FloridaRealtor/FloridaBar Contract Change: Q&As
By Marcia Tabak
April 3, 2017
Question: What if a buyer fails to notify the seller during the loan approval period whether he has or hasn’t obtained approval – but one day after the loan approval period expires, the buyer secures a loan and he immediately informs the seller. At this point, the ball is in the seller’s court since he has three days to make a decision under the new contract. During these three days, can the seller still terminate the contract even if the buy has notified the seller that he has obtained loan approval?
Question: Under the above condition in which the buyer obtained loan approval one day late, what happens if the seller agrees to move forward? How should the parties proceed?
Answer: An easy way to move forward would be for the seller to take no action to terminate the contract during his three-day period. After those three days, the parties would simply continue in the transaction.
Per Paragraph 8 (b)(v), if the buyer didn’t notify the seller at all about the status of the buyer’s loan approval during the loan approval period, and the seller did not terminate the contract during the following three-day period, loan approval will be deemed obtained and the buyer will remain in the contract. If the buyer fails to close, the buyer will lose the deposit unless buyer’s failure is based upon a condition spelled out in (vii).
Alternatively, the parties could, in writing, amend the contract deleting the seller’s right to cancel the contract, or the seller could waive the right to cancel per Paragraph 8(v).
Question: If a buyer fails to notify the seller whether or not a loan approval was obtained within the loan approval period, can the buyer stop the seller from terminating the contract during the three days following the loan approval period?
Answer: The buyer could waive the financing contingency altogether prior to seller terminating the contract. In this event, the seller’s right to terminate would be deleted, as would all provisions of Paragraph 8(b), including the protections included in (vii).
Question: What if the buyer isn’t sure he’ll be able to obtain loan approval by the end of the loan approval period? is there anything the buyer can do to protect himself against the seller terminating the contract during the three-day period short of waiving the entire financing contingency?
Answer: If the seller is willing, the parties could extend the loan approval period in writing. This would give the buyer additional time to determine if he can obtain timely loan approval.
Marcia Tabak is Deputy General Counsel of Florida Realtors
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