[Katiegirlisme]

[F]Buyers have been under contract for 6 months and were due to close escrow this month-they have been living in my home and paying rent. My Realtor just received a letter saying they had to cancel the escrow because they are getting a divorce. They said that neither of them can qualify for a loan on their own (although they did, according to what they said prior to this, qualify together).<p>

My Broker believes the Buyers are supposed to get their money back from escrow. He said that their cancellation is due to the fact they can't get loan approval. He thinks that since they are stating the fact for the cancellation is because neither can get loan approval (individually-since they are getting a divorce)-the escrow deposit should be refundable.<p>

I think NO. I believe that my agreement/contract wasn't based on whether they could qualify for a loan individually, my contract was for them, as a couple, to buy my home and get a loan together. So, just because they decided to get a divorce shouldn't be my problem. I have no problem (much) re-listing my home but I do not feel they should get the money being held in escrow. The buyers and their Realtor had already told me they were approved for a loan a month ago.<p>

I need to support my theory that it's their circumstances that changed and it's not the same as both of them not qualifying for a loan.<p>

Am I right or am I wrong?<p>

Thanks... Kate</p></p></p></p></p>

[Fr_Chuck]

You will need proof that they were approved for the loan before, If you have or can get a letter from the lender stating their loan was approved.

And/or they will have to furnish you a number of denial letters NOW showing they have tried to get a loan, so if you can prove they had as a couple applied for a loan an was approved, that makes your case, or at this time, both have to apply for the loan, normally at least twice and be denied.

Since the cause of their backing out is really the divorce.

[Katiegirlisme]

I understand what you are saying and I don't know if I can get the loan approval in writing. I'm certain that neither of them actually applied for a loan on their own because I believe that the house is too large and too much for either of them, individually, on their own.

But are you saying that they have to provide proof from at least two sources that they were turned down (individually)?

As it is now, I don't want to make them mad because the wife wants to stay in the house and continue paying the high rent, which helps me tremendously. The house is kept immaculate and they have actually improved the property to my benefit (sprinkler system, etc). And she told my Realtor that she would not interfere with showings, etc.

I am now thinking of not making a stand on the escrow deposit and try to just resell the house (only then refunding the deposit) if it goes into escrow soon.

Thanks for the response. If push comes to shove, I'm glad to know they would have to, at the very least, prove this to me about the loan approvals.

Thanks.. Kate

[ScottGem]

What does the contract say? Most such contracts are usually made pending loan approval. If that's the case they are probably due the money back.

[Katiegirlisme]

The original offer and subsequently signed purchase agreement included that it was based on no contingencies in regards to inspections, etc. but I believe that the one box that was checked and remained contingent was regarding the loan. And despite the fact that their Realtor told my Realtor in the middle of February that they had loan approval and were going to close by mid-April... this was never disclosed to escrow so they could remove that contingency.

Kate

[excon]

Hello Kate:

Hmmmm. You've got a prospective tenant who's willing to pay your high rent and you know she keeps your house up.

I don't know. You can piss her off by being a harda$$ about the escrow... Or, you can refund it, and take it back in the form of first, last and a security deposit...

excon

[Katiegirlisme]

I know what you mean. I don't want to piss her off and want her to continue renting until the house is resold. So, maybe what I want is to hold it (the deposit) hostage... :)

She is paying a higher rent because it was part of their offer to cover the mortgage payment for the six months that they felt it would take them to be in the position to buy the house.

Kate :)

[Fr_Chuck]

The issue on "loan approval" means that the people have to make an effort to get the loan, if no efforct is made, then normally they can't get it back. Unless you OK it. But it sounds rent is more imprortant for now