Contractual Assent . . . and a Veto Power
[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
To successfully change the closing date of a home sale, which of the following must agree?
A. The Buyer.
B. The Seller.
C. The Buyer’s lender.
D. The Buyer’s title company.
E. The Seller’s title company.
F. The Realtors (Listing agent and Buyer’s agent).
Correct answer: all but “F.”
If you think that’s a lot of parties to sign off on a change . . . you’re right!
Which is why it seldom happens — especially within 7-10 days of the originally scheduled closing (and especially between April and July, prime time for closings following the super-busy Spring market).
Privity of Contract
While the title companies don’t get a contractual say in changing the closing — that requires a Purchase Agreement Amendment, signed by both the Buyer and Seller — they effectively wield a veto, especially over a desired faster closing.
That’s because the title company representing the Seller must comply with various filing requirements, which can be especially time-consuming when an estate or trust are involved, and the property is Torrens (= evidence of legal title; the older system is known as “abstract”).
Of course, de facto veto #2 is wielded by the Buyer’s lender (assuming it’s not a cash deal).
Before lenders will fund a mortgage, they must finish vetting both the Buyer’s finances and the home they intend to buy, which in turn requires requires marshaling the Buyer’s W-2’s and tax returns, having the home appraised, etc.
If the lender’s underwriting department** can’t accommodate a faster close . . . also no dice.
P.S.: other things affected by a changed closing date: utility bill cut-off’s; moving company arrangements; and insurance coverage.
**After the lender has completed underwriting, they typically provide what’s called a Written Statement that ultimately gets forwarded to the Seller. Once that’s delivered, if the Buyer doesn’t close, their earnest money is non-refundable.