Additional Information:

The closing attorney for the sale of my home in Dedham, MA was aware of the necessity to payoff my FHA loan at a certain time to avoid additional fees. The payoff was rejected by my lender because it wasn’t a “certified check, cashier’s check, or bank wire”, as required by the lender’s Payoff Statement. After being contacted by the lender, he then sent a certified check which was received after the deadline and I was charged additional interest and fees. He admitted to ignoring the lender’s requirements, but refuses to reimburse me because he was not responsible for the payoff of my loan. What can I do?

ATTORNEY ANSWER:

You may have a cause of action against the closing attorney since he assumed the responsibility regarding the payoff of the FHA loan, including timeliness of correct payment. Having assumed the responsibility for payment of the payoff, he is now liable for any late fees or penalties that have resulted from his negligence or oversight. You should make a formal demand upon him for reimbursement.   If he fails to pay, you have a good cause of action against him and could seek multiple damages in court plus attorney fees and costs.  [Read more...]

Additional Information:

We are buying a home in Needham, MA. The seller signed a purchase and sale agreement to pay for our closing cost, but he says he did not know that what he signed was actually to do this. The sellers now understand that what they signed is seller’s concession towards buyers closing cost but the sellers never intended to pay the buyers closing costs and they don’t even have their own seller’s agent in an attempt to save money and not pay a realtor commission. My question is, are they liable to pay for our closing costs?

ATTORNEY ANSWER:

Yes, the seller will be liable to pay for your closing costs. The purchase and sale agreement is a legal contract.  However, the maximum amount the seller can pay may depend on the loan program, and, in some cases the amount you’re putting down to purchase the home.  For example, for FHA and USDA loans, sellers can contribute up to 6% of the purchase price towards closing costs. For FHA loans, seller concessions will soon be reduced to 3%.

The Lender may decide to disallow a specific expense on the “Closing Statement”. The Government approved closing statement is called a HUD-1, and the buyer and seller are given one to approve at the closing on the sale. The HUD-1 lists the details of all expenses and payments in the sale, and it is on this document that the lender may disapprove of an item.

Since lender approval of the HUD-1 is the final step standing in the way of completing the sale, buyers often accept the lenders terms, even though it is their loss. However, if you are lucky enough that the seller contracted to pay the buyers closing costs, then the seller is liable and he will be responsible for covering the closing costs he contracted to pay for. If he refuses to proceed with the closing, you can sue him to complete the transaction.  That is called a suit for specific performance.  The alternative is to re-open the negotiations, which can be a quicker approach.  [Read more...]