Seller Refuses to Sign Promissory Note
Looking for advice. In the purchase agreement it says "subject to 3rd party approval". The Lender OK's the sale but demands a promissory note for the deficiency. The Seller refuses to sell because they do not like the terms the Lender is demanding. There is nothing in the Purchase Agreement that says subject to the Lender and Seller agreeing on the terms of the sale. Seems to me the Seller is bound by the Purchase Agreement they signed with the Seller. Am I correct? Also, if this is the case does anyone have any language they use in the Purchase Agreement regarding the Lender and Seller agreeing to the terms of the sale/release?
Replies to This Discussion
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Permalink Reply by Jim Schneider on
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You really should have a lawyer look over the specific language, my guess is that this amounts to the bank changing the deal.
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Permalink Reply by Heidi White, CDPE, San Diego on
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Most Real Estate agents in most states have access to Short Sales Addendum type documents which are logically added to most Short Sale purchase agreements. These have verbiage which basically say, 'subject to Lender's Approval.'
If all it says it your case is 'subject to 3rd party approval' and the 3rd party changes the terms of the original agreement by adding something like a promissory note requirement for the Seller (even if everything else in the PA remains exactly the same) - than they are essentially changing the terms of the original Purchase Agreement, which's means they've countered with a new offer. So - the 3rd party didn't agree to the original PA and I think you are going to have a hard time forcing a Seller to proceed with the sale. But - now that's beginning to sound like RE contract law - and I'm not an attorney and will not give legal advice.
Ethically, it seems the Sellers should have the right to agree or not agree to the terms of the 3rd party. Most SS addendums give the seller's that right - because the lenders almost always change something.
Having said that, more and more lenders are requiring the promissory note. Some will change their minds if the negotiator pushes back hard enough - other's will not. Some sellers choose to sign the note and then later file BK. Again - the Seller's need to consult their own attorney and financial advisors for advice regarding the benefits of doing a prommisory note vs. just allowing a foreclosure.
If you're looking for language - check with a Realtor in your state, and ask to see a copy of the Short Sale Addendum (or whatever it is called)
Good luck with your transaction.
Heidi White, CDPE, SFR, Realtor
San Diego, CA
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