time is for a delay on the part of the seller. Usually a 30-day window is applicable. However, if the house closing delayed by the seller moves beyond the allowable window, the seller could be liable for financial losses incurred by the buyer due to a delay. Such costs could include fees for moving and storage, apartment rental or hotel stays, etc.
It’s the last thing anyone involved in the home sale wants to think about, especially when real estate transaction was nearly completed and the closing date was on the horizon. But sometimes, the seller simply decides that they have changed their mind and no longer wish to sell their home. Frustrating doesn’t even begin to describe the emotions that the home buyer might be feeling, but while the home they wanted might be lost, they do have recourse.
The seller can likely be sued for breach of contract, but the legal implications they face will really depend upon the terms of the real estate contract. There are, of course, some legal reasons that a seller can back out of a contract without facing penalty, but if no legal reason applies, then the seller will undoubtedly face costly consequences.
The matter will have to go to court first, but in many cases, the seller will be responsible for paying the buyer’s legal fees. And, most times, the buyer can sue for possession of the property, rather than any financial compensation. Other penalties the seller might face include:
- Being ordered to reimburse the buyer for fees for appraisals, inspections, and other costs related to the real estate transaction
- Having to return the good faith deposit, with interest
- Pay for expenses incurred by the buyer or lost equity on the home
- Reimburse the listing agent for lost commission and expenses for marketing
Perhaps an even more horrible scenario than the seller attempting to back out of the real estate transaction is a seller that is actually a cyber criminal. Why is this worse? Because not only will the buyer not be able to recoup any finances or resolve the situation in a satisfactory manner, but you and other real estate professionals involved in the home sale might also be adversely affected as well.
Mortgage closing scams are, unfortunately, a harsh reality. Cyber criminals and identity thieves are targeting the real estate industry because of the large amounts of funds involved in real estate transactions, and because it is often easy to gain access to the personal and financial information that is passed back and forth between all the parties involved.
There are a variety of scams a cyber criminal might attempt, but most of them have the purpose of fraudulently obtaining earnest money deposits or closing costs from a buyer, and then disappearing, leaving the real estate transaction in limbo and the buyer and escrow agent without the money.
To avoid such a difficult situation and significantly reduce the risk of fraud, many real estate professionals are utilizing a secure electronic money transfer system for the purpose of collecting earnest money deposits and closing costs. That’s because ACH transfer platforms, such as paymints.io, are extremely secure and the money transfer is tracked from beginning to end. Additionally, paymints.io uses bank-level encryption and identification security to ensure that neither party is an identity thief claiming to be someone else.
Typically, the buyer is well protected and has a lot of options for recouping lost funds if the seller backs out of the real estate transaction or even just continues to cause closing delays. But it all comes down to the contingencies in the purchase contract. So it’s highly recommended that the contract is read thoroughly to ensure all contingencies are in place to protect the buyer before signing. Additionally, the real estate attorney can often be called upon to resolve the situation and handle any filings that may be necessary. Hopefully, the closing will simply be rescheduled and matters resolved to the satisfaction of both parties without incident or cause for legal action.
Home buyers who are seeking to learn more about the mortgage process can find plenty of good resources on online forums and blogs.
To learn more about how using paymints.io can be safer and beneficial to both your business and your clients, schedule a free demo today!