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So what's a closing date anyway?

Transfer of Title...

Is a closing date...date of transfer...date of conveyance, what ever you might call it in your area, an important piece of the purchase agreement?

Last week I showed a house...a nice house everything my buyer client was looking for. This listing was showing active in MLS with a kick...meaning it had a 48 hour kick out clause. This is a fairly common contingency in our area which is used when a seller has accepted an offer from a buyer who must sell their present residence to buy.

The kick out clause allows the seller to continue to market their property while giving the buyer some additional time to sell. IF during that time frame another buyer comes along who does not have a home sale contingency the seller can entertain that offer and initiate a kick out clause. The clock is now ticking and Buyer # 1 has 48 hours to remove the home sale contingency, provide poof they can purchase without selling or their agreement becomes null and void.

Sound easy?...Well it can be and then sometimes it's a nightmare. Usually we have standard addendum's we use so that as agents we are not drafting legal documents. In NH it's illegal to practice Law and sell real estate without a license. So anyway all REALTORS have access to approved forms, contracts and addendum's that are available on line via our REALTOR state association. They're free and easy and we have a whole library full of every imaginable addendum an agent might find themselves needing. You simply click add the names, property address, print and your done...a very nice benefit if you ask me.

So just what am I getting at you might be thinking?

Well, I do the showing since the listing agent assures me that Buyers # 1 won't be able to perform without selling their current residence and my buyers do not have a home to sell...sounds pretty good...doesn't it?

My buyers love the place...of course!

We write up a very good offer with a close date 5 weeks out and contingent upon the seller initiating the 48 hour kick out and buyer # 1 signing the release. We'd technically be in second place only until Buyer # 1 signs the release. A formality the listing agent tells me as he is sure that buyer # 1 can not buy without selling and would not be able to afford a bridge loan in any case.

Okay, our offer gets accepted and all looks good. Nothing to do but wait for the release. We wait and finally get a call from the listing agent at what would have been the end of the 48 hour period.

Listing agent... "We have a... ummm problem..."
Me..."What kind of a problem?"
Listing agent..."The buyer's agent tells me the buyers won't sign a release."
Me..."Wow, can they get financing then?"
Listing agent..."Ummm I dunno."
Me..."Okay so what are you saying?"
Listing agent..."They won't sign."
Me..."So how long do we have to wait for their closing date to come and go?" I'm figuring it to be a few weeks out and my buyers, I knew, wanted it and would wait it out if need be.
Listing agent..."Well uhhh that's part of the problem...we don't have a closing date!"
Me..."What?? No closing date...How could that be? No closing date...no contract...not a valid contract in my opinion...BUT why would you have your seller sign a contact without an end/closing date? And what about the addendum...the kick out clause...gotta have a date on that?"
Listing agent..."Well ummm that's the other problem. It's a loosely written addendum written by the buyer agent and has no date."

Me ..."A Loosely written addendum...no closing date? How in the world could a professional let that slip by them?"

So guess what? No dates, anywhere and this contract was fully executed by all parties and now buyer # 1 won't sign a release...even though I know it's not a contract...I'm not an attorney... just a real estate agent who happens to know contract law.

Now these sellers will need to hire an attorney to help get them out of an invalid contract that they never should have signed to begin with. They are not happy sellers and the listing agent and his broker are both squirming. They are hoping that the seller just plays nice and gives buyer # 1 a little more time, they know if the seller hires an attorney that they will be the first one the attorney points a finger at.

This just really frustrates me! Unbelievable...

Jay and Monika McGillicuddy

Monika McGillicuddy

Serving Southern New Hampshire and Rockingham County

Monika McGillicuddy Real Estate Training Website

NH Real Estate Blogs

Prudential Verani Realty

Hampstead NH Real Estate

603-548-7728

Posted by Monika McGillicuddy~REALTOR®~ N.H. Real Estate Broker & Trainer on 01/08/2007 06:31 PM

Comments (61)

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61 Comments on So what's a closing date anyway?

JAN

2007

This is a prime example why some states don't allow real estate agents to write purchase and sales agreements.

Agents need to be more careful and they also need to be properly supervised.

i could see one person forgetting to put in a date (well I can't, but hypothetically lol), but the second one? This is absurd! Good luck :-)

Good grief! Talk about someone asleep at the switch....you just wonder how on earth that agent allowed her seller clients to enter into an agreement with no ending of any kind. When I do those kick-out clauses, I use number of days from certain things happening as it's most difficult to pick an actual date until the buyers get a contract on their house.

We had a very weird situation happen in my office not all that long ago. Buyers in that case wouldn't sign the release either. They held out until the sellers ended up having to pay them off to get them out of the picture. Perhaps that's what these buyers are doing as well, knowing full well they can't perform.

Ann

Carole...I'm starting feel like for some reason I'm attracting all the nuts, between this and the biker chick..Yikes!

Jay...This agent and his broker both should not be allowed to practice real estate. I simply can not understand how they can be sooooo STUPID!

I am backed up on commenting on all the posts that have been emailed to me.

I will be back as soon as I can.

TLW...ROAR!

Ann...That's what I think they want. It will cost the sellers money to hire an attorney even though clearly the contract is invalid...a judge will look at the intent of the parties and maybe even the ineptitude of the agents involved! But sadly it will cost the sellers and my buyers!

Carole, now you see why Monika and I are together, she sure knows how to attract the nuts.

I'd say it's a crafty buyer agent who got a listing agent who wasn't paying attention. shame on both of them!

Moni K,

WOW, Okay does this kind of offer happen often? How long is a typical Kick-Out clause? Can a Buyer legally stop the Seller from selling to another Party under This Clause? Have you ever had any of these type of contracts before and if so have any of them worked out smoothly?

I really feel bad for you. Didn't the agent's broker catch the error? Agents are supposed to be supervised

Monika, you are right, bikers, nuts, and dummies, you are in the wrong business.....LOL

Why not just NOTICE the buyers on the contingent contract that they 48 hours to cure the contingency. If they don't, their contract is dead. Actually, without a closing date, there probably isn't a contract anyway.

A seller doesn't need a RELEASE from a contingent buyer when the contingent buyer can't cure. These sellers can't be held hostage to a bad contract.

These RELEASES that everyone always believes the seller needs to sell their property is nonsense. The RELEASE is for the earnest money.

The above information is approved by my attorney. We've all had instances when the buyer tried to hold the seller hostage when the buyer couldn't perform. I just ignore them and go on about the business of selling the house. That famous RELEASE IS FOR EARNEST MONEY. If the buyer doesn't want it, look to the state statute for release of earnest money. Shucks, the seller might get that too.

This is one part of real estate brokerage that can be exciting because the agent on the other side obviously hasn't a clue.

Lenn

LOL....there was really no reason to put the kick out clause in, if there's no way to enforce it. Did the listing agent actually READ the contract or did he just hand it over for the seller's to sign. I would be fuming if I were stuck with no closing date and no way to sell my house to anyone other than the first buyers....

I think he should get the DUH award.

BTW - In CA we have a cancellation of contract, release of deposit & joint escrow instruction form - and there is a civil penalty for refusal to sign if no good faith dispute exists.

Leigh...Crafty Buyer agent or stupid one...I'm not sure but definitely a stupid listing agent.

Moni C...Kick outs are fairly common albeit I don't like them much. Typically they are 48 or 72 hours from notification and the entire clause can run however long it takes to get the buyers house UA or if another buyer comes on the scene as described in my scenario. I've had several that have gone smoothly and few that haven't.

MaryAnn...apparently one caught the error in time. Can you imagine that??

George...I've had my share for sure. I'm shopping for a Harley Chicks rule tee shirt...LOL

Lenn...The buyers were noticed but the release of escrow requires signatures by all parties. I agree and believe they do not have a contract to begin with but the buyers refuse to release their interest in the property and until the close date passes with them not performing...of course not having a close date means it could go on for how long????? Not a valid contract is my stand on it but I'm not an attorney! Sellers are seeking advise and I'll be curious what the advise will be. I feel the listing office will try and have the sellers give buyer # 1 some more time. It's a mess!

I want to see a picture of that if you find one Monika. Get one for Jay too....LOL

Christy...My feeling is that he did not read it especially since he said that the buyer agent drafted a loosely written addendum...Bet Mr Dud...did not read it word for word...maybe he thought he knew what it said but really didn't. No excuse for him in my book!!!

MaryAnn...We don't have that type of clause...wish we did!

George...I think a trip to Seacoast Harley is in order...wonder if I could get Jay to take me?

Monika - you and I, together, atract the best! But don't you have fun? I see where Lenn is coming from, but unfortunately, the sellers are getting advice from a not so bright agent. As much as they don't need a release, they need their agent to do their job - could a call to that agents broker solve anything? (they would probably be afraid of a lawsuit) - DON'T KNOW WHAT TO TELL YOU MONIKA - go get yourself a Harley.

LOL..Ines...I'd love one but my guy is a golfer and he'd not ride one in fear he'd fall and ruin his swing or something like that..his stance and his grip..whatever it is that could be ruined and then he'll ruin his golf game!

Ines..my feeling is the broker is trying to cover his and the agents butt...lawsuit fear is a very realistic fear for them. LOL just my week for the nuts I think!!! Definitely a type of job where you simply don't know what will happen next.

Monika- Dang Girl! Do they come out of the woodwork for you?? In that situation we would not need anything signed by the buyer. And contract dates cannot be missed, else the contract is completely unenforceable. HERE is a copy of what our buy/sell contracts looked like in 2006. They were updated 1/1/07 and I dont have a "link" as it is programmed in my 'puter.

WOW! The agents involved (excluding yourself of course!) have to get a clue! How can TWO agents miss the fact that a contract not have a COE????

Mariana...Thanks for the link but good grief...11 pages long!!!

Problem here is we have several versions of a purchase agreement and not everyone has to use the standard forms. Our agreements are either 3 or 5 pages long. I personally have never seen a P&S without a closing date ..ever and can't imagine an agent letting their client sign it!

I'm telling you I'm attracting them this week, I'm almost afraid of what the rest of the week will bring...I'm still trying to recover from the Biker Chick!!

Kaushik...LOL thank god you didn't add me to that mix! I have no clue how they missed it and of course the broker as well. pretty sad if you ask me.

Agents (all of us really) need to be thorough from the get go regardless of the state we operate in. No excuses. This is a great post. I can relate.

Ken

Monika,

Thanks for sharing this train wreck. It makes me wish I was licensed in your state, because it sounds like some of the cases I occasionally get. I'm going to use this story when I teach on contracts. Your buyer may even have their own claim depending upon state law and the representations made by the listing agent.

JAN

2007

The saddest part of this whole mess, I bet the agents involved will probably repeat the same mistakes over and over.

Our terminology is that the first buyer is bumped. Hopefully bumped gentley. I have never seen one without dates,,, WOW

Well Done Monika

A "timely" reminder that not all agents are created equally. Gee this contract is IMMORTAL!

Wow. What a story! Poor folks. and poor you, Monika. It sounds like it would have been a dream sale otherwise. How difficult is it to notice that a blank hasn't been filled in?

Stories like this still serve to keep me on my toes. =) I'm still learning as a new agent and go to my broker all the time.

Now about this biker chick..... did you blog about this earlier? You've got me wondering about the details!

Monika, thanks for the post and for educating that LA. That LA done a poor job in representing the customer. Just imagine how many buyers would be running rampant if that was ever allowed. Whenever I have an offer, I'll always take the time to go over it line by line with my customer. Seems like the LA just got carried away and now it can be very costly.

Ouch!

Some sleepless nights, I betcha!

I sure would like to see the "loosely written addendum."

As a buyer's agent I think the original buyer's agent should be held responsiable also. Maybe a stern call to her and her broker would help to persuade buyer's #1 to quit playing games and move on.

Monika - What a great way to start the New Year! I concur with Lenn and Sharon on this one - and you may want to push the issue with the Listing Agent's Broker in the interests of your client. Also - can you update your post with links to the free forms you mentioned? Always interesting to see how contracts in other states are written.

This is why people look at realtors as having our own agendas. This is just embarrassing to our profession. Who, in their right mind, would allow a client to sign a "loosely written" anything??? Both agents are irresponsible. Now the seller will need to consult an attorney and add those fees to their closing costs. Shame, shame!! They need to consult an attorney and lose their agent!

Unbelievable! In the first place, ours have the ability to put any amount of days in that you want for the contingency to be waived, but, in the event that it isn't waived the form itself isn't necessary (according to one real estate attorney friend) as long as we can prove that they received it. In other words, email with receipt, certified letter, etc... would hold up. I can't imagine how anyone would accept a contract without a closing date though... WOW!!! I think your Real Estate Commission ought to be looking at that one!

The Texas contracts are drawn up my a Broker-Lawyer commity so all they are is fill in the blank. You must have a closing date for the contract to be completely executed. If there truly is no date on that contract, I'm not an attorney, but I would have my sellers send the form to the title company releasing Buyer #1's earnest money and go ahead and execute the offer for buyer #2. Buyer #1 has no case as they have no actual contract. Just like listing agreements and buyer rep agreements, there must be a termination date to be valid.

O.K. If the listing agent and seller are unwilling to simply NOTICE the buyers that they have 48 hours to cure the contingency, WHICH BY THE WAY HAS NOTHING TO DO WITH THE CLOSING DATE MISSING, why not just take the page of the contract and fill in the settlement date???

If they ignore that, send an addendum.

BUYER AND SELLER AGREE THAT SETTLEMENT IS SCHEDULED FOR JANUARY 12TH AT 11:00 A.M.

Nothing more, nothing less. Nothing that would give the buyer's agent any admission that the seller believes that there IS a contract. Hold to the position that there is NO contract.

Since the settlement date seems to have almost everyone paralized, just set it. Since there is, IMO, no legal enforceable contract in real estate without a settlement date, this contract is not RATIFIED. So, just send the addendum with a settlement date. If they sign it, settle. If they don't sign it, go to the back-up contract.

Actually, I'd probably take the original contract, write in the closing date and send it to the buyer's agent for their signature.

One thing I would NOT do is telephone anyone. This needs to be documented.

But, do it FAST or the seller could lose a good buyer.

Forget the release. No buyer or seller is held to the requirement of a signed release if the other party can't perform. THE RELEASE IS FOR REFUND OF EARNEST MONEY. THE RELEASE IS FOR REFUND OF EARNEST MONEY. THE RELEASE IS FOR REFUND OF EARNEST MONEY.

Good luck. These things can get sticky. But, follow the contract. What?? No contract??? Geez. Sell that house. And make sure your E&O is paid if it doesn't sell.

Lenn

Ugh. What an unpleasant situation, Monika. Amazing the trouble that people can get themselves into. Incredible that there is no date, the agent allowed this, and the sellers were agreeable. What were they thinking? Oh, guess they weren't.

Interesting how every state is different. I'm not allowed to write a contract. We have to have lawyers but closing dates on a contract doesn't mean much here. The closing date on contract usually says on or around Jan 9, 2006. There is an automatic 30 day extension. Lawyers can drag a closing until it fits their vacation schedule. I have to try and get a draft of the contract from the lawyers before it is signed to make sure the terms I negotiated are even in the contract. Often they won't send me a copy until it's too late. It is really important to use a good real estate attorney.

Thanks so much Ken...sometimes I think people take short cuts and obviously don't think about what they're doing! I feel so bad for the sellers!!

Steven...my buyers are hoping to still get the property and are willing to wait it out! Thanks for your comments.

Randy...I think this agent is learning a very valuable lesson and my "gut" tells me that he'll not forget it.

Maureen...Is it called a Buyer Bump clause? Sounds much better than a kick out.

Allison...I love it...this contract is IMMORTAL!!!

Maggie...My biker Chick..Polished Professional story is on my previous blog and it is hysterical...I've had on heck of a week!!!

Netta...No excuse for that LA but I do think after this he will be very careful! Sad all around for everyone.

No it is called an escape clause (for the seller) we just talk about the buyer getting bumped.

Mike...I asked to see it!!! LOL I don't think I'll get my hands on it but I sure would love to!

Shannon...I wonder if the Buyer agent did it on purpose???

Tony...I have tried to push it believe me. My buyers are hanging in there! Our forms are on the member side of our NHAR website.

Virginia...It is embarrassing to our profession!!! I can't believe the LA let it slide by !!!

Chris...We also insert dates in our Kick Out Clauses...this one was written by the BA and was not on one of our approved forms! What a mess!

Donna..Ours are a fill in the blanks as well...problem is the blanks weren't filled in!!! Also the brokers hold the escrow...not a title company.

Lenn...Sellers have now contacted an attorney who is previewing everything! I think this will get sticky!

Just shows ya Jeff when things go bad they really go bad!!!

Mitchell...When I see these types of things it really makes me wonder if we should be allowed to write contracts...ours are simple...fill in the blanks but even at that some people mess up big time.

Thanks Maureen...Escape clause..Usually up here we (seller's side) insert them when we get a home sale contingency in our contract. Buyers typically don't like them! Can't blame them.

I can't believe that the dates were just accidentally left off. The dates are sometimes the most critical part of the whole addendum. I just feel for your clients now...it's so hard to compare other homes to the one you really want.

Jim & Maria...I know my people want that house and are hoping it gets resolved so that they can be in first place! Nothing else will compare as they have their hearts set on it.

Real estate, closings, and people...hmm, all make for an interesting combination and spell trouble. This is a tough business.

Phyllis Pafumi

Phyllis...It is a tough business but I really couldn't imagine doing anything else at least it's never boring. Thanks for commenting.

Monika... I agree with a few comments made, basically being thorough. So many people tend to cut corners or just want to make everyone happy. But at times, it seems to nip someone in the butt.

I do hope it gets resovled. Keep us posted.

JAN

2007

Jeff...Thanks so much for commenting. I've been doing this for 22 years and have seen a lot but never something as ridiculous as this. This is just way too much.

ack. that's incredibly frustrating. i was just talking with an appraiser today. she said she had to have 2000 hours of education prior to becoming an appraiser. 2000 hours! there needs to be more education involved than simply studying a book and take a test.

cheers,

cindy

i love staging and all things staging!

i stage to sell, live & work in san francisco bay area

www.staged4more.com

http://stagingtipsandmore.com

ps. love the picture of you teaching!

Thanks Cindy..New Hampshire requires only 9 hours of license re cert. Many REALTOR®S that I know however have way more than that. Last time I had over 60 credits but only needed 9.

Thanks for the compliment about the photo.

JAN

2007

:::::Butting In:::::::: Moni K, Just wanted to say HI! Haven't chatted with you since yesterday and Figured I would stop by..hehehe

Moni C....I found you! I was trying to figure out where you commented!

Moni K,

I sent you on a scavenger Hunt didn't I? We should make that a game...LOL

LOL...keeping me on my toes!

JAN

2007

Phylena,

It was pretty weird to say the least....no closing date- I still can't believe it.

I don't know about your state, but in Georgia - if you have no closing date... you don't have a contract.

Therefore, the first buyers are SOL. They don't want to sign? They don't need to.

I can think of two brokers that should have reviewed the work of two agents... so that makes FOUR sets of eyes that missed this.

Geez.

JAN

2007

Doug...Thanks for commenting. NH is the same must have a closing date to make a valid contract. We unfortunately can't get money out of escrow without signatures...

JAN

2007

Monika,

You are not alone! I've seen a similiar situation happen in my area. I wasn't involved, but was very close to the situation. It is very frustrating when other "Professionals" don't do their job. Maybe we are just perfectionist, you think?

Remember this, Life is GOOD!

JUN

2007

anybody see some brokers around here?

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