Legal FAQs for REALTORS®
— Contracts and Forms
Contract Closing Dates
My seller client is ready to close, but the buyer’s lender won’t have the loan processed in time for tomorrow’s closing. What can my client do, and how can I prevent this situation in the future? (Updated July 30, 2014)
Since the contract does not include an automatic extension to allow the lender time to complete his role, your seller has two options. He could amend the contract to extend the closing date to allow the lender time to process the loan.
Another option is to consider the buyer in default. However, since time is not of the essence to the closing date, the buyer might argue that a short delay in closing is not a material breach of contract. This issue may end up in court.
To prevent this situation in future transactions, encourage your clients to build extra time into the contract. Requirements imposed by the Dodd Frank Wall Street Reform and Consumer Protection Act have made 30-day closings less viable than in the past.
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