What to do if I’m a homebuyer and the financing contingency expired on 21 days from the date of the contract but the closing date is 24 days from the date of contract?

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What to do if I’m a homebuyer and the financing contingency expired on 21 days from the date of the contract but the closing date is 24 days from the date of contract?

I’ve obtained the loan commitment letter but we cannot close on time because lender cannot provide all closing documents. Sellers and buyers cannot reach an agreement on extending closing date. My agent suggested me to announce the contract null on the closing date based on the reason buyers are no longer eligible for the loan after paying the compensation sellers required. In this case, can I get the deposit back?

Asked on January 2, 2013 under Real Estate Law, Maryland

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Your agent is wrong. The financing contingency MUST be exercised by or before the date it expires. If you do not exercise  the contingency by the 21st day (based on what you write), you will lose you right to terminate the contract due to unavailability of financing; even if you lose financing after the day the contingency expires, you will be legally obligated to go through with the sale. If you cannot or do not, you will be in breach of contract; the buyer could keep the deposit and potentially sue you for additional damages or compensation as well.


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