Home seller is in advantageous position
Q:
I found a new house I wanted to buy and made an offer on it. Things progressed along very well and I thought everything was fine. I needed the proceeds from the sale of my old house in order to close on the new one and was able to find a buyer. We set the closing date for the old house one day before the closing for the new house.
The old home closed without a hitch, but I never closed on the new house because of a title problem. Now I’m living in a motor home in my parents’ driveway, and I’ve had to put all of my furniture and other stuff in storage.
Who is responsible for all of these extra expenses, my attorney’s fees and other costs? Is the seller responsible? Doesn’t the seller have title insurance for this kind of problem?
A:
The seller of the house is not responsible for any of your expenses related to the non-purchase. The seller undoubtedly did have title insurance, which would cover any loss or damages he suffered as a result of the title problem. Title insurance covers the policyholder – i.e. the owner of the house; not the buyer.
Any rights to damages a buyer might have would come under the purchase-and-sales agreement. And this too won’t help you much.
Under a standard P&S, the seller must deliver a clean title to the buyer. If the seller is unable to do so, the buyer has the right to go ahead and purchase the property anyway or get his deposit back without penalty. If the buyer decides to walk away, he has no claim to receive reimbursement for any extra expenses.
I know this is not the answer you were hoping for, but on the brighter side, you probably are not harmed as much as you think you are. If you had indeed bought the house as planned, I’m sure that your expenses – closing costs, mortgage, taxes, utilities, insurance, etc. – would be quite a bit more than your expenses are now for renting and storing your furniture.
And if we keep looking at the glass as half full, consider that we have a buyer’s market. You have already sold your old home, which is more than many sellers have done, presumably have a very solid down payment and are now free to pick and choose and bargain for a new home.
In this market, where some sellers are having trouble selling, some buyers are having trouble getting financing, I think you are fortunate indeed to be in the situation you are. Take advantage of it.
