Do I have grounds for a negligence case against the bank or our mortgage consultant?

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Do I have grounds for a negligence case against the bank or our mortgage consultant?

We recently applied for a rehab refinance loan. We were preapproved and we gave our

contractor a deposit. He decided to begin work before winter started. Our mortgage

consultant knew this and said it was fine. We were 2 days from closing when we’re

were told we violated a stipulation that says no work can be done prior to closing. We

were never told of this stipulation and now face paying cash for work done in order to

finance the remained of the project.

Asked on January 1, 2017 under Real Estate Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, they would not be liable: 
1) If there was a stipulation, it was presumably in the documentation you signed and/or received; you are legally required by the law to read all such documents, and in fact are presumed to have read, understood, and agreed to them. Therefore, if the stipulation was in *anything* you received, you are considered to have read it yourself and cannot rely on what you were told in contradiction to it.
2) Pre-approval does not guaranty a loan; a loan is not guaranteed until closing when it is actually given, and can be denied at any time up to closing, for example, for any of a number of reasons. Therefore, it is not reasonable to "spend" the loan money (to act based on the loan) until the loan settles, and since it is not reasonable to begin using the money until you get it, it is your responsibility if you suffer some adverse impact for doing this.
3) You haven't really been injured in a way the law recogizes if it's simply that you have to spend some cash for the work, so long as the cost of the work doesn't increase; while the balance between cash and loan may have changed, you're not paying any more money in total.


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