If you are a seller and are in the situation of a buyer threatening to walk away from the deal if you do not agree to delay the closing, you have precious few options available. Since nearly every real estate purchase contract has contingency clauses, you might have to agree and resort to changing your own plans.
Should you have a contract on another home, and planning a closing on that property in a timely fashion, you too, can request settlement date be delayed. Though you probably would not want to do this, there’s little you can do to keep things on schedule. Of course, this creates a vicious cycle for all tangential parties involved. However, there are some things you can do to keep the deal moving forward as planned.
The Power of Performance Clauses
Simply put, there are not only contingency clauses, which act as escape hatches for buyers, there is also a performance clause. In plain English, this clause essentially forces each party to the contractual sale to perform as stipulated in the agreement. It can be the leverage necessary to get the buyer to spring into action and honor the agreed upon date.
“Home sale transactions address the issue of closing by setting a specific closing date in the purchase agreement, or by pinning it to a future, identifiable event, for example, 10 working days after the buyer receives satisfactory evidence of title. It’s not unusual for a closing to be postponed, and it’s not impossible for a closing to be postponed numerous times. Knowing why the delay is happening and what you can do about it, is key to preserving your patience.” —Global Post
It should be noted that such dynamics are not common. This is largely because there are circumstances out of the buyer’s control. However, if it’s purely because of cold feet, claiming pre-buyer’s remorse is not a valid reason to negate the sales contract.
Why Buyers Request to Delay Closing
If the buyer isn’t trying to wiggle out of the transaction with an excuse which is not legally sufficient, it could be the requested delay is for one of the following reasons:
- The buyer’s financing has changed. The bank ordered a second appraisal or ran a second credit check and the financial circumstances have changed. Should this be the case, the buyer can use the financing contingency clause to walk away.
- Clouds on the title have been discovered. Unfortunately, if this is the case, it is you–the seller–that will have to deal with resolving any defects or encumbrances on the title.
- The buyer is rethinking the issues found during the home inspection. What once was not a deal breaker suddenly becomes one and depending on the particulars, this might well be a legitimate out for the buyer.
- The buyer’s current home has not sold. This is also a common contingency because it negatively impacts the buyer’s finances and paying two mortgages simultaneously is a hardship of sorts.
Speak with your listing agent as to the reason why and ask what options are available to you. Depending on the circumstances of the situation, this might be out of the buyer’s control; or, you might be able to cancel the contract to entertain other offers.