What can be done if I put down earnest money but only at the closing found out that I was given a variable instead of fixed rate?

I put earnest money down for a property. I never received my notice of disclosures and found out about the interest rate, which is variable, the day of closing. I specifically told the lender only fixed rates. Do I have any recourse since I didn’t know the information ahead of time.

Asked on May 26, 2017 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

As to the property or the seller, you have no recourse: you contracted to buy the property, and any issues you have with the lender are not the seller's issues, and legally, the seller does not have to take cognizance of them. The seller--and the contract with the seller--does not care about whether you had the type of loan you wanted or not. If you fail(ed) to go through with the purchase, the seller could successfully sue you.
As to the lender, if you gave them written instructions or directions as to the type of loan you wanted, including in the application, you should be able to force them to change the loan to a fixed rate: not following your instructions could be breach of contract, and/or lying to you about what they would provide may be fraud. Either would provide a basis to take legal action (e.g. sue) against them.
If you did not provide written directions or instructions, however, you would be very unlikely to prevail in a legal action. Your best bet would likely be to pay until you can refinance, etc. the loan to a better one for you.

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