How Jane lost the claim to her deposit money
Today, Sam Schneiderman, broker owner of Great Boston Home Team discusses what happens when a real estate deal goes bad. This is his 100th entry here at BREN!
The buyer, who we will call Jane, has been a licensed Massachusetts agent for about two and a half years. She had less than six closings. Her agent license allows her to work for a broker who is responsible for overseeing her transactions.
Jane decided to buy herself one of my listings. She acted as her own buyer's agent so that she could collect a commission on her purchase.
Jane made her offer, negotiated a purchase price that worked for her, did her inspections and finally signed the purchase and sale agreement after the deadline to sign had passed. Her attorney obtained extensions to protect her right to the return of the deposit that she made with her offer.
When she signed the P & S agreement, I suggested that it would be wise to speak with a lender other than the one that pre-approved her because she might get a better rate and service. She didn't take my advice. I warned the sellers that we could be in for a bumpy ride.
Jane had a month to get her mortgage. After ten days, no lender’s appraiser. After more reminders, the appraiser arrived three days before her commitment date. Her mortgage broker needed to send her mortgage out to an investor for final review. It was obvious to me, but not Jane, that the commitment was going to be late. Her lender gave notice and her attorney requested an extension of the commitment date at the last minute. The sellers had a new home under agreement, so reluctantly agreed to extend.
The lender ran the final credit check before issuing the commitment. Jane's credit score recently dropped 20 points because she forgot to make a ten dollar credit card payment. She no longer qualified for her original loan. The lender said he had another investor that could close in about two to three weeks.
The sellers reluctantly agreed to extend the commitment date for two weeks. They closed on their new home.
Two weeks came and went without word from the buyer, her lender, or her attorney. On the fifteenth day, one day late, the buyer's attorney requested another extension of the commitment and closing date. Her attorney had to request an extension before the deadline to maintain her right to her deposit. A day late and the buyer had lost the right to the return of her deposit. Since the seller could now claim the deposit money, they thought that it was out of the question to grant an extension that would give Jane the right to get it back if she didn't get a commitment.
The sellers were now carrying two mortgages. Jane was lucky that the condo market was very slow. The lender promised a commitment and closing soon. The sellers hung in with Jane, but refused to sign any further extensions.
Two months after the original closing date, Jane closed on her new condo. In order to get credit for her deposit, she had to bring thousands of extra dollars to the closing table to cover the seller's carrying costs on the condo.
This is what can happen when agents, attorneys and lenders don’t pay attention to deadlines. Did the people working with you pay enough attention to deadlines?
