If we do not agree to seller’s request for an extension will we lose what we’ve already invested?

Additional Information:

The seller is unable to find a replacement property by the time the sixty day escrow closes. They have requested an extension of thirty days. If we do not agree to that extension, will we lose the appraisal fee, the home inspection fee, and our deposit?

ATTORNEY ANSWER:

In order to answer this question, I would really need to review the terms of your purchase and sale agreement as well as your commitment letter with the bank and contract with the home inspector.  If there is not a contingency in your purchase and sale agreement that the Seller must first close on another property, typically you have a couple of options. First, you could advise the Seller that you will not agree to an extension. The Seller would then have two options. The Seller could either timely close and rent until he finds a replacement property or the Seller could breach the purchase and sale agreement by not closing. If the Seller breaches you can seek specific performance (i.e. court order for them to sell the property to you), plus damages such as any fees, etc. Alternatively, you can just seek your damages.

Another alternative would be to try to negotiate an agreement where you grant the extension subject to the Seller paying any of your expenses that might occur as a result of a thirty day extension.

If you do not agree to the extension, you should not lose your deposit in any event. The Seller is breaching the contract, not you. If you breached the contract, however, it is common that you would lose your deposit as liquidated damages. With regard to the home inspection fee and appraisal fee, you would only lose those if you did not eventually close. If the transaction never closes you will likely lose the appraisal fee and inspection fee, but you will have a claim against the Seller for those amounts.

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