Should seller refuse to grant buyer another contract extension?

Q: I’m a seller and after four months of granting home buyers contract extensions, I’m not going to grant another.

The current buyers have financing issues and apparently have made purchases and deposits on several things in the run-up to closing that have jeopardized their credit.

I’ve signed off on previous extensions, but the last contract extension is now expired. Am I still at the mercy of the buyers? A: No. Many sellers in your situation who have granted extension after extension are rewarded with nothing in the end because buyers just can’t repair their credit in time. Unless there’s a stipulation giving the finance-challenged sellers more grace time, your instinct to exit is right.

Some contracts may stipulate that the seller must give the buyers “notice to perform” within a set period, even after a previous contract extension. But if you’ve not been asked to sign off on another one or on an amended escrow agreement, you’re probably in the clear.

There’s a bigger risk of getting sued if you announce you are keeping the deposit, especially if it’s a significant sum, even if you believe you have a contractual right to do so. Yes, you have been inconvenienced, but do you want to risk going to court?

While it may be that the buyers didn’t realize that making a bunch of credit purchases before closing (always inadvisable), would count against them with the lender, that’s their “bad.” Someone, be it their lender or agent, should have informed the buyers of this no-no, although that warning isn’t required by law.

One way to largely determine whether the buyer’s contract is now kaput is to see a lawyer. Even then, there’s no sure way to know if the buyers will sue should they have any grounds.

But if I were to guess, buyers wanting to sue would be informed by their counsel that they’ve already broken the contract, which, by the way, is also expired.

Other options for you include sticking with the sellers but asking them for a larger deposit with stricter deposit forfeiture language or at least demanding a per diem for every day the closing is delayed.

It’s time to unbind your house so serious buyers can have a go at it. And next time, don’t accept an offer from a buyer without a preapproval letter.