Legal assistance/advice... please

[WilmywoodNCparalegal]

Ok... I'll try to make a long story short.

My parents recently relocated from NC to IL for work. They found a couple who signed a purchasing agreement to buy their house in NC. All parties signed this agreement.

Closing is supposedly set for tomorrow. My dad took a week off work (he gets paid by the days he works; he is a contract worker) to go to NC with my mom for closing and to move the furniture from their house into storage.

Apparently, the husband buyer was the only one who saw the house. Now, a little side note about the house: my parents have a very contemporary sense of style that utilizes intriguing paint effects, mosaic tiles, etc. A lot of work went into this house.

The wife buyer went to the house for the first time this Monday with a painter and a mason. She wanted an estimate on taking out all the paint effects, colors, cork, crown moulding, tiles, etc. (her prerogative, of course) to paint the house all white and have no crown mouldings.

Well, yesterday the realtor tells my parents that the buyers are no longer interested in the house.

Now, keep in mind that closing is supposed to occur tomorrow. My parents theorize that this woman received the estimate and the cost was too high, so she changed her mind.

The realtor has come up with excuses such as: (1) they were not able to sell their house (and they find out now, 2 days before closing???); (2) they can't get the mortgage amount they want (again, 2 days before closing, when the attorney is cutting checks and all various disclosures have been prepared???); etc etc...

Now, let me emphasize the enormous expenses my parents are going through when they can least afford it. Their furniture being moved to storage cost $3000. They drove from IL to NC. My dad took a whole week off (meaning, no pay for the week). Now, they also have to deal with the potentially devastating issue of having to pay a mortgage they thought it was no longer their problem.

Any suggestions? Comments? Legal recourse?

[HereSince1628]

1. Was there earnest money paid?

I don't know the limits of that in NC, but I think that it is intended to recompense loss of opportunity and costs associated with a buyer backing out without recognized cause.

[Gyre]

2. Read the contract that the parties signed.

That document should provide for any foreseeable contingency, and THIS is foreseeable. Including, under what conditions the "earnest money" is forfeit

Good luck.

Gyre

[WilmywoodNCparalegal]

3. Now, additional developments

The buyers want to postpone closing until their other home is sold. My parents cannot afford to keep going like this.

Options? Suggestions?

[atre]

4. This development does present a problem

Since there is a contract for sale, the house is as good as sold. Title is equitably converted to the buyers; in fact, if the house were destroyed by some act of God at this time, the buyers bear the loss. Thus, the buyers are misguided and foolish if they think they can just back out without facing recourse (in this case, either specific performance to force the sale or the incidental damages associated with setting up the sale).

Now you say that the buyers intend to close, but postpone the closing date. Unfortunately, there is little that can be done about the buyer's intentions to delay the closing date, unless and until the delay becomes "unreasonable under the circumstances." Absent a "time is of the essence clause" in a contract for sale (and I doubt your parents' lawyer bothered to deviate from a standard form agreement to include it), closing dates are not fixed in stone. The parties are allowed a reasonable time after the closing date to arrange for the financing, title transfer, etc. I know it seems counterintuitive that a buyer who waits two weeks after the closing date to close the sale is not in breach, but it is a reflection of the realities of the real estate market in that these delays happen all the time.

"Unreasonableness" has vague and uncertain contours, but if a couple months pass by, it is probably time for your parents to seek an attorney to litigate the matter. North Carolina does allow fee-shifting in cases involving real property disputes, so they shouldn't have too much trouble getting an attorney.

DISCLAIMER: This is not legal advice and should not be treated as such. There is no substitute for the individual consultation with a lawyer who can undertake a fuller understanding of the facts and the law as it applies to the facts.

[welshTerrier2]

5. not a lawyer but ...

in my state (Massachusetts), i believe there is an automatic contingency for obtained a mortgage ... if buyers fail to qualify for financing, even their "good faith" deposit must be returned ... of course, the buyers would have to show that they made a good faith effort to obtain financing and that they were rejected ... it sounds like these buyers are just using that as an excuse ... if the real reason for backing out is they don't want to incur remodeling costs, your parents should be able to keep their deposit ...

also, i would NOT allow these buyers to substantially delay (i.e. more than a couple of weeks) the closing ... what's to stop them from cancelling the deal in the future ... if your parents are still hoping the buyers will follow through, have them require a non-refundable deposit for the extension ... otherwise, tell them you're putting the house back on the market ... if they're still interested, they can make another offer ...

[WilmywoodNCparalegal]

6. I'm reading the purchasing agreement

which states they had until Feb. 10 to arrange for financing. This problem is cropping up on Mar. 2 and closing is to be on Mar. 4. Now, they want an extension. And who is to say they will actually have a closing? Yet, at the same time, my parents have to continue to pay money (for the furniture in storage, which could have stayed in the house; for the mortgage; for the lost income while my dad is away from work; etc.).

No one seems to care about my parents' interests. Definitely not the realtor or the closing attorney, who is insisting my parents give her power of attorney to sign on their behalf (I strongly urged my parents not to do that until they speak to a lawyer).

[welshTerrier2]

7. don't give the realtor power of attorney

that would be a HUGE mistake !!!