Lost Financing for a Home Purchase and Now the Seller Wants to Sue

[Anonymous]

Forgot to answer you....my agent was not the seller's agent, but she might as well have been.....same with the "buyer's broker".

[Jazzzy]

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@Anonymous wrote:

Our FHA addendum didn't use those exact words.  You are right about what you said....we've had no one helping us through this.  It's funny that you called the seller a bully because this is EXACTLY what we have said about him from the very beginning (along with a few other words).  Now that they put the house back on the market, should we talk with the attorney about the lis pendens or wait until we know for sure that he plans to sue?  I could see him being the type to take the home off the market if we put the lis pendens on it and proceeding with court, but if we don't force his hand into signing the mutual release then I seriously doubt he will.  I really don't think that he would win in court so I guess if he wants to go that route, we can.  I honestly lost financing due to financial aid deferrment/IBR issues.

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I don't understand why you would put a lis pendens on the house OR pay any money for an attorney right now. Looks to me as if the seller has moved on.

Send a certified letter to the broker telling him/her that you want your earnest money back.

[Anonymous]

Because he is refusing to release us from the contract and has repeatedly said that he plans to sue.  Just because he has relisted the home does not mean that he has moved on.  It wouldn't surprise me if he didn't sell the home and then turn around and still sue.  The lis pendens would force his hand to sign our original mutual release so that this is done and over for good.

[Jazzzy]

He doesn't need to release you from the contract. You were unable to get financing. The contract is done.

[Anonymous]

I personally agree with what you are saying, but he is a jerk and claims that I didn't in good faith try to get financing (even though I had preapproval and the loan fell through the week beofre closing due to financial aid issues and what I feel was missed on the lender's end).  So he said that if I didn't close, which obvioulsy I couldn't, he would proceed to court.  I cannot make him stop unless he signs the mutual release form to completely end it and he refuses.  So this is why I am SERIOUSLY thinking about the lis pendens.  If he doesn't sign it then he won't be able to resell the home and if he does sign it, he cannot sue me.

[Anonymous]

I think I am just a little confused. And I think the seller might just be 'all talk' and will not actually go through the trouble of suing you. He would have to prove that you did not pursue try to obtain financing and how can he do that?

Contracts fall through all the time. These things happen. I would just focus on getting your earnest money back and moving on.

[FrugalRican]

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@Jazzzy wrote:

He doesn't need to release you from the contract. You were unable to get financing. The contract is done.

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This was my understanding of it as well.

I think the next move is the sellers'. And I am willing to bet they won't do anything if they are relisting.

[Anonymous]

The only thing I would assume to do is get a letter from your mortgage company saying you were flat out denied. Then get something in writing from 2-3 other companies stating what their minimum credit score is and a copy of your credit score to show the financing wasn't possible. Reread your contract and find any clause you can about not getting funding. Then just put it all in a safe place and wait. He's probably trying to scare you into staying into the contract, but if he sells the house to someone else, he'll -hopefully- just let it go.

Our real estate agent put "contingent to financing approval" even though it said it in the contract. She said that she always put contingencies because she carries liability insurance and the sellers can actually sue her over a failed contract. Makes me wonder if that's why your agent told you to seek a lawyer, to get the heat off herself.

[Anonymous]

Btw, purchase contracts expire. I was told that if ours was expired and we didn't sign a new one, that they could choose to relist the house or accept other bids. Something to look into in case you can reap any benefit from it expiring.