If a buyer cannot get financed by the closing date on the contract, does the seller have to extend the closing date since the buyer showed due diligence?
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If a buyer cannot get financed by the closing date on the contract, does the seller have to extend the closing date since the buyer showed due diligence?
The buyers first bank turned down his loan. We do not wish to extend contract past the specified closing date on the contract which the buyer can not meet due to having to apply for a new loan. The buyers agent says that state law protects if the buyer has done due diligence.
Asked on June 22, 2012 under Real Estate Law, Michigan
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Whether or not the seller of the property that you are writing about is required to give a reasonable extension of time for the buyer to obtain a loan and close escrow depends upon what the terms and conditions of the purchase agreement states on the subject.
Ordinarily, custom and practice in the real estate industry is that the seller gives a reasonable amount of time for the buyer after the designated close date to close escrow such as 15 to 20 days. I suggest that you consult with a real estate attorney your options concerning the buyer in the matter that you have written about.
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