House in escrow – when can I sign rental lease?

[NotCranky]

Tone if your buyer does not perform on time that is the chance to put new items into the contract or keep the earnest money. Lets hope everything goes well but if it doesn’t, think about demanding things that protect your interests better….like some period of occupancy for you after escrow closes and get the 72 hour clause put into effect if it isn’t already. After that you have your agent put the house fully back on the market for offers.
Good Luck.

[NotCranky]

Tone if your buyer does not perform on time that is the chance to put new items into the contract or keep the earnest money. Lets hope everything goes well but if it doesn’t, think about demanding things that protect your interests better….like some period of occupancy for you after escrow closes and get the 72 hour clause put into effect if it isn’t already. After that you have your agent put the house fully back on the market for offers.
Good Luck.

[Tone]

Thanks for the advice, everyone.

I called the property manager for the house I was hoping to rent and offered one month’s rent as a penalty should I have to bail out of the lease. She agreed.

Now that that’s taken care of, she wants to sign the lease on Monday (the day my contingencies are supposed to be met). I called my realtor and she told me that contingencies could clear Monday, or maybe Tuesday (“maybe”? WTF?). And if the contingencies don’t clear, my realtor is going to send the buyer a “notice to perform.” I asked her what would happen if they didn’t perform and everything got fuzzy (my realtor is older and a friend of the family – she’s nice but I can’t get a stright answer from her half the time — but that’s my problem).

Anyhow, as Rustico pointed out, a Notice to Perform seems like the time to add new items into the contract, so I was wondering what I should do. I could just sign the rental lease (with out-clause) now even without my buyer’s contingencies met, and then maybe stick the buyers with some more items advantgeous to me should they fail to perform. I don’t know what. If this thing drags out beyond the 31st then I’m out one months rent (as penalty for getting out of my rental lease) and my house is back on the market and I would struggle to get the buyer’s escrow deposit. Doesn’t seem so bad, unless I’m missing something.

Of course all this is moot should the contingencies be met, but still, I like to think worst case scenario to help get my mind around the process.

I feel like calling the lender directly myself on Monday to iron out where this loan is. I really hate dealing with so many middle men.

[Tone]

Thanks for the advice, everyone.

I called the property manager for the house I was hoping to rent and offered one month’s rent as a penalty should I have to bail out of the lease. She agreed.

Now that that’s taken care of, she wants to sign the lease on Monday (the day my contingencies are supposed to be met). I called my realtor and she told me that contingencies could clear Monday, or maybe Tuesday (“maybe”? WTF?). And if the contingencies don’t clear, my realtor is going to send the buyer a “notice to perform.” I asked her what would happen if they didn’t perform and everything got fuzzy (my realtor is older and a friend of the family – she’s nice but I can’t get a stright answer from her half the time — but that’s my problem).

Anyhow, as Rustico pointed out, a Notice to Perform seems like the time to add new items into the contract, so I was wondering what I should do. I could just sign the rental lease (with out-clause) now even without my buyer’s contingencies met, and then maybe stick the buyers with some more items advantgeous to me should they fail to perform. I don’t know what. If this thing drags out beyond the 31st then I’m out one months rent (as penalty for getting out of my rental lease) and my house is back on the market and I would struggle to get the buyer’s escrow deposit. Doesn’t seem so bad, unless I’m missing something.

Of course all this is moot should the contingencies be met, but still, I like to think worst case scenario to help get my mind around the process.

I feel like calling the lender directly myself on Monday to iron out where this loan is. I really hate dealing with so many middle men.

[SD Realtor]

Rustico, Tone –

My recommendation would be to move forward as you are doing. Make an immediate ammendment to escrow stating that in the event of a late closing that you will be compensated for all of the damages incurred including your PITI, as well as any additional costs for the arrangements you are making. It may be in your best interest to attempt to ask for additional deposit money as well. This doesn’t protect you in the event of a full on default but it does help cover your expenses in the event of a late closing.

Fortunately we smelled a rat and did this and were covered financially. That is about all you can do.

SDA no the broker did not have those initials. Both the agent and the mortgage broker operated in the south part of the county.

[SD Realtor]

Rustico, Tone –

My recommendation would be to move forward as you are doing. Make an immediate ammendment to escrow stating that in the event of a late closing that you will be compensated for all of the damages incurred including your PITI, as well as any additional costs for the arrangements you are making. It may be in your best interest to attempt to ask for additional deposit money as well. This doesn’t protect you in the event of a full on default but it does help cover your expenses in the event of a late closing.

Fortunately we smelled a rat and did this and were covered financially. That is about all you can do.

SDA no the broker did not have those initials. Both the agent and the mortgage broker operated in the south part of the county.

[TemekuT]

To protect yourself, request that the buyers sign an irrevocable deposit release. Even though they are going with 100% financing, there should be some sort of deposit. This will allow Escrow to release the deposit to you should the buyers fail to perform. If you don’t do this, Escrow, as a neutral fiduciary, won’t release the funds to you in case of failure to perform unless stipulated via a judgment or negotiated settlement at arbitration. Then, to protect the buyers, you submit an addendum to the contract that credits the deposit back to the buyers at COE. I have done this several times in the case of 100% financing.

Do this before you sign the lease.

Good Luck

[TemekuT]

To protect yourself, request that the buyers sign an irrevocable deposit release. Even though they are going with 100% financing, there should be some sort of deposit. This will allow Escrow to release the deposit to you should the buyers fail to perform. If you don’t do this, Escrow, as a neutral fiduciary, won’t release the funds to you in case of failure to perform unless stipulated via a judgment or negotiated settlement at arbitration. Then, to protect the buyers, you submit an addendum to the contract that credits the deposit back to the buyers at COE. I have done this several times in the case of 100% financing.

Do this before you sign the lease.

Good Luck

[NotCranky]

I feel bad for you. Keep in mind you don’t have a very good pool of buyers, be assertive but carefully.If you want to get tough you could demand an increased deposit and actually anything reasonable that you want. If you don’t need to make too many demands It might be better just to chalk it up to experience and go on assuming that your deal is going to close.You should at the very least get it back on the market if the buyer is holding things up but then just continue to be nice and patient. Demanding occupancy after the sale could kill the deal if the buyer is as weak as the one SD Realtor is describing above.I don’t recommend calling the Mortgage people unless both agents seem completely incompetent and then you should go your agents broker and ask that person to work with the buyer’s agents broker.Your remedy after that and you absloutely don’t need to worry about it yet, is to go to the local Realtors Board. Best wishes.

[NotCranky]

I feel bad for you. Keep in mind you don’t have a very good pool of buyers, be assertive but carefully.If you want to get tough you could demand an increased deposit and actually anything reasonable that you want. If you don’t need to make too many demands It might be better just to chalk it up to experience and go on assuming that your deal is going to close.You should at the very least get it back on the market if the buyer is holding things up but then just continue to be nice and patient. Demanding occupancy after the sale could kill the deal if the buyer is as weak as the one SD Realtor is describing above.I don’t recommend calling the Mortgage people unless both agents seem completely incompetent and then you should go your agents broker and ask that person to work with the buyer’s agents broker.Your remedy after that and you absloutely don’t need to worry about it yet, is to go to the local Realtors Board. Best wishes.

[NotCranky]

SDR, I don’t agree that it is time to try to submit any threats or demands yet. As far as I understand the failure to perform is hypothetical still.

TONE: Escrows often get scary at the end but close anyway.
Just be glad that your buyer isn’t checking in to this blog!

[NotCranky]

SDR, I don’t agree that it is time to try to submit any threats or demands yet. As far as I understand the failure to perform is hypothetical still.

TONE: Escrows often get scary at the end but close anyway.
Just be glad that your buyer isn’t checking in to this blog!

[gn]

“My home is remodeled and I priced myself 10-15k below the other houses in my neighborhood and I actually had a bidding war on my house”

An offer with 100% financing is a weak offer. If there was a bidding war, isn’t there a stronger offer than that ? Personally, I would have accepted an offer with less money & a stronger term.

[gn]

“My home is remodeled and I priced myself 10-15k below the other houses in my neighborhood and I actually had a bidding war on my house”

An offer with 100% financing is a weak offer. If there was a bidding war, isn’t there a stronger offer than that ? Personally, I would have accepted an offer with less money & a stronger term.

[NotCranky]

Very good point gn. I wonder if the listing agent at least tried to get back-up offers? I also feel guilty of playing a game of armchair quarterback!

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