What constitutes failure of a financing contingency in a purchase and sale agreement?

UPDATED: Jul 20, 2010

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What constitutes failure of a financing contingency in a purchase and sale agreement?

I signed a real estate contract with a finance contingency. Only my name is on the contract. After working with a lender, the only way I can qualify for a loan is if it’s applied for in my wife’s name, as she has the required income level for the loan, and I am unemployed. She does not want to be on the loan. Can they force her to co-sign out of “good faith effort”, or is this situation meet the contingency required to break the contract and demand the earnest money back? Again, only my name is on the real estate purchase contract, not my wife’s.

Asked on July 20, 2010 under Real Estate Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

You need to speak with a real estate attorney who can evaluate the contract in detail with regards to all the specifics of your situation. There may be no clean cut answer; it may depend upon what will be the living situation, use of the property, etc. after the purchase. If your wife will get the benefit of the property--it will be your joint residence, etc.--the seller could raise a plausible argument that regardless of who is the signatory to the contract, you wife is effectively a party and needs also to take action to secure financing.

Note that on the face of it, it would seem that only the signatory to the contract would be resonsible for the financing efforts; however, given that you are married, it is worthwhile checking with an attorney to be sure, especially given how much money is presumably at stake.

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