Originally posted by Maryann L.:
Does your purchase contract have an "I don't like the seller getting money" contingency?
It absolutely 100% does. It's called a "Due Diligence Contingency," and it gives me the option to renegotiate or back out of the deal for any reason whatsoever. In fact, I don't have to have a reason, I can back out for no reason at all.
That's the way a due diligence contingency works.
Here is specifically what my state contract says:
Contract is Option Contract. For and in consideration of the additional payment of Ten Dollars ($10)..., Seller does hereby grant Buyer the option of terminating this Agreement, for any reason, for a _____ day period from the Binding Agreement Date ("Due Diligence Period"). This agreement shall be an option contract until the Due Diligence Period has ended without Buyer terminating the same.
Pretty clear on the issue...
Due diligence doesn't pertain to a seller incentive.
It pertains to ANYTHING I want it to pertain to. Again, that's what a due diligence contingency is. See the legal verbiage above.
How long is your due diligence period? Is it for the entire transaction? Usually you have a period to conduct your diligence and I would assume by the time approval is issued, it has expired.
For short sales, I include a stipulation that extends the due diligence period to 7 days after short sale approval is received in writing from the bank.
For what it's worth, my RE attorney is a partner at the largest closing firm in the nation, and this is the way the firm recommends writing due diligence contingencies for short sales.
You signed a contract for a particular purchase price, and could put in whatever contingency you wanted at the beginning. NOW at approval time, you figure, "hey, let's just throw the P&S to the wayside, we don't like the terms the seller is getting?"
What are you talking about? I'm 100% abiding by the P&S I signed. It gives me the right to renegotiate or back out of the deal for up to 7 days after I receive indication of short sale approval -- I'm still within that 7 days.
I also wonder if you could be sued for breach of contract.
I haven't breached any contract. As of today, my contract is still an option contract, as the due diligence period hasn't expired.
That said, the sellers don't have to accept my revised offer. They can say exactly what you suggested, "F*** off, we're not going to give up $8000 of our $20,000."
They have every right to do that and to try to find another buyer for their property before it forecloses next month (something they weren't able to do previously, even though the price we offered was pre-approved by the bank). If they find another buyer, they save $8000. If they don't, they lose $12,000.
We'll see if they're greedy enough to take the risk of losing the money. I'm guessing no, but we'll see -- I haven't yet heard back from the agent.