What happens if the loan won’t be processed by the closing date?
12/16/2014 | Author: Legal Staff
I’m buying a home, and the closing was supposed to be today. However, my lender says it’s going to take a few more days to process the loan. Since we had 30 days from the time we signed the contract until closing, I thought that would plenty of time. What happens now?
This scenario has become more common recently, as federal regulations imposed by the Dodd Frank Wall Street Reform and Consumer Protection Act have made 30-day closings harder to complete on time than in the past.
The contract does not include an automatic extension if the lender doesn’t process the loan by the closing date. As such, the seller could claim that you did not uphold your contractual obligations. However, since time is not of the essence to the closing date, you could argue that a few extra days is not a material breach of the contract. Alternatively, you and the seller may agree to amend the contract to provide more time for the lender to process the loan. It is important to remember that the seller must agree to amend the contract and may require additional earnest money as a condition of signing the amendment to extend closing.
Given the challenges of meeting a 30-day time frame these days, buyers may want to consider allowing more than 30 days from the execution of a contract until closing.
The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.
While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.
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