Compensation for Delayed Closing

Occasionally, the builder must meet the original delivery date due to strikes, labor, or materials shortages. Unexpected circumstances often cause delays in the closing process of real estate transactions. The seller may delay the closing, which can frustrate the buyer. Here we will learn about the Compensation for Delayed closing.

The Worst-Case Scenarios And Penalties You May Face.

If you miss your closing date, you may face steeper penalties than when you were in school. Here are the worst-case scenarios and penalties you may face in Compensation for Delayed Closing.

The closing date passes and charges you a per diem

A seller can extend the closing deadline after the closing date passes and charge you a per diem, or daily rate, as a result of the postponement, not only to cover the inconvenience but also to cover the additional mortgage, tax, and insurance payments the seller still has to make.

It is usually one-thirtieth of the seller’s housing expenses that the seller is reimbursed for per diem. You can avoid debt due to this penalty, but you may have more difficulty meeting the new closing deadline due to this additional financial burden.

Return the earnest money deposit.

For all the trouble involved, the seller will return the earnest money deposit you paid to prove to him that you had the funds to buy the house.

A traditional earnest money deposit is returned to you at closing, which you can use to cover closing costs or a down payment, but this time it is nonrefundable.

The possibility of canceling the Deal

There is, unfortunately, the possibility of the seller canceling the sale altogether. A seller may want out of a sale, and the negotiations have become contentious, although it’s not in their best interest to walk away from the sale.

However, the seller can cancel the contract under certain conditions. A legal postponement usually gives the buyer 30 days to close the sale if you have a legitimate reason for missing the Closing.

Consider the Legal Recourse for Damages

It does not matter if the delay was unintentional and out of your control; a seller can still pursue legal action since you are technically in breach of the contract.

Consider the Legal Recourse for Damages.

Upon request, the seller may be compensated for monetary damages, such as mortgage payments, taxes, or insurance payments, or if they had to continue renting a storage unit to store their staging furniture.

Even if your financing fell through, the seller can sue you to force you to buy their house. A lawsuit is generally not an option in most contract agreements, but you’ll want to consult with your agent to ensure it’s not.

The Time of the Essence Clause

There’s nothing less dramatic than the time of essence clause. You have a hard closing deadline, regardless of any financing problems or other snafus, if your purchase agreement includes the time of the essence clause.

Generally, time-of-the-essence provisions aren’t common, but you can negotiate an extension with the seller if they exist.

Conclusion

In many cases of Compensation for Delayed Closing, the real estate attorney can assist in resolving the situation and handling any necessary paperwork. There is no need for legal action or incidents in this case. We hope we can reschedule the closing and resolve the matters to the satisfaction of both parties.