If a Sale is Contingent on a Seller's purchase on a replacement property should it be diclosed if the property is a short sale?

By
Real Estate Agent with RE/MAX North Orange County DRE#01045442

How much disclosure is really required when a seller is asking a buyer to make a sale contingent on "The Seller's successful purchase and closing of replacement property"?  I am currently in a transaction representing the buyer. At the time of the counter offer, the listing agent requested that the sale be contingent on the Seller's successful purchase of replacement property.

The buyer's accepted these terms based on the fact that the seller was already in escrow and we were given a closing date.  The buyer proceeded in good faith by depositing their funds into escrow. Conducted Home Inspection and had lender complete appraisal.

A week from closing we were told by the selling agent that the seller is requesting an extension to the escrow closing date for a week. When I inquired with the selling agent why the extra time ws needed she slipped and told me that "They are waiting on the short sale approval on the second loan on the sellers purchase". My heart sank!!! I know that second lein holders and their requests from the seller's are usually the reason a short sale never closes!

My buyers and I feel Jilted! If we were told up front that the sale was contingent on the Seller purchasing a short sale, we would have not made the purchase! At the time my buyers has already sold their home. The selling agnet knew we were in escrow and needed to close on something in 30 days.

Do  you think that the short sale purchase should have been disclosed?  

Has anyone  run into this situation?   

Frustrated and Sad for My Buyers...Desperately searching for a  vacant home for them to purchase.

Tina Maraj

www.TinaMaraj.com

Posted by

 Tina Maraj & Randy Tovar   714-403-7901   www.TinaMaraj.com

 

RE/MAX North Orange County Real Estate

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Rainmaker
265,674
Kristen Wheatley
The Maine Real Estate Network - Auburn, ME
Lewiston/Auburn Maine Real Estate Agent

When we have a sale contingent upon a seller's purchase of a replacement property, we get a copy of the seller's P&S for their purchase as an attachment to the addednum that covers the contingency.  This way we always know the property they are buying and can follow it's progress or research more details.  It may vary by state.

The very fact that the seller's purchase being a short sale would have impacted your buyer's decision to agree to the contingency may make it a required disclosure, but it probably depends on your state.

Sep 16, 2010 12:47 PM #1
Rainmaker
255,180
Tina Maraj
RE/MAX North Orange County - Fullerton, CA
Fullerton, California Real Estate 714-403-7901

Thank for you input Kristen,

I will be making this part of my procedure from now on!

Sep 16, 2010 12:54 PM #2
Rainmaker
446,075
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

That contingency seems like a get out of jail free card for the sellers.  Since the sellers probably need to complete the sale of their home before completing the purchase of their new home, it appears that they will never satisfy the contingency.

Sep 16, 2010 12:54 PM #3
Rainer
71,795
Donald Tepper
Long and Foster - Fairfax, VA

To answer your question: Absolutely. I can't believe the listing agent didn't provide that information earlier in the process.

And that was a good suggestion from Kristen!

Sep 16, 2010 12:57 PM #4
Rainmaker
536,486
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Tina,

Yikes, what a situation! Ditto on Kristen's comment.

Sep 16, 2010 11:38 PM #5
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Rainmaker
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Tina Maraj

Fullerton, California Real Estate 714-403-7901
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