Critical Buyer Dates For As-Is Contract With Financing

DEPOSIT DUE DATE:                                              

This is the date by which you need to get your deposit to the escrow agent named on page 1 of the contract. The deposit should be a wire, not a check. If you submit a check rather than a wire, it is possible that a seller could terminate your contract and sell the home to a higher bidder because the contract requires “collected” funds by the deposit due date (which is normally either the signing date or 3 days after the signing date) and a check cannot be collected in less than 7 to 10 business days, SO SEND A WIRE.

START LOAN APPLICATION DATE:                                

This is the date by which you must contact a lender and start your loan application. You should be prepared to document that you have done this (emails, for example), because if you do nothing by this date, or if you fail to pursue your loan with diligence, you may be in default under the contract and may be liable for loss of your deposit and also possibly even damages if you do not close.

INSPECTION PERIOD ENDS DATE:                                              

WATCH THIS DATE CAREFULLY. Even though seller does not have to make repairs or give credits under an “AS IS” contract, it is nonetheless common for buyers to ask for some repairs or credits anyway (it’s just part of the game). However, if you do decide to require some concessions from the seller, it is not enough to simply say so by the end of the Inspection Period, you must also get a contract addendum signed by both parties before the end of the Inspection Period. If you do not get a signed addendum in time, seller does not have to do anything and you may lose your deposit. This is a common error. The best way to request a seller concession (repair an item or give credit for it) is to say: “I need this:_____. If you (seller) do not agree to this, and we do not have a signed contract addendum saying so by the end of the Inspection Period, then this contract shall be deemed terminated, and the deposit is to be returned to me (buyer).”

LOAN APPROVAL PERIOD ENDS DATE:                                    

This date is the cause of the greatest confusion. This is what this date really means: “the date when I decide whether I am going to risk losing my deposit if I don’t get my loan”. If you have gotten a loan approval from your lender by this date, then you must notify the seller of this in writing before this date ends, and thereafter you will no longer be able to get your deposit back if you do not close (with a few rare exceptions). If you do not have a lender approval that you trust and believe in by this date, then before this date passes, you need to do one of these 3 things in writing to the seller:

1. Terminate the contract and get your deposit back. This is self-explanatory. You can actually do this well before this date if you are pretty sure you won’t be able to get the loan you specified in the contract; you do not have to keep working at it up to this date.


2. Tell the seller that you are waiving the loan approval. The trade-off here is that the seller can no longer unilaterally cancel the contract, but if you do not close (for any reason, including inability to get a loan), you will lose your deposit. So, if you choose this option, you risk losing your deposit, but at least you do not risk losing the house (as long as you close).


3. Ask seller for a contract amendment to extend the loan commitment date to get additional time to get your loan approval. Sometimes sellers agree to do this, sometimes they don’t, and sometimes they agree but want something from you in exchange (such as a larger deposit, a higher sales price, an extension fee, or that some or all of the deposit be given to the seller right then and there). Sellers are not required to give you additional time. It is their choice. If you ask, be sure to do so and get an answer before the Loan Approval Period ends, so if the seller says no, you have time to decide whether you want to try options (1) or (2) above.
   

             Suppose you pick none of the above and simply do nothing. This is the worst of all possible worlds. Do not make this mistake.
   If you remain silent (either intentionally, or accidentally because you forgot about the date), you will be deemed to have waived your loan approval and placed your deposit at risk, and also, for 3 days after this date, the seller can terminate your contract without your consent and sell the home to someone else (however, they would have to refund your deposit). In other words, if you allow this date to pass without acting, you are in danger of losing either the house (if the seller chooses to terminate) or your deposit (if you don’t close), and you do not get to pick which one happens. So, do not remain silent or forget about this date.

CLOSING DATE:­                               

This is the date when you must close. If you do not, most times you will lose your deposit unless the delay was caused by the seller. It does not matter if your lender caused the delay, you are responsible for your lender since you picked them, so it does you no good to blame the lender. This is why it is very important to make sure that when your lender says you are approved, that they are really done, and nothing else is needed.