We are in the process of buying a home in PA. Upon accepting our offer, the seller asked us to sign a "Time of Essence" addendum which awards them 2% of the purchase price monthly, prorated on a daily basis, for each day the deal goes past the closing date if closing was delayed "due to the purchaser's actions". Is this a common request from sellers at this point in a real estate transaction? Is that an unusually high penalty to pay for a delayed closing date? Is the phrase "due to purchaser's actions" too vague?
1 Answer from Attorneys
It is not a customary request. If it was marked on the agreement that you signed and it was added together with the seller's signature, that was not an acceptance of your offer, it was a counter-offer, and you do not have to agree to it.
There have been occasions when settlement was delayed because of, for example, the buyer's mortgage not being ready. The seller is carrying it's own mortgage and other expenses, and may be delayed in the seller's purchase of its next home, or may have already purchased the new home and is now carrying 2 mortgages. In order to extend the closing date, I've seen buyers and sellers agree on the buyer's picking up some of the seller's expenses, often by an adjustment at settlement.
The amount should be substantiated in some way so that it's not just an arbitrary amount.
"Due to purchaser's actions" could be refined, for example, to limit it to purchaser's own action or failure to act when it should have. The buyer doesn't want to give up rights under an inspection or mortgage contingency if the deadlines for a contingency would cause missing the deadline for closing.
The examples I've given are not meant to be the only ones, nor should the language be used without getting legal advice.
This response is not legal advice, since I do not have all of the information that would be required, and I do not have a representation agreement with you.
* If the answers to your question confirm that you have a valid issue or worthwhile claim, your next step should almost always be to establish a dialog with a lawyer who can provide specific advice to you. Contact a lawyer in your county or township.
* Another reason for contacting a lawyer is that it is often impossible to give a good answer in the Internet Q&A format without having more information. The unique circumstances of your situation and things that you may not have thought to mention in your question may completely change the answer. If you want to be sure that you have a complete answer to your question and an understanding of what that answer means, establish a connection with a lawyer who practices in the area of your concern.
Related Questions & Answers
Exwife and I are not on good terms. my name is still on the home which she and her... Asked 6/13/11, 8:49 am in United States Pennsylvania Real Estate and Real Property
My Mother set up a Life Estate putting myself and my three other siblings on the... Asked 6/11/11, 9:26 am in United States Pennsylvania Real Estate and Real Property
What can I do if i have filed a loan modification and it has not been approved in... Asked 6/10/11, 2:06 am in United States Pennsylvania Real Estate and Real Property
My mother in law passed away 5 years ago. we tried to sell her house which needed... Asked 6/08/11, 11:04 am in United States Pennsylvania Real Estate and Real Property
We just purchased half of a duplex from a Management Company who is currently still... Asked 6/07/11, 8:25 am in United States Pennsylvania Real Estate and Real Property