Prevent Delayed Real Estate Closings
Trying to sell your home can be a frustrating experience, especially in today’s slow market. It’s common for buyers to delay the deal or back out altogether, due to insufficient financing and other problems. This can cause numerous problems for the seller, as they are stuck making another mortgage payment, cannot move into their own new home, or have already asked renters to vacate the premises in anticipation of closing day. All of these hassles can add up to thousands of dollars lost, not to mention the frustration and inconvenience of a delayed closing.
As the saying goes, prevention is the best medicine for most problems, and this is certainly true when it comes to real estate deals. If there is a problem that your agent cannot handle, consulting with an experienced real estate attorney can help sellers and their agents draft purchase contracts that prevent closing delays. If delays do occur, contingencies in the sale contract can help frustrated sellers recoup some of their losses. For example, contracts can be drafted to include, or an extension can be granted conditioned upon, payment of a “per diem,” a per-day expense which is paid from the buyer to the seller if closing is delayed beyond a particular time frame.
Built into the standard Residential Purchase Agreement (RPA), used in most residential sales in California, is the use of the DCE, Demand to Close Escrow form, by which the seller can demand that buyer close escrow and giving the buyer 3 days to comply. Using this form can potentially set up the seller to cancel a non-performing buyer who is in breach of the RPA, also potentially permitting the seller to keep the buyer’s deposit in the proper circumstances.
The important thing to remember is that a seller must understand and properly apply the contingencies included in the sales contract, and the options to require a recalcitrant buyer to close escrow. It’s important to seek guidance from an experienced real estate attorney when complicated purchase issues arise. Sellers can protect their rights, avoid disappointing delays, and potentially save hundreds or thousands of dollars on delayed closings.