According to Real Estate Purchase Contract, one of the buyer's duties is to apply for a loan before loan application deadline:
What does it mean to apply for loan: following events should occur before the application deadline:
1. the application should be completed, signed and delivered to the leander
2. all loan application fees, if they apply, should be paid
3. Buyer should diligently work to obtain the Loan and provide any additional information which can be required.
Procedure if Loan Application is denied:
There are several scenarios, all of them depend of the calendar, in other words, did it happen before or after the loan denial deadline? /em>
Buyer receives written notice from the Lender that the Lender does not approve the loan ("A Notice of Loan Denial"), first of all, the Buyer should no later than 3 calendar days thereafter, provide a copy to the Seller.
Buyer or Seller may, within 3 calendar days after Seller's receipt of such notice, cancel this contract by providing written notice to the other party. It is the only clear reason for the Seller to cancel the agreement. There are other possible situations, but it is the only obvious one.
In the event of cancellation, what happens with deposit (Earnest Money)?
1. if the notice of loan denial was received by the Buyer no later than the loan denial deadlines referenced in deadline section, the deposit shall be returned to the Buyer. Please pay attention, if you are a seller, if the notice was received the the BUYER..., not seller...
2. If the notice was received after that date, the deposit shall be released to the seller, and seller agrees to accept it as seller's exlusive remedy, deposit as liquidated damages. Please pay attention, if you are a seller, if buyer last minutes decides to cancel the agreement, no matter what true reason is, if the buyer indicates that loan is denied (he may know people in loan indusry to ask him to write the loan denial notice), you will have a right only to keep a deposit because it is your exlusive remedy, in other words, you would not be able to sue.
3. The failure to cancel shall have no effect on thte Financing Condition set in previous section.
Tomorrow, I will review in more details what is DATE PLUS THREE DAYS WARNING NOTICE?
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Marina Vialtsina
Showing posts with label deposit. Show all posts
Showing posts with label deposit. Show all posts
Friday, April 25, 2008
Tuesday, April 15, 2008
Offer vs. Contract and everything about Earnest Money (Deposit)
Even though as a Buyer you are using the Contract Form to spell out all terms of your offer, this offer will not become a Contract until Seller accepts it.
What is Acceptance?
When Seller or Buyer, responding to an offer or counteroffer of the other do the following:
1. signs the offer and counteroffer where noted to indicate acceptance
2. and communicate to the other party or to the party's agent that the offer or counteroffer has been signed as required.
What if while you are waiting for Seller's response you have changed you mind, and do not want to purchase the property anymore?
Not a problem, as long as you correctly communicate that to the Seller...Talk more to me or your Agent about how it should be done.
What is Earnest Money (EM)? And as a Buyer, why do you need to submit it?
Earnest Money (also known as Deposit) is a promise that as a Buyer you will follow the rules and terms of the agreed contract. This money can be returned to you at the Title company during closing or become your downpayment.
Do you need EM to write an offer?
No, in state of Utah, you only need your good intention? However, if the offer becomes a contract, in other words upon Acceptance of the offer by all parties, this money shall be deposited in accordance with state law.
Where and When will it be deposited?
As a Buyer you should give check or cash to your agent who should request his/her broker to deposit it within three banking days after the offer acceptance to the bank. The bank account most of the time will not be interest bearable one.
As a Seller, you are interested prior to final acceptance of this offer or few days after-- request a Buyer to provide proof of the earnest money deposit as being received by Buyer's Agent.
Required amount?
While a lot of other states require earnest money to be at least 2-3% of the purchase price. Utah has no such requirement.It is personal decision between Seller and Buyer. Sometimes, you can see as little as $500 and as high as complete purchase price.
As a Buyer, because the Utah Purchase Contract is very much biased, if you play by the rules, you will not loose your Earnest Money.
As a Buyer, you can choose your deposit to be with Title company. The only thing keep in mind that title companies are regulated by the Department of Commerce, and they may have different release rules which have nothing to do with your agent.
What if EM check is returned as "NSF"? (not sufficient funds)
Very grey area, but Seller can cancel agreement if EM check bounces back.
As a Seller, good idea to specify this right in a contract.
What is Acceptance?
When Seller or Buyer, responding to an offer or counteroffer of the other do the following:
1. signs the offer and counteroffer where noted to indicate acceptance
2. and communicate to the other party or to the party's agent that the offer or counteroffer has been signed as required.
What if while you are waiting for Seller's response you have changed you mind, and do not want to purchase the property anymore?
Not a problem, as long as you correctly communicate that to the Seller...Talk more to me or your Agent about how it should be done.
What is Earnest Money (EM)? And as a Buyer, why do you need to submit it?
Earnest Money (also known as Deposit) is a promise that as a Buyer you will follow the rules and terms of the agreed contract. This money can be returned to you at the Title company during closing or become your downpayment.
Do you need EM to write an offer?
No, in state of Utah, you only need your good intention? However, if the offer becomes a contract, in other words upon Acceptance of the offer by all parties, this money shall be deposited in accordance with state law.
Where and When will it be deposited?
As a Buyer you should give check or cash to your agent who should request his/her broker to deposit it within three banking days after the offer acceptance to the bank. The bank account most of the time will not be interest bearable one.
As a Seller, you are interested prior to final acceptance of this offer or few days after-- request a Buyer to provide proof of the earnest money deposit as being received by Buyer's Agent.
Required amount?
While a lot of other states require earnest money to be at least 2-3% of the purchase price. Utah has no such requirement.It is personal decision between Seller and Buyer. Sometimes, you can see as little as $500 and as high as complete purchase price.
As a Buyer, because the Utah Purchase Contract is very much biased, if you play by the rules, you will not loose your Earnest Money.
As a Buyer, you can choose your deposit to be with Title company. The only thing keep in mind that title companies are regulated by the Department of Commerce, and they may have different release rules which have nothing to do with your agent.
What if EM check is returned as "NSF"? (not sufficient funds)
Very grey area, but Seller can cancel agreement if EM check bounces back.
As a Seller, good idea to specify this right in a contract.
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