Legal Question in Real Estate Law in Utah
Conditional loan approval grounds for terminating a contract?
I signed a contract to sell my home. Later, my agent sent me the buyer's loan approval, but the approval was conditional on the buyer selling or renting their current house. The contract does not mention a conditional approval, but does say that the contract can be terminated due to a loan denial. Can I terminate the contract on the basis that the buyer does not currently qualify?
If so, would this buyer count as ''ready, willing, and able'' and force me to pay commission to the realtor even if I choose not to sell my house?
1 Answer from Attorneys
Re: Conditional loan approval grounds for terminating a contract?
Was it a standard Real Estate Purchase Contract (REPC)? Or some other form?
This response assumes that you/your agent used a standard REPC form. You've hit a situation that "falls in the cracks." Rarely does a lender put such a condition on a loan. However, because the buyers' loan has NOT been denied you would be in breach of the contract if you cancel and if you cancel now your agent may well seek a commission.
You have some dates by which certain things are to happen, such as the settlement date. If they can't sell or rent their home by that date the contract would fail because their failure to qualify by then will terminate the contract.
It seems to me that the practical solution is to get with your agent and the buyers and see if some agreement can be reached. Otherwise you are likely going to have to wait out the completion dates (see page 5 of the REPC).
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