What legal rights does a seller have when a delay in closing escrow is caused by the lender?
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What legal rights does a seller have when a delay in closing escrow is caused by the lender?
We are selling our home and all paperwork has been completed. The buyer has already been approved for the loan, all inspections and other documents have been completed and sent to the escrow office. Now the lending institution is delaying the release of funds. Escrow was scheduled to close on 11/23 and it is now 12/18. Notarized signatures were put into question, suspicion of kinship between buyer and seller and other petty issues have been raised. Due to this delay we have incurred many additional expenses.
Asked on December 18, 2010 under Real Estate Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Unfortunately, you probably don't have any recourse or rights against the lender. Lenders don't have to lend; they lend because a borrower meets their criteria. Lenders therefore have a wide, almost total discretion, to either decline to lend; to delay lending while they do additional underwriting or research, request additional documentation; or investigate issues as to the truthfulness and completeness of information and signatures; or to reduce the amount loaned or put additional requirements on the loan. Possibly if you could show this is due to some improper motive--e.g. someone at the bank has a personal grudge against you--you might have a claim; but if there concerns are in any way presented and investigated in good faith, because they have questions to be answered, there is no recourse.
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