What To Do When a Home Buyer Cannot Close on Time

Sellers do not want to hear that the home buyer cannot close on time.

When a home buyer cannot close on time, it means the purchase contract will expire. If the purchase contract expires, the parties are no longer engaged in an active contract with each other; although lawyers would argue intent, I imagine, and extenuating circumstances and whatever else establishes the basis for a solid argument. Still, why travel down that road when there are solutions at hand?

Many home sellers, you can bet, are generally upset when a home buyer cannot close on time. My clients receive an estimated timeline for escrow upon inception, so they have a general idea of when the buyers will release contingencies and an estimated closing date. That date is probably circled on a wall calendar, with an alarm set on their phone. That’s when the money arrives. It’s an important date.

In fact, the sellers might even make other financial commitments in anticipation of this closing date, or at the very least arrange a celebratory dinner at a favorite Sacramento restaurant. They are counting on closing on that date. They can feel annoyed and irritated at the news the home buyer cannot close on time. Of course, the buyer expects the sellers will extend. Not so fast, though.

This is the point where the sellers might say: Whoa, I could sell to another buyer for more money or better terms. Why should I extend? What’s in it for me, Al Franken?

This type of situation is when the release of earnest money deposit might be offered by the buyer to the seller in exchange for signing an extension. Even if all of the buyer’s contingencies have been released, it doesn’t mean the earnest money deposit will be released to the seller upon non-performance, at least not without an argument or Small Claim’s Court action. The release of the earnest money deposit through escrow directly to the seller sidesteps that crap.

When the home buyer cannot close on time, this is one way to show good faith, that the buyer will close escrow, and it encourages the sellers to cooperate. If you’re selling a home in Sacramento, call Elizabeth Weintraub, at 916.233.6759.