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Can I sue the buyer of my home for failing to get financing on time for closing?
Anonymous2 views3 answers
The buyer had a 30 day to close FHA loan and due to her financials not being completed in time we could not close on the scheduled date. Because of this, my USDA loan was nearing the point to having to reapply and I had to scurry at the last minute to get a different loan. The loan I ended up with is costing me $60 more a month in mortgage costs and over the life of a 30 year loan we are paying an extra $21,240.00. This is money we would not be paying if the buyer had her paperwork in on time. Can I sue for this?
If the contract was contained standard Maryland Association of Realtors (MAR) terms, it included a financing addendum, which made purchase of the property contingent on the buyer obtaining adequate financing through the FHA.
Additionally, recovery of consequential damages (e.g. the higher mortgage rates) in a contract case like this hinges on "foreseeability." That is-- was it foreseeable that a breach of the buyer's obligation to purchase or obtain financing would cause you the damage you are claiming.
Your rights and liabilities against the buyer are primarily dictated by the contract. Have a lawyer review it and advise you.
It is unlikely you will be able to sue for the damages you describe unless the home sales contract laid out with specificity the potential damages you could suffer for a late closing, and that the buyer agreed to be liable to you for these damages for a late closing. It is highly unlikely these prerequisites were laid out in your contract, but that is why you should take the contract to an attorney for a close review to see if there is any basis for you to sue the buyer for a late closing. By the way, in a scenario where one party is penalized for late performance, there is usually a clause awarding that party a bonus for early performance. Did any of these terms make it to the negotiating table? Or were these concerns of yours merely kept to yourself and out of the written contract?
You could try to go after the buyer's earnest money deposit, arguing they breached their obligation to pursue their financing in good faith or with reasonable diligence. You cannot get your future increased mortgage costs for your new home unless you both disclosed the potential risk to you and made the buyer's purchase of the property subject to this risk of loss. I doubt seriously that such a provision would even be permissible in connection with an FHA contingent financing contract. The amount of the forfeited deposit, however, if invested, may more than cover the extra mortgage cost you suffer over the next 30 years. Even if you could recover the damages you seek, you cannot get an award equal to $21,240, which it will take you 30 years to incur as a loss; rather, you would need to reduce that number to a present day value. Consult a real estate lawyer to review the sales contract and terms.
