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Closing Date Drama

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Posted On: 07/20/2016

Question: We sold our home and await closing. We’ve now found a new house and the owners want to settle about two weeks after the closing on our old home. This means we will have to move out of our house and store our stuff for half a month. Can we get our buyers to delay closing?

Answer: You may be able to achieve your goal without changing the settlement date, but let’s start with that option.

You have a contract that sets out the closing date. It likely has some flexibility. For instance, a recent contract stated that, “Seller and Purchaser will make full settlement in accordance with the terms of this Contract (‘Settlement’) on, or with mutual consent before, __________ (‘Settlement Date’) except as otherwise provided in this Contract.”

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This language tells us that you need the buyers’ agreement to move up the closing date and that raises some issues. First, will the buyers agree? If yes, under what conditions? Second, will the lender be able to close sooner? Third, will there be enough time to comply with new mortgage rules, which require that the Closing Disclosure (CD) must be received three days before settlement? Fourth, will there be at least seven days between your receipt of the Loan Estimate and the closing? That’s another new federal requirement.

In your situation, you want to delay closing. This may require an addendum to the original agreement setting a new date. However, if closing is delayed does that mean the buyer will lose a loan lock-in? If yes, can the lock-in be extended? Is there a cost for the extension? Are you willing to pay it?

There are two possible alternatives to a settlement delay.

In one case you work out a deal with the buyer to have a post-occupancy settlement agreement that allows you to stay in the house for two weeks after closing. In the other you arrange with the seller to get a pre-occupancy settlement agreement that allows you to move into the replacement property before closing.

Both of these agreements are complex. For instance, what rent will you pay? What about utilities, insurance, a deposit, improvements and damage? If you move in early, have you accepted the condition of the property? By any chance do you live in an area with rent control?

In addition to paperwork, another issue – and maybe the real issue – is your relationship with the buyers and sellers. If you get along, it may be easy to make a better arrangement. However, if everyone is fighting tooth and claw over a $12 item, it might be best to start looking for temporary storage.

Peter G. Miller is author of "The Common-Sense Mortgage," (Kindle 2016). Have a question? Please write to peter@ctwfeatures.com.

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