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November 28, 2017 • Stay Connected!

QUESTION:  I have noticed that some listing brokers are issuing the allowed notices on the financing addendum pertaining to "Seller's Request for Loan Information" and the "Right to Terminate Notice" prior to the agreed upon time periods, usually the 10 days or 30 days. One broker issued the notice for loan information the day after mutual acceptance even thought the default period of 10 days was agreed upon. This is causing confusion, concern, and worry with buyers who want to comply as well as selling brokers. If the notice is issued and delivered to the buyer early is it a valid notice? If valid I assume the time period for the buyers to respond starts after day 10 or 30 assuming the defaults were left in place?

ANSWER: Seller's early delivery of the "Seller's Request for Loan Information" and/or "Seller's Notice of Right to Terminate," pursuant to paragraphs 2 and 3 of the Form 22A, Financing Addendum, is contrary to the terms of the Purchase Agreement and renders delivery of the form meaningless. Both paragraphs 2 and 3 of Form 22A say that the relevant form, from seller, will be delivered AFTER the triggering date. Using the default time periods, buyer and seller agree that seller will not deliver the request for loan information until 10 days AFTER mutual acceptance and that seller will not deliver the Notice of Right to Terminate until 30 days AFTER mutual acceptance. Seller's delivery of those forms prior to the date on which seller is allowed to deliver the forms likely makes delivery of the form ineffective.
Why is early delivery ineffective? With respect to the Request for Loan Information, the parties agreed that seller will not deliver the form until ten days after mutual acceptance and also agreed that buyer is required to provide the requested information within three days of buyer's receipt of the form. How can buyer be required to provide information to seller at a time that is sooner than seller is even allowed to demand the information? Similarly, with respect to the Notice of Right to Terminate, the parties agreed that seller will not deliver the form until 30 days after mutual acceptance and also agreed that seller can terminate the purchase agreement if buyer fails to waive the financing contingency within three days following seller's delivery of the notice. How can buyer be required to waive the financing contingency in response to seller's notice at a time that is earlier than seller is even allowed to deliver the notice? The answer to both question is that buyer has no obligation, in either case, to act sooner than the time agreed between the parties as part of the terms of the purchase agreement.
Should, then, buyer's response period in either case, be three days after the date seller was entitled to deliver the form? There is absolutely no language in the form creating that outcome. Rather, the parties mutually agreed that buyer's response, in both cases, would be triggered by seller's delivery of the form. However, seller has no contractual authority to deliver a form, mandating a response from buyer, sooner than the parties agreed.
The only plausible conclusion is that when seller delivers one of these forms sooner than seller is entitled to deliver the form, delivery of the form means nothing. Seller will be required to deliver the form again, at a time when the parties have agreed that seller is authorized to deliver the form and seller's timely delivery of the form will then trigger buyer's three day response period.


The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to . Please tell us your NRDS number when you e-mail the Hotline with your question.


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Primary Mortgage Rates Survey
(updated every Thursday)  Source:  Freddie Mac
 November 22, 2017  30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  3.92%  3.32%  3.22%
 Fees & Points  0.5
 Margin  N/A  N/A  2.74

 November 16, 2017  30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  3.95%  3.31%  3.21%
 Fees & Points  0.5
 Margin  N/A  N/A  2.74

 November 9, 2017  30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  3.90%  3.24%  3.22%
 Fees & Points  0.4
 Margin  N/A  N/A  2.74

 November 2, 2017  30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  3.94%  3.27%  3.23%
 Fees & Points  0.5
 Margin  N/A  N/A  2.74

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