This “seems” like a simple issue delaying our closing…?

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We found a great home that has recently been foreclosed. They accepted our offer on September 4th with a closing date of September 30th. We have been approved for a FHA loan, and have gone through underwriting. We paid earnest money, had a FHA assessment, paid for a home inspection, bought home owners insurance, etc. over $ 3,000.00 invested thus far.

The day before we were due to close, I got a call from my mortgage guy saying there is a problem, the company listed on the title is not the company that accepted the offer. They are apparently “sister” companies and an attorney gave Power of Attorney to the wrong company? Unknown to me, they (our mortgage company and the title company) were working on this for over a week with no responses from the owners. Here is the note we got on September 30th from the title company….

“First of all the Bank never gave “REO Company 1” (the company that signed the offer) Power of Attorney to sign the contracts, etc. so the contract needs to be re-executed with “REO Company 2” listed as the seller and signing. The other issue is that this property was incorrectly vested when the foreclosure was done, so they have to have the foreclosure attorney correct the vesting to read “REO Company 2”, instead of “REO Company 1″. We previously addressed this with our contact over there when the title work came back and was told it was fine and that they could sign off that way as well. Apparently that person did not know what they were talking about because now they are stating it is wrong……” she continues…

“With all that being said, we unfortunately will not be able to close this today. They are supposed to get back with us later today to let us know the time frame on corrective vesting deed and we will also need the agents to revise the contract and get it re-executed. Any expenses incurred by the buyer because of this delay will need to be addressed between the listing and selling agent and approved by the seller when the new contract is executed.”

*We rewrote the offer (no change n purchase price and have extended our closing date. We love this house and am not willing to walk away.

The bank that owns the property is located in S. Carolina, their lawyer is located in Florida, the REO Company 1&2 is located in California and the property is in Wisconsin and listed by a local real estate company.

We keep hearing from our mortgage guy and my real estate agent that we will get this house, no one else can buy it out from under us, etc… questions are this….

HOW LONG can this take to get resolved?
Can some one buy it out from under us?
Can the price change?

1 Comment
  1. Reply
    April 30, 2011 at 12:45 am

    That is a lot of questions, but I will give it a try.
    The original accepted offer is a valid contract and binding on the parties that executed it. It’s just that one party (the listed seller) has committed to sell property they don’t have clear title to. This means they better get this corrected quickly so they’re not in breach.

    The offer should have a “Close by Date”, which is really an expiration date for the contract. Both parties have at least until that date to perform.

    Theoretically, the record owner of the property could sell it to somebody else while you’re waiting for your “seller” to gain clear title. I believe this is unlikely as what you’re dealing with is mostly a paperwork issue rather than fraud… far.
    The same reasoning would also permit the record owner to not accept the price of the “new” offer (when they get around to presenting it for you) and counter with a higher price. I believe this is also unlikely because it isn’t as if they didn’t agree to the price, they just made a mistake as to which of their entities actually owns the house.

    I don’t think you’re hosed on this….just inconvenienced.
    So, I would suggest strongly to the listing agent (that facilitated the acceptance of the offer by the ineligible seller) that they kick in part of their commission towards your closing costs for the inconvenience. They should have known who the legal seller was when they listed the property for sale and their negligence is the source of your inconvenience. If you don’t get any satisfaction, you can always submit a complaint (after buying the house) to the state real estate commission.

    Good Luck with your home

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