What Happens When Seller Does Not Meet Closing Date?

The Closing Date

A contract of sale typically includes a provision specifying the date the deal closes and the title to the property transfers, known as the “closing date.” Vacations, new jobs, school start dates, alterations, and improvements must all come into play when determining a closing date.

As well as considering the sale and purchase of existing properties, the parties must also consider the sale of current properties.

Most Common Reasons For Delays

Purchasing a house can be stressful, and everyone worries about delays and possible failures.

Among the most common roadblocks and delays are:

• Faults found during appraisal or surveys – The buyer may back out if there are any faults or ask for repairs as a condition of the sale.
• Low appraisals – Changing the purchase price to accommodate a lower appraisal value can result in renegotiating the sale price.
• A buyer or seller backs out – Both parties cannot complete the sale if they change their minds.
• Difficulties getting financing – There is a possibility that a lender will not approve your loan. This can result in delays, so you should have backup help to assist you with the loan application process.
• Insurance companies won’t insure the property – You may need help getting insurance on a home with significant faults or a large insurance claim.

In case of a late closing, what happens?

Depending on the reasons for the delay, the closing may take longer. If a buyer requests repairs before closing, the move may take longer since the seller must complete the repairs. This means both parties must renegotiate the closing date to meet their needs.

Getting approved for financing might be difficult for the buyer, which could result in the purchase falling through if the problem still needs to be resolved.

They could value it much lower than the buyer’s offer. Occasionally, a seller can extend the closing date to recoup damages, but they charge a daily rate for the inconvenience.

In most cases, if the home does not close on time, the purchase contract expires if the seller does not agree to delay closing to give the buyer some extra time. However, this only sometimes means the house purchase will not go ahead. It is also possible that the seller will decide to put the property on the market again.

Is there no specific penalty when a seller fails to close on time?

If a seller fails to close on time, there is no specific penalty. The buyer will likely allow an extension on the closing date since this is the quickest way for all parties to close.

A seller fails to close on time.

As a buyer, we can sue for specific performance or damages if a seller is playing games and no longer wants to sell. If the seller does not comply with the contract, the buyer can put them in default for not complying with the contract.

In Conclusion

In most cases, buyers are well protected and have many ways of recovering lost funds if the seller backs out of the transaction or delays closing. However, it all depends on the contingencies in the purchase contract.

Read it carefully to ensure all contingencies are part of the contract before signing. As well as resolving the situation, a real estate attorney can often handle filings as needed.

There should be no incident or cause for legal action at the closing if it simply needs to be rescheduled and matters resolved to the satisfaction of both parties.

If a seller needs to delay closing due to a family member’s illness or if they can’t get time off work for a later date, their real estate agent can explain the situation. No matter the reason, if it is something simple like the cases above, it could resolve easily, and we can schedule a new closing date.