Once a buyer and seller have agreed on the price for a house, they sign a purchase contract that outlines the terms of the deal and includes a closing date. Setting a specific date is intended to motivate all parties involved in the transaction to work expeditiously to fulfill their duties. Sometimes, however, things don’t go according to plan and the closing is delayed.
Reasons Why the Closing May Be Delayed
A real estate deal may not be able to close on the anticipated date for a variety of reasons. Sometimes the buyer is unable to get approved for a mortgage. Even if the buyer was pre-approved, a recent increase in debt could’ve made the person’s debt-to-income ratio too high and caused the lender to rescind the mortgage offer or change the terms. The buyer may also be unable to get a mortgage because the house was appraised for less than the sale price. The home inspection also could’ve uncovered serious problems that need to be fixed prior to closing, such as roof leaks or mold.
What Happens If You Can’t Close on Time
The purchase agreement should specify what’ll happen if the closing is delayed. If one party is clearly responsible for failing to meet the target date, that party will have to pay financial penalties. The contract may specify a variety of penalties for different scenarios. The penalties may be flat fees or may be calculated in other ways.
If the buyer is unable to close on time, he or she may be required to pay the seller’s mortgage on a prorated basis until closing. If the seller is responsible for the delay, he or she may have to pay for the buyer’s unanticipated living costs until closing.
A lender may refuse to approve a mortgage for more than the appraised value of a house. If the house was appraised for less than the agreed-upon sale price, the parties may have to renegotiate the price.
If the closing is delayed because the inspector found serious problems, the parties will have to decide how to proceed. The seller may be willing to make repairs before closing. If the buyer can’t wait to move in, the seller may be willing to lower the purchase price to account for the cost of repairs. If the problems are major, the buyer may decide to cancel the deal.
Discuss Potential Delays With Your Real Estate Agent
If you have any reason to think that you might miss your closing date, talk to your real estate agent. He or she might be able to help you find a solution or work with the other party to make modifications or concessions so you can proceed as close to schedule as possible.
My house was scheduled to close March 31st, all inspections were complete and signed off and the house appraised. Now i just signed off on the second closing extension addendum. Now the closing is set at April 29th. I moved into an apartment on March 27th in anticipation of closing March 31st that never took place. I have to pay my mortgage by the 16th of April or I’ll receive a late fee. I don’t have the income to support both my house and now the apartment lease I agreed too. My agent isn’t sure why the closing keeps getting pushed out. What can I do?
Our escrow was delayed because the seller could not get notary signings due to liviving in another country and the American consulate being closed due to COVID. The new date is in 4 days. What happens if he extends again?
Can I seek legal recourse for delaying my closing due to incompetence of the seller executing needed tasks in a timely matter and the appraiser adding a “note of concern” regarding power line fall distance” that ended up being an irrelevant concern with HUD guidelines for a USDA loan. The home was a foreclosure and the managing agent was lackadaisical in getting needed task completed. Now myself as the buyer have added expenses due to all the delays and faulty appraisal concerns! There’s been delays throughout the whole process on the part of sellers agent and appraiser. What can I do, besides withdraw from the purchase and lose all I have put forth in good faith?
We were supposed to close on a home we sold in one state on 12/3 and close on our new home (across country) on 12/7. We have had multiple reschedules that has led to an additional costs on our side $2,500. The delays were due to errors and lack of follow through on the buyer’s lender, which they have acknowledge, “they dropped the ball.” What options do I have to recover these additional costs from the lenders?