My buyer’s lender called to let me know that the lender was unable to send the Closing Disclosure to the buyer three (3) days prior to closing and needs us to get an extension of the closing date.
Can the seller refuse to extend the closing date? The parties used the 2017 Agreement to Buy or Sell.
By now, all Real Estate Agents should be using the new 2017 Agreement to Buy and Sell, which is a mandatory form according to the Louisiana Real Estate Commission.
One of the main changes to 2017 Purchase Agreement, can be found at lines 72-75, wherein the following is stated:
“If this sale is a Financed Sale, BUYER acknowledges that any terms and conditions imposed by BUYER’S lender(s) or by Consumer Financial Protection Bureau Requirements shall not affect or extend the BUYER’S obligation to execute the Act of Sale or otherwise affect any terms or conditions of this Agreement except as otherwise set forth herein.”
A strict reading of this portion of the 2017 Purchase Agreement would indicate that, absent a written agreement between the parties stating otherwise, Seller can refuse to extend the closing date based on the circumstances outlined in your question.
So, how should Buyers’ Agents deal with this language in the future?
The key is found in the phrase, “….except as otherwise set forth herein.”
Previously, Buyers’ Agents could attach the “Financing Addendum” to the Purchase Agreement. This addendum provided for an automatic extension of the closing date for your scenario.
This particular “extension” language in the old “Financing Addendum” is not located in the new 2017 Purchase Agreement. So, it is recommended that Buyers’ Agents incorporate this “extension” language in the “Additional Terms and Conditions” section of the 2017 Purchase Agreement.
To this end, Buyers’ Agents could use language similar to the below:
“If this is a Financed Sale and the loan from BUYER’S lender (s) is not available on the date for the Act of Sale specified herein due to terms and conditions imposed by BUYER’S lender(s) or due to terms, conditions, and/or delivery requirements of the Consumer Financial Protection Bureau (“CFPB Requirements”), then the date to close the Act of Sale shall be extended for such period necessary to satisfy the terms and conditions imposed by BUYER’S lender(s) or to satisfy CFPB Requirements, provided such period shall not exceed (_____) calendar days.”
(Essentially, you are just cutting and pasting the 1st paragraph from the old Financing Addendum).
As of the date of this writing, it is the intention of the Realtor Association of Acadiana (RAA) to remove the old Financing Addendum from use. So, I do not recommend Buyers’ Agents use the old Financing Addendum to “build in” an extension of the closing date.