Legal Question in Real Estate Law in Indiana
Non-contingent agreements to purchase property.
I put down earnest money on a home and signed a purchase agreement. There was no mention of the agreement being non-contingent by the sales consultant. Two weeks later, we were notified of our jobs being terminated. I contacted the sales company and their mortgage company (this was expressed in the mortgage papers to notify them of any job changes). We did not sign any mortgage documents. They sent a certified letter back stating we had been approved for the mortgage and they would take legal action if we did not purchase the property. I recognize I will forfeit the earnest money. I notifed them prior to the walk-through and two weeks before the closing that we had to halt the sale due to changes in our employment and financial stability. We did not return or sign the mortgage papers, but notifed the sales person by email. The sales consultant also allowed me to sign the purchase agreement for me and my husband without him present. What type of legal recourse will there be? Is the contract still binding?
2 Answers from Attorneys
Re: Non-contingent agreements to purchase property.
You have taken the correct action by posting here! This is a prime example of why Congress should not have changed the laws allowing real eatate brokers to associate with mortgage companies and creating the mortgage brokerage industry. Prior to the early to mid 90s, most of the loans were underwritten by banks and savings and loans who processed and approved their own loans, unassociated with the realty companies. If the loan went bad, they lost their own money. It is unlikely that any mortgage company would have approved you with a loss of two jobs. However, under present law abuses such as what is happening here are widespread! Let me explain.
The realty company has an interest in the mortgage brokerage company. The mortgage broker merely takes your application and places the loan with an independent company who underwrites the loan. Once the house sells, the realty broker and the mortgage broker get their commissions. They do not care whether you can make the payments because the independent company and you are the ones that lose. They get their commissions and you and the investor get stuck. I wonder if the title company is also associated with the realty company?
Anyway, bottom line is that you should contact an attorney! You definately have a defense to the contract!
As you can tell, I am incensed by what is happening to you! I could go on and on about this subject.
Re: Non-contingent agreements to purchase property.
I wonder if you haven't fallen among thieves? Or rude barbarians? It is very unusual to have a no-contingency contract, but it is impossible to tell without seeing the purchase agreement and disclosure statements. You may even be entitled to a return of your earnest money deposit. But, you need to gather all your paperwork and make an appointment with a real lawyer. The "sales consultant" may have violated various consumer protection regulations or may have been in collusion with the mortgage company. So, go to a lawyer as soon as possible. Don't be frightened into signing a release allowing them to keep the deposit until after you have consulted a lawyer experienced in real estate sales transactions. Good luck.
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