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September 18, 2018 • Stay Connected!
         


QUESTION:  I am the listing broker for a home (under mutually accepted contract) where the buyer included a 22Q (Buyer's Pending Sale Contingency) with their offer and also attached the full PSA for the contingent home. That sale was supposed to close on Friday, August 31st. As of today (Wednesday, September 5th) it still shows Pending in the MLS. According to the 22Q the buyer needs to give notice of failure to close within 2 days of learning that the Pending Sale has failed to close. Then it says if buyer does not give such notice, then buyer shall be in default.
 
Based on the fact the sale was supposed to close on Friday, the 31st, after excluding the days for the extended holiday weekend I believe the buyer has until 9:00 pm tonight (Wednesday) before the 2 days expires and they are in default.
 
I understand the buyer would use the Form 90U to give us notice of failure to close but my question is how do we (the sellers) give the buyers notice that they failed to give us notice within 2 days of the sale failing to close and that they are in default? Also, does this mean the seller can terminate the agreement and keep the earnest money (if they wanted to)? What if the Pending Sale only failed to close “on time” but has been delayed and they are still working towards closing it? I see Paragraph 2 of the 22Q says “Buyer may not extend the Closing Date of the Pending Sale, if such extension would delay the closing of this Agreement, without Seller’s prior written consent.” So does that mean that if it does not delay the closing of this agreement they can extend their closing without seller’s consent? Our closing date is not until the 13th of September.
 
We don’t necessarily want to terminate the sale but I just want to know our options and how to go about giving proper notice, etc.



ANSWER:   So long as extension of buyer's pending sale closing date will not interfere with seller's closing date, buyer may extend the pending sale closing date without seller's permission. The 9/5 closing date could be extended by a few days since seller's closing date is not until 9/13. Professional courtesy should have led buyer's broker to keep seller's broker informed if buyer extended the closing date of the pending sale but since listing broker is left to wonder, listing broker should make inquiry directly with buyer's broker. Listing broker needs to know what is going on.
 
If buyer extended the pending sale closing date and buyer is still on track to close the pending sale in time to close the purchase of seller's property, so be it. Listing broker should know that but no action is required. If, however, it is clear that buyer is not going to close the pending sale, then buyer MUST give notice of the sale fail. Buyer may choose, at the time notice is given, to waive the pending sale contingency if that is what buyer chooses to do. It should be noted that buyer's waiver of the pending sale contingency constitutes a waiver of all other contingencies benefiting buyer and does NOT change the closing date of buyer's purchase of seller's house.
 
If, however, buyer's sale failed on 9/5 (no extension of closing date) and buyer failed to notify seller of the sale fail within two business days, then buyer is already in default of the PSA. The PSA terminated based on the sale fail and buyer is in default based on buyer's failure to give timely notice of the sale fail. Listing broker should use a blank Form 90 notice to put buyer on notice that the sale terminated and use a Form 50 to instruct escrow to release EM to seller. Buyer will have to sign Form 50. Buyer will not be required to sign the notice of termination, Form 90.
 
In any event, and particularly since seller is not motivated to terminate the sale immediately, broker should make inquiry to buyer's broker seeking a status update before taking any other action.

 

 

The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit www.warealtor.org. Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to legalhotline@warealtor.org or leave a message at 800.562.6027. Please include your NRDS number.



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Primary Mortgage Rates Survey
(updated every Thursday)  Source:  Freddie Mac
 
  September 13, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.60%  4.06%  3.93%
 Fees & Points  0.5
 0.5
 0.3
 Margin  N/A  N/A  2.77



  September 6, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.54%  3.99%  3.93%
 Fees & Points  0.5
 0.4
 0.3
 Margin  N/A  N/A  2.77



 August 30, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.52%  3.97%  3.85%
 Fees & Points  0.5
 0.5
 0.3
 Margin  N/A  N/A  2.77



 August 23, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.51%  3.98%  3.82%
 Fees & Points  0.5
 0.5
 0.3
 Margin  N/A  N/A  2.75



 August 16, 2018       30-yr FRM  15-Yr FRM  5/1-Yr ARM
 Average Rates  4.53%  4.01%  3.87%
 Fees & Points  0.5
 0.5
 0.4
 Margin  N/A  N/A  2.75



 
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