Tight closing dates can create headache
Q:
A couple of months ago we sold our old home and bought a new one. We had to sell the old home first in order to get the money to buy the new home. Needless to say, it was a nerve-wracking process.
The timing had to be perfect so that we would not end up homeless, which meant that we had to close on the old house in the morning and then turn around and close on the new one in the afternoon.
To do this we planned to move out of the old home on Monday, do the two closings Tuesday and move into the new home Wednesday. We planned to keep our furniture on the truck a couple of nights while we stayed in a hotel.
So much for plans. The move, to put it mildly, was a nightmare. The movers were late, did not have any permits, had to park illegally and were eventually shut down by the police and went packing (no pun intended).
Half of our furniture was still inside the house. Meanwhile, I was frantic since the buyer was supposed to be coming back for a final walk-through, and she was so picky I was afraid she would walk out of the deal if everything wasn’t perfect, which meant my deal to buy the new home would collapse and we would lose our deposit.
The movers were finally able to send another truck, find a legal parking space (halfway down the block) and finish moving us out. Everything went through, and we are now in our new house.
Since then, I’ve heard that I didn’t need to be quite so hysterical because either the buyer or the seller can extend a closing in extreme circumstances. I was wondering if this is true?
A:
Most standard purchase-and-sales agreements do include a provision that allows the seller, in extreme circumstances, to extend the closing for up to 30 days without penalty.
If for some reason – weather, accident, movers unable to complete a scheduled move, etc. – a seller is unable to complete the closing at the appointed time, the deal will remain alive for another 30 days.
A buyer does not have this protection automatically written into the agreement. So while as a seller you would have been able to extend the first closing, as a buyer you would not have been able to extend your second closing – unless, and this is a very important point, some language to this effect is added to the P&S. Your hysteria was warranted.
It is very important for a buyer to add at least a seven-day grace period to the closing date. Such an extension is not automatically included in the P&S, so buyers need to add it in themselves.
Suppose the bank is not ready to close? It happens. Suppose you are in an accident on the way to the closing? It's unlikely, but it could happen.
Suppose you could not close on your first home in the morning because the movers did not get you out in time, which meant you could not buy your new home in the afternoon.
As you can attest, this can happen. Both buyers and sellers need to be able to extend the closing if they have to. Sellers automatically have this protection written into a P&S; buyers need to add it.
