Legal Consequences if one Party does not attend a Scheduled Real-Estate Closing
When the buyer and the seller establish an agreement on the sale terms, they come up with an estate purchase agreement, which is a contract that affirms the agreed closing date. If the buyer and the seller cannot meet for the closing date, both groups can look into the purchase agreement clauses that contain specifications detailing how to address the issue (Guerra, 2017). Closing dates are significance since they establish the dates when the lenders, buyers, and sellers can conclude any inspections, repair works, and paperwork (Freybote & Seagraves, 2016). As such, when the closing date is missed, the lenders are at risk of losing their profits from a mortgage, the sellers risk losing their proceeds, and the buyers risk losing their dream homes.
There could be a variety of reasons that could force a closing not to occur. For instance, it could be as a result of the buyer not meeting the contingencies before the closing date. Some of the contingencies include securing financing, selling a current home, and obtaining a reasonable and better interest rate for the financing of the new home (Freybote & Seagraves, 2016). Also, home flaws may force the buyer to suspend closing and thus demand that the repairs are done before the process is executed.
Possible consequences of a missed closing date could be a cancellation of the sale. However, monetary penalties could be a possible consequence, especially on the Party that fails to meet the closing date (Guerra, 2017). For instance, if it is the buyer that missed the closing date, a flat fee may be paid or paying a percentage of the seller’s mortgage for delaying his or her property for longer than had planned.
References
Freybote, J., & Seagraves, P. (2016). Heterogeneous Investor Sentiment and Institutional Real Estate Investments. Real Estate Economics, 45(1), 154-176. doi: 10.1111/1540-6229.12132
Guerra, T. (2017). Real Estate Contracts: What if I Can’t Close by the Date on the Contract?. Retrieved 4 July 2020, from https://homeguides.sfgate.com/real-estate-contracts-cant-close-date-contract-38979.html
