Sunday, November 05, 2006

Extensions on a home purchase

Just for a change, let's talk about some legal issues.

I had a client recently who was buying a house. He and the seller had signed a purchase and sale agreement that set a closing date. It became apparent that the seller was not going to complete inspections and obtain an occupancy permit by the closing date. The seller proposed an extension for the closing but proposed it so late that the deadline for accepting it had passed by the time my client received it. My client called the seller about this, and the seller said that since the deadline had passed, the whole deal was off.

Let's walk through some basic, contract points so that you can avoid sounding like that magnitude of idiot. Simply and simplistically put, if a buyer offers to buy a house and the seller accepts, there is a contract. That's what signing a purchase and sale contract signifies. If one of the parties wants to change that contract, he is proposing an amendment. If the other party doesn't accept the proposal, the contract continues unamended. It doesn't simply go away.

Lessons to learn:

1. If you enter into a contract, expect to have to perform it on time.
2. If you can't perform the contract on time, expect to have to pay.
3. If you think you can make a contract go away by proposing an amendment, expect people to laugh at you while they make you pay.


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