Seller Not Acting in Good Faith

**S197** · 09-25-2009, 06:53 PM

I am currently in escrow on an REO property where the bank (seller) has a clause in the purchase contract that "time is of the essence" and escrow must close by a specific date.

All documentation has been signed on my end and all funds have been sent to escrow. Essentially all that needs to be done for this deal to close is for the seller to submit their documentation to escrow.

This has not ocurred. We have extended the close date twice and still no documents from the seller. Given that it was the seller's clause to begin with, do I have any recourse against them that they have not signed documentation by their own self-imposed deadline? They will not even respond to inquiries about the paperwork by escrow.

It is my belief that they have no good faith intention of selling this property. Is there any sort of regulatory agency that will take a complaint? Also can I dispute the earnest deposit that was put up should they try to collect this amount given that it is rather clear that I (the buyer) have acted in good faith while they clearly have not.

Thank you in advance for any help!

**Greg** · 09-26-2009, 07:45 AM

The answer to your question is in the addendums you signed from the bank. You don't mention time frames which would also be important.

The bank might be acting in good faith but you just don't know it yet.

**Arizona Real Estate** · 09-26-2009, 01:34 PM

Different States have different RE laws but most likely if everything has been performed by your buyer and funds are at escrow, you could cancel the contract (if you submitted a "Cure Period) and the buyer would get their money back, and no "per diem" would be charged to the buyer.

**S197** · 09-26-2009, 01:49 PM

Thank you for the responses. I'm actually the buyer, not a realtor, so I apologize in advance if some of these questions are silly.

Can you elaborate on what is a "cure period?"

Also the initial addendum stated time is of the essence and closing must be done by 9/21. We would be charged a per diem if the seller extends beyond this. Subsequent to this addendum, the contract was amended to sell by 9/30 with no per diem penalty to the buyer.

I know it's not 9/30 yet, but if we do not receive the paperwork by Monday, recording by 9/30 is not possible. I'm just trying to figure out what I can do to limit my losses on this one, all money is with escrow and docs on our side are all signed. Isn't it a breach of contract that they are not able to meet their own 9/30 deadline?

**Arizona Real Estate** · 09-26-2009, 02:11 PM

In AZ when the closing does not happen, the non-breaching party can send over a "Cure Period Notice" to the breaching party and they then have 3 days to close.

In this market right now I don't know of very many homes that close on time and it is very frustrating. Just be sure your agent stays in contact with you every day with an update. Communication is the MOST IMPORTANT thing in everything we do.

Good luck,

**Jim Pritchard** · 09-28-2009, 02:52 AM

You should update yourself with your agent to keep you on track on what is happening.

**ohioreoexperts.com** · 09-28-2009, 08:13 AM

Without knowing the full extent of your scenerio it is hard to say. In Ohio, if they have breached the contract and you do not agree to an extension the contract is terminated and your earnest returned. Most likely, there is no other recourse for you as the bank addendums normally cover their hineys pretty well. The addendums often state their is only a per diem if YOU hold up the closing. If they do, all you can do is wait.

The hold up in escrow could be for a number reasons. In Ohio, anyway, there is a backlog of Sheriff's Deeds that need to be recorded in several counties. Until all the paperwork is cleared up at the county level, no transfer can happen. More often than not, we've found the hold up to be either at county or city level with some transfer regulation or code violation. In a current case I am dealing with, the county issued defective deeds for Sheriff Sales during the month of May.....all of them. They had to resend requests out to various title agencies and had the paperwork sent back. I've had one deal in escrow for four months.

If you have any further questions, you can email me. I deal almost exclusively with REO property. Thank you.