Real Estate

The nightmare before closing.

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  • Jul 7th, 2016 10:38 pm
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Deal Fanatic
Dec 5, 2009
5768 posts
3612 upvotes
Kkhan15 wrote: Financing can go sideways when the bank pulls the bureau again and buyer racked up the debt. They may have to bring in another signer, show more income or simply forfeit the deal and lose their deposit and potentially be sued by the seller. I've seen it happen numerous times.
I was referring to the appraisal specifically. Which shouldn't be a "closing day" issue.
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
It has indeed happened and usually ends up with the seller selling it for more money. The buyer's award is typically equitable damages. If the house hasn't sold, the award is still likely to be equitable damages over specific performance as specific performance has to prove uniqueness that cannot be had elsewhere. In any case the seller is playing with fire.
Deal Fanatic
Dec 6, 2006
5805 posts
1972 upvotes
Toronto
licenced wrote: It has indeed happened and usually ends up with the seller selling it for more money. The buyer's award is typically equitable damages. If the house hasn't sold, the award is still likely to be equitable damages over specific performance as specific performance has to prove uniqueness that cannot be had elsewhere. In any case the seller is playing with fire.
If the buyer is to be awarded damage, will include these?:,... say the buyer now needs to find another house of similar (previous) price range, but the current price has gone up (the sole reason seller is backing out) so that price difference, plus the extra time to find the other house so there may be additional price appreciation, plus whatever extra legal/agent fees buyer has to incur to re-do the buying process....


And if it's down south in US, add another $10million for emotional damage and anxiety due to delay without a new house. :D
Deal Expert
User avatar
Jul 30, 2007
33237 posts
21166 upvotes
Toronto
boyohboy wrote: what... no emotional damage? lol
You need to be a real good actor to cry and break down in front of the judge.

... and the Oscar goes to ..... :)
Deal Addict
Aug 10, 2013
2403 posts
671 upvotes
Toronto
fdl wrote: It does sound like a made up story. Or maybe OP is thinking of doing this himself ;)
Not made up actually happened. I really have no reason to lie about that. I'm thinking it happens more often than we know
Deal Expert
Dec 5, 2006
16788 posts
12572 upvotes
Markham
Sam9876 wrote: Nothing is sure in life but the judge will see clearly what happened and will decide how much to award the buyer. Of course the buyer will have to document/record everything so as there is a solid case against the seller for the damage and suffering they caused.
But if buyer didn't sell old house yet, I doubt how much judge can reward, if reward will be more than price increases during that period, then seller wouldn't want to cancel the deal. So compensation probably much lower than we thought
Deal Addict
Jan 29, 2006
1942 posts
1746 upvotes
Center of the univer…
Heavenleigh85 wrote: Not made up actually happened. I really have no reason to lie about that. I'm thinking it happens more often than we know
Well you can't be sure it happened as it was a friend of a friend who bought a house without a lawyer and somehow a mortgage company allowed that transaction to happen without a lawyer without any proper purchase papers. And if it was for cash and I am paying in cash, I for sure would have a good lawyer making sure all the conditions are aligned and met without any issues.
Deal Addict
Aug 10, 2013
2403 posts
671 upvotes
Toronto
awais wrote: Well you can't be sure it happened as it was a friend of a friend who bought a house without a lawyer and somehow a mortgage company allowed that transaction to happen without a lawyer without any proper purchase papers. And if it was for cash and I am paying in cash, I for sure would have a good lawyer making sure all the conditions are aligned and met without any issues.
My thinking is that since there's usually 2 months before a home closes that it is believable that someone else can approach the seller and offer more $ and though illegal the seller will try any sneaky way they can get out of the contract. Really wish I knew more details I couldn't believe it either.
Deal Addict
Jan 29, 2006
1942 posts
1746 upvotes
Center of the univer…
Heavenleigh85 wrote: My thinking is that since there's usually 2 months before a home closes that it is believable that someone else can approach the seller and offer more $ and though illegal the seller will try any sneaky way they can get out of the contract. Really wish I knew more details I couldn't believe it either.
Someone can definitely approach but on the closing day everything is in escrow and you're just waiting for finances to clear and pick up your keys. This sounds like they might have backed out in the cooling off period or something right away after signing. If it was done thru lawyers I can't see this happening on closing date. Other than financial issues due to your mortgage company I don't see how something like this would happen.
Deal Guru
User avatar
Mar 23, 2008
13006 posts
10009 upvotes
Edmonton
I'm not doubting the OP that the story was told to them... But I would find it hard to believe that the seller's lawyer would guide their client into action like that. It would take a combination of a true troll of a client and an unethical lawyer to hold up the sale of the house on the closing day. But if they (together) determined that the cost of settling the subsequent lawsuit was less than the money they could make by canceling the sale, I guess anything goes. After all, corporations regularly determine that the cost of a lawsuit is outweighed by the financial benefit of potentially wrong actions all the time. Nothing saying a person is immune to the same lure.

C
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
From where are so many getting that this story has to do with 1) a mortgage 2) closing without a lawyer or even the mortgage co allowing the transaction to happen without a lawyer?
awais wrote: Well you can't be sure it happened as it was a friend of a friend who bought a house without a lawyer and somehow a mortgage company allowed that transaction to happen without a lawyer without any proper purchase papers. And if it was for cash and I am paying in cash, I for sure would have a good lawyer making sure all the conditions are aligned and met without any issues.
The OP's post is distinguishing between the types of stories she's heard before from the one a friend of a friend told her. And as for looking for a lawyer, it probably means litigation lawyer since many real estate lawyers don't touch the litigation side.
've heard some crazy things happening to people before closing ie bank pulls credit last minute -refusing funding due to big purchases etc but this one tops the list- I was chatting with a friend of a friend who was looking for a lawyer because she bought a house and the sellers refused to close on closing day because they said the house was worth 100k more than she bought it for and they want her to pay the 100k or void the deal. What?! Anyone have or heard about something crazy happening in the 11th hour of closing?
Deal Expert
User avatar
Mar 18, 2005
23686 posts
5125 upvotes
Niagara Falls
I'd be pretty pissed off at my lawyer if I had to find another lawyer if this happened. Afterall, that's why you pay the lawyer originally.

I'm currently going through a private sale and I know I'd be heading to court if this occurred to me. Both parties have signed agreements for the sale and both lawyers have a copy of the document, a small down payment has been placed.

Guess I'll find out in a month if the sellers try to change their mind.
Deal Addict
Jan 29, 2006
1942 posts
1746 upvotes
Center of the univer…
licenced wrote: From where are so many getting that this story has to do with 1) a mortgage 2) closing without a lawyer or even the mortgage co allowing the transaction to happen without a lawyer?



The OP's post is distinguishing between the types of stories she's heard before from the one a friend of a friend told her. And as for looking for a lawyer, it probably means litigation lawyer since many real estate lawyers don't touch the litigation side.
Not saying that's what happened but how else would a sale close without a mortgage company and lawyers involved and if it was straight cash deal I would get even a better lawyer as it is my cash. And my point was if it is a mortgage, then they work with the lawyer to see if the title is clean, purchase papers are in order and if all that was in place, this story has a rare chance of happening
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
I believe the whole point of it was that the seller pulled the plug. This had nothing to do with the lender or the lawyers, clean title and all the prep work done to get to day of closing.

As for have a rare chance of happening. They do happen and while this is supposedly instituted on the seller's part, the majority of closings fall through on the day of closing that were not buyer or seller initiated.


While I agree with the underlying point I think you're trying to make, which is:- did the buyer really not know the seller changed their mind until the day of closing? it is conceivable they did know yet that may change nothing. But there is no information here to talk about lenders, lawyers and title searches. The facts will surface in court if it ever gets there.
awais wrote: Not saying that's what happened but how else would a sale close without a mortgage company and lawyers involved and if it was straight cash deal I would get even a better lawyer as it is my cash. And my point was if it is a mortgage, then they work with the lawyer to see if the title is clean, purchase papers are in order and if all that was in place, this story has a rare chance of happening
Penalty Box
Dec 27, 2013
8003 posts
4050 upvotes
Toronto
guess it works both ways.. how much of a deposit would the buyer lose if they pulled the plug at the last minute?/ most likely depending on how much they put as a deposit, some/all of it, within reason.

but anyway, this world is *****ed anyway, i wouldn't trust anyone.
Deal Addict
Aug 31, 2014
1505 posts
564 upvotes
YVR, BC
Heavenleigh85 wrote: I've heard some crazy things happening to people before closing ie bank pulls credit last minute -refusing funding due to big purchases etc but this one tops the list- I was chatting with a friend of a friend who was looking for a lawyer because she bought a house and the sellers refused to close on closing day because they said the house was worth 100k more than she bought it for and they want her to pay the 100k or void the deal. What?! Anyone have or heard about something crazy happening in the 11th hour of closing?
a accepted offer of purchase is a legally binding contract once all subject have been removed.....this analogy is a bit ridiculous, once a lender has approved a mortgage application is is very rare to see it pulled unless there is a breach or fraud etc

i have heard of sellers taking appliances and drapes that were in the contract etc
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
daivey wrote: guess it works both ways.. how much of a deposit would the buyer lose if they pulled the plug at the last minute?/ most likely depending on how much they put as a deposit, some/all of it, within reason.

but anyway, this world is *****ed anyway, i wouldn't trust anyone.
From all the cases I've read which is most of them, and real property law courses I've taken, it works like this - if the buyer pulls out of the deal, even one day after signing, they may as well kiss their deposit goodbye without having to argue too hard to get it because it is generally considered automatically forfeited, plus any additional costs the seller incurred by relying on that contract such as their own loss of deposit and all manner of expenses.

If however the seller reneges, the burden is on the buyer to show the property was unique and/or the delay cost them.
Deal Expert
Dec 5, 2006
16788 posts
12572 upvotes
Markham
licenced wrote:
If however the seller reneges, the burden is on the buyer to show the property was unique and/or the delay cost them.
This is what I heard

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