What Happens When a
Seller Isn't Ready to Close?

Question: What options are available to a buyer if the seller does not meet the closing date specified in the purchase agreement? For example, what if liens on the property are not removed, or the seller does not provide financial information that had been requested by the buyer for review?  It seems like the buyer should be able to terminate the agreement because the closing date set forth in the purchase agreement was not met by the seller. Or perhaps the closing date can be extended.

-- Scott, no city provided

Scott: You are generally correct. If either party fails to meet its obligations -- for example, the buyers can't get financing, or the sellers can't give clear title by the closing deadline -- the usual choices are to extend the deadline (which is often done if both parties want the deal to go through and the problem can be resolved by having a few more days), or terminate the agreement.

Problems arise when one party wants to proceed and the other wants to terminate. Then the wording in the purchase agreement becomes critical. The usual question for the buyer is, can you terminate and still get your deposit returned?

You mention the seller has problems removing liens and providing condo financial information. Often liens (typically a judgment against the seller filed on the property for a specific amount of money), are paid off from the proceeds of the sale as part of the closing with the lien holder providing a release. Thus, they usually do not hold up the sale.

On the other hand, you are certainly wise to hold up on the purchase if the seller refuses to provide vital financial information, in this instance on the condominium homeowner's association fees. Usually, however, this delay is caused not by the seller, but by the condo homeowner's association. You may need to have the seller's attorney send a strongly worded letter to the association to get results.

What do you do if the requested condo financial information is never produced? The answer depends on whether or not your purchase agreement gives you the right to view and approve this information. If it doesn't, you could be out of luck in backing out of the deal and getting your deposit back.

If you want to give the sellers more time, your agent should be able to produce a short extension you and the sellers can sign. But if you want out and the sellers are agreeable, your agent should also be able to provide you with a termination document you both can sign. If the sellers can't meet their obligations, refuse to terminate the agreement and likewise refuse to give back your deposit, you would be wise to have a local real-estate attorney read over your purchase agreement to review your options.

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Irwin's Power Tips for Selling a Home for More," (McGraw-Hill, 2000).

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