Q&A: Your Loan Hits a Delay You Did Not Cause Mid-Escrow. What Happens to Your Contract?

This question shows up in a specific tone of voice, usually a few days before a deadline. The buyer did everything right, and then something outside their control stalled the loan. The employer is slow to return a verification of employment. A tax transcript or a piece of income documentation is delayed by someone the buyer does not even work with. The appraiser cannot get to the house until next week. The buyer wants to know whether the deal is in trouble. Here is the plain version.

The purchase contract runs on dates, not on reasons. There is a date tied to the loan contingency and a date for closing, and neither of them pauses because a third party is behind. If a deadline passes and nothing has been signed to address it, the seller may have choices you would rather they did not have. The delay itself is rarely what hurts a buyer. The missed deadline with no paperwork is.

Here is the short list I walk buyers through.

First, call the lender the day you learn something is stuck. Ask exactly which document or verification is missing, who is responsible for it, and what the lender can do in the meantime. Sometimes a different form of documentation is acceptable. Sometimes the lender can keep the file moving on everything else so that the one missing item is the only thing left.

Second, go to the seller early with a specific request. Have your agent explain what is delayed and how many days you need. Sellers are far more willing to sign a short extension when they hear about the problem before the deadline than after it. Most would rather extend than put the home back on the market and start over.

Third, get the extension in writing and signed by both sides. A conversation where everyone agrees it is fine is not an extension. An addendum is. Your agent will know the form your contract uses.

Fourth, keep a written record of every message about the delay. If there is ever a disagreement about earnest money, that record is what tells the story.

What trips people up is assuming that being blameless is the same as being protected. It is not. The contract protects the buyer who acts on it, and the buyer who acts fast usually keeps the house.

Whether a missed date puts your earnest money at risk depends on the exact language in your contract, so ask an attorney before you rely on anyone's reassurance. Questions about the loan itself belong with your lender.

This is general information, not legal or tax advice.

Search homes in the North Valley: https://www.previewarizonahomes.com/?utm_source=blog_pah&utm_medium=marketing&utm_campaign=daily

Jon Hegreness, REALTOR / Associate Broker, Howe Realty
(623) 826-0888 / JonHegreness@gmail.com / License BR540940000
9059 W Lake Pleasant Pkwy, B-200, Peoria, AZ 85382
previewarizonahomes.com