Changes In Contract
I accepted an offer on my home last week. We signed a contract and sent everything on to the Title Co. The contract had a clause stating that the buyer needs provide seller with proof of funding within three days. The buyer said his bank had pre-approved him. More than three days has past and now he says he is having a problem getting a good interest rate. He is also saying he wants to make some changes to the contract. I don't want to make any changes to the contract I am happy with it the way it is. I don't trust this man and I don't think I want to do buisness with him anymore. Did he brech the contract when he failed to provide me with proof of funding? Can he legally make changes to the contract? By the way this is a FSBO. Any advise would be very helpful.
As always with any advice on contracts check with your attorney for a legal, professional opinion.
That said, yes, he is in breach of contract if it clearly stated that he must provide proof-of-funds within 3 days. You need to verify that the contract actually stated this. Most standard contracts state something like, 'the buyer must apply for financing within 3 days.' Big difference.
Does your contract have a finance clause? If so, it should have an interest rate cap stated in the contract (ex- financing not to exceed 7% fixed interest).
No he cannot just to decide to change things in the contract. It is a legally binding contract, and the only way anything can be changed is if BOTH parties, seller and buyer, agree to it in writing and add it to the original contract (Addendum).
My suggestion would be to simply give him back his escrow deposit (if any) and find another buyer.
Roger
Yes, It does have a finance clause. The interest rate cape is 8%. He can't get lower than 10%. This is one of the things he needs changed.
I would put the house back on the market immediately. At the same time tell him that your willing to settle with him if you have not accepted another offer. I would not agree to any changes in the contract. If he has to pay 10% interest he must have terrible credit.
Caveat: You will want to speak to a lawyer or research the law of your own state on this issue. This should not be construed as legal advice.
Speaking generally, I can tell you that time is of the essence in contracts for the purchase/sale of real property. Even though that is generally the case, courts in some states are willing to grant an additional period of time for the purchaser to "cure" the default, http://www.i.e. a few additional days to get their financing in order. I would give your buyer written notice that he is in breach of the contract and that if he does not provide proof of financing within 48 hours from the date of your letter, that you will deem him in breach of contract. You will want to check your contract to see if the amount of the good faith deposit will constitute liquidated damages for his/her breach (you get to keep that amount w/o a need to prove damages). If so, and if there is no broker involved, I would further indicate your desire to retain the good faith deposit as damages for the breach (if the money is held by the title company/attorney you will need to direct your letter to them).
[ Edited by jorge121 on Date 07/21/2003 ]
Thank you all very much for all the advice. I am going to put the house back on the market. I put my sign back out already.