Adjusting a Closing Date without Breaching Contract
Buying a house can be a long drawn out process. Some buyers want to speed the process along while others would like to take it slow and learn all they can before making any final decisions. Either way, a buyer or a seller may ask to move a closing date.
While some contracts do not allow for a change in the closing date, there are some that will under certain circumstances.
Why Change the Closing Date
Typically a buyer or a seller is not able to make it to closing on a certain day. They may have obligations at work or with their family that does not allow them to meet. Changing the closing date by a few days to fit into both parties schedules is typical.
Two other instances that may cause one party to change a date is a home inspection or an appraisal. If the home inspection found a major problem with the house the buyer may want to hold off finalizing a deal until the seller fixes the issue.
An appraisal can show that the house is not valued as high as the seller had hoped. This can be a big problem if the lender the buyer was using will not finance a loan on a house that is not worth as much as the proposed mortgage. Increasing the down payment can help this situation if the buyer really wants to proceed with the purchase.
Sometimes the buyer and seller are able to agree on a date but there are other people involved. A title company will need to be used to finalize the sale. The employees of this company will search the title to make sure the seller does not have any liens or debts that are tied to the property. If any of these charges are found the seller must dispute them or pay them off, which can delay the closing date.
How to Change the Date
Carefully examine the contract. Work with a professional in order to be guided through the process of changing the closing date according to the guidelines of the contract. Most contracts will have a clause that says the closing date is set unless the new date is agreed on. This does leave some room for negotiation, so long as the other party is reasonable.
The seller and the buyer are important in the closing process but they are not the only people that need to be notified of changes. The title company, the lenders involved, and any attorneys who will attend closing will have to approve a date change as well.
Inability to Meet the Date
If the buyer or seller cannot close by the date that is set, the other party is able to reject or withdraw their offer. The lender may give penalties for changing the closing date. Some lenders will offer a rate lock which will allow a person to have a certain interest rate, but the buyer must close before the offer is expired. If the buyer does not close before that date their interest rate may change.
Taxes can also be affected when pushing the closing date up or back. A person’s taxes will be prorated with the date of purchase in mind. With a later closing date, a person may pay less in taxes. An earlier closing date could cause the taxes to be higher.
No matter the reason, many people need to change a closing date. Both the buyer and seller have their own lives and schedules that they must account for. When a scheduling conflict comes up or a problem with an appraisal or home inspection arises the closing date may need to be changed. Most contracts will allow for this change, but it is important to check the contract first before breaching any agreements.