Seller hasn’t signed termination of contract

141 Replies

So here’s the deal... We are technically under contract on a property in Texas and a few days before we were to close we got the appraisal back and it came in 8k under the contract price. Now since it’s a fha loan we know we can walk away and not lose our earnest money, but we figured the seller would not throw away this deal and just come down on the price so we could close...But we were wrong, so I think.. He stated even though the appraisal say the prop is worth 260k he still wants the 268k we agreed too and understands he would not be able to keep our earnest money. So since we are definitely not going to pay the difference we figured we would sign to terminate the contract and move on. BUT the seller hasn’t signed and it’s been 2 days now. He stated he wanted to do some research, whatever that means. My question is does anyone know how long he has before he has to sign the term of contract or agree to drop the price and close? We were suppose to close on feb.27th and never signed any extension of closing. Also we do want to close on the property but don’t want to be held in limbo as everyone is agitated at this seller at this point.

If there is something in the contract that stated you have to pay the difference ( which is in some contracts ) then you would lose the EMD. If there isn't, then the contract is void if you say so, and the bank appraisal can be shared as proof, and the seller should return the money within a reasonable timeframe.

Question, are their agents on both sides? No sides? Who is actually holding the deposit? If the seller has it, I would contact a real estate attorney or someone in efforts to make the process more serious, and typically I wouldn't let a seller hold the $, the attorneys always should in a worse case scenario. I would hit him with an additional letter from your atty or something that would say agree to amend the purchase price to 260, and reschedule closing, or , refund deposit by end of day ( 2nd, 4th, 5th, etc ) or face legal action. You'd have to check with someone but im sure there are laws about holding your money and being in violation of contract ( 93a in Mass - which makes him liable for treble damages, or 3x ). 

@Remone Randolph

I'm not sure what the laws are for Texas RE Law. You may want to reach out to an agent on BP that works in Texas. Unless you already have an agent.

Do you have the contract? My thoughts are that he is sweating you out, hoping that you'll come up with the 8k out of pocket. It sounds like you already signed the cancellation of contract, and he hasn't responded?

@Anthony Katsonis yea our agent isn’t real knowledgeable as we’ve found out through this whole process. But yes we have already signed to term contract, but will still close if he drops the price. I kind of feel like he wants to agents to drop their commission fees to cover his 8k he’s ‘potentially’ losing.

RE read what I wrote, if there is agents, have them execute what I wrote. Was looking for more info.

Even if there is a contract, some contracts state you have to come up with the money. Very common here in boston in a competitive market where stuff goes over asking. 

@Remone Randolph It really depends on the terms of your contract.  It's very common here in MA for there to be a financing contingency - BUT - that normally takes the form of a commitment deadline that's a couple of weeks before closing.  No mortgage commitment, no sale, monies returned.

Others add a provision that the home must appraise at or above the sale price.  If not, no sale, monies returned.

However, we do our appraisals as soon after P&S as possible and they come in weeks before closing, so if the house doesn't appraise, the buyer can exercise his mortgage contingency, because without the appraisal, the lender will not write the loan.

In your case, it sounds like you got the appraisal results just days before closing, so check your contract terms and dates to see if you're actually entitled to your deposits.

As far as the research, he may be looking for a way to challenge the appraisal.

By the way, two interesting things about FHA loans.

1. The appraisal must meet the purchase price, not the loan amount (price minus deposits).

2. An appraisal sticks to the property for 6 months. That will affect other FHA buyers down the road.

@Remone Randolph . You keep saying because it's an fha Loan and the appraisal came in low he can't keep your EMD. What's the contract say? If there's no appraisal contingency in the contract I think he may be able to keep your earnest money. I've never heard of the part about the fha loan and appraisal

Read your contract. Did you have a timeline for financing? Did you have a timeline for an appraisal?  Were you within those dates? 

Hi @Remone Randolph ,

It's only been 2 days. There are plenty of people who stick things in front of their lawyer before they sign them. There may be something in the contract he can use to get the EMD, there may be some wording that is specific locally to allow him to make a play for it. Your agent could have failed to sign the "FHA Amendment clause" or missed a signature block somewhere that you had to sign. He has time to research and decide his next move.

@Russell Brazil yes we had a financing contingency but that’s wasn’t a problem we were all ready to close but the seller did not want to lower the price. I learned when we bought our first property that with fha you don’t need an appraisal contingency because hud won’t insure more than the appraised amount and you are not required to make up the difference and in turn do not lose your earnest money. The contract states that but that’s fed law. So I’m confused why folks are asking what the contract says when hud won’t fund a loan wIth a low appraisal so why wouldn’t get your emd back?

@Remone Randolph , I am an agent,  I’m trying to help you. I asked questions you didn’t answer, the same that everyone else is asking. 

In a contract it can state that you have to come up with the difference upon appraisal. Whether that is legal or not on an fha loan or not, I couldn’t tell you I’m not an attorney. Most people won’t be going to court over a deposit of such low amount anyway. 

Just trying to help, we need more info. 

@Mike Cumbie no we signed all docs. And it states we are not to incur any penalty or forfeiture of deposits when there is a low appraisal. We have the option of moving forward but can walk away. Now I’m really confused how it seems there is a way to trump what hud states? I learned this on our first property when I asked our realtor to put in a appraisal contingency and he told me we didn’t need it because fha it’s automatically in there because hud won’t fund a low appraisal unless we have a written letter from them. It states this
@Seth Williams yes but the question you asked can be answered doing a quick search and as a agent I’m confused how you don’t know this? And I don’t mention how much our deposit was so how can that be determined what is feasible to put in front of a lawyer? Fha has different guidelines than conventional and please if you have other info to disputes this I’m all ears. Please re read my post I didn’t want to know if he could keep it but how long he has to keep us in limbo.

@Remone Randolph ,

What time frame is in the contract for how fast he has to sign a cancellation? What time frame is listed for him to return the funds in escrow?

The expectation that he is required to jump and put your cancellation request in the front of the line and address it right now, may be a little misguided. You had more than 2 days to do your contract approvals and inspections. He has more than 2 days to decide how he wants to handle your request. 

@Mike Cumbie the contract doesn’t state how long he has to sign the term of contract but if make the request to escrow he has 7 days to respond. So just so I’m understanding what your saying..2 days before closing the seller tells us he doesn’t want to drop the price so we can close and undrrstands ge wont get our earnest money. Since we are not going to pay 8k to cover the difference we sign to terminate and move on, but in 2 days he hasnt signed and so now we should wait however long so he can be sure and do research and I’m misguided for thinking that’s not ok? He made his decision but we should wait for him to really be sure and hold us up?? I’m confused by that

@Remone Randolph

Then your best bet is to go into your lawyers office. Stand at the front desk and demand to be seen NOW, do not accept any excuses.

Once you get in demand your lawyer write a letter insisting for immediate return of funds and demand that he/she personally delivers it to the seller and then stand there until the seller signs. Then instruct your lawyer to go to where the funds are held and chain them self to a desk until they cut you a check.

Since obviously you know your contract better then anyone else in that state there is a whole profession that should just be removed and turned into carrier pigeons for their clients.

Originally posted by @Remone Randolph :
@Seth Williams attacking? Lol. Ok thanks anyway

The CONTRACT between you and seller CAN stipulate that you will pay the difference between the appraisal and purchase price. Just because FHA wont pay it doesn't mean you didn't agree to do it yourself.

There’s a hangup between the questions you’re receiving and the questions you’re answering.

Ask your agent about a cure notice. I think WA is pretty similar to AZ. Also your agent needs to talk to title/escrow. This is THEIR JOB, not yours. Your answers should be all coming from your agent not people who haven’t got a clue about what’s going on. 

@Remone Randolph I am surprised that the realtors have not offered some concession to help close it. Even if each gave up $2000 and the seller gave up $4000. Or maybe you can put in another $1000 or something. Sellers agent needs to figure out why their comps didn't match the appraisal. Maybe they can work with the appraiser to correct. It is a realtors job to figure problems like this out. If your realtor isn't willing to help, maybe they can sign themselves out of the deal and there is your $8000. I would get on the phone and tell the realtor it is their job to figure this out, present the options I mentioned and see what they say.

I am not one to cut a realtor out, but any good realtor would be hustling to fix this.

@Remone Randolph , was the FHA amendatory clause signed?

Here is the portion from the amendatory clause required on all FHA loans that will allow you to get your deposit back if doesn't appraise.

"the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise....setting forth the appraised value of the property of not less than" $(purchase price)."

I do not know if there is a specific timeline for your state but you can contact the escrow agent and find out. 

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