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  1. #1
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    Default Seller Won't Amend Purchase Contract to Include FHA Clause

    My question involves real estate located in the State of: Florida
    Hi - So I'm hoping to get some more insight. I'm the buyer and currently in contract with agreed upon terms. We are financing through FHA. We have already gone through inspections and appraisal. Home came back appraised at 10,000+ over the agreed selling price. We are set to close in two weeks and the lender is asking for the seller to sign the FHA Amendatory Clause and also an amendment to the contract to remove a "4500.00" roofing credit. The home needs a new roof and cannot be insured without a new roof. The seller agreed to pay 4500.00 toward the roof and that was written into the contract. FHA requirements need us to eliminate that from the contract. We emailed the FHA amendatory clause and and the contract amendment to seller and now they are refusing to sign both documents without explanation, cannot be reached, and we see they have re-listed the home. Are they able to do this? We have received no documentation from them asking to be released from contract, no reason, etc? Any help would be appreciated.

  2. #2
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    Your contract is what it is. If they do not wish to amend the contract and there is nothin within the contract that would require them to amend it for some reason, then they do not have to amend it.

    If you cannot complete the contract as the parties agreed, then you would be in breach of the contract and likely to lose any earnest money deposited.



    It sounds like the problem you have is you did not write the co tract with the statement the financing would be FHA. If so, the seller is not obligated to conform to the requirements the FHA imposes.


    Given the fact the appraisal showed you were getting a fantastic deal and paying $10k under actual value, the sellers may be using this opportunity to either renogotiate your contract or force the termination. Of your contract so they can accept a new contract and get some of that $10k in their pocket.

  3. #3
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    It seems like the seller is using your failure to secure financing according to the original contract to get out of the deal. You shouldn't lose the earnest money (if any) since you made a good-faith intent to purchase the home and the seller is the one who backed out of the deal.

    There are several steps along the way where either party can back out. You are asking the seller to amend the contract, he is unwilling to do so which means you no longer have the financing to purchase the home. You can either find a new lender or let the home go.

  4. #4
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    antrc170;718787]It seems like the seller is using your failure to secure financing according to the original contract to get out of the deal. You shouldn't lose the earnest money (if any) since you made a good-faith intent to purchase the home and the seller is the one who backed out of the deal.
    How is the seller backing out of the deal? They are simply enforcing the contract the buyer agreed to. That is going to mean if the buyer cannot complete the contract and there are now no longer contingencies that would allow the buyer to terminate the contract, then it is the buyer that would lose the earnest money.

    Generally contracts are written with a contingency for financing approval (at least those being financed). The period to remove that contingency is usually limited to a reasonable but short period of time. Either the buyer is approved for financing or allowed to terminate the contract if they cannot obtain financing., Since this is only 2 weeks out from scheduled closing, I suspect the contingency has been removed long ago.

    If the buyer included they were seeking FHA financing when making the offer, then the current issue would not be an issue. Most real estate agents know that there are hoops to jump through when the buyer is using FHA financing and should counsel their client (the seller) how to deal with that when presenting an offer. If it was not included in the offer, then the offer as written is what it is. Neither party has the right to unilaterally alter the contract once signed. There are requirements and rules unique to FHA. Those rules and requirements can cause a financial impact on the seller so such an offer is accepted with such possibilities in mind. This situation is one of those: you can't have your cake and eat it too situations.


    So, when it gets down to it, if the contract does not allow for FHA financing, then there is nothing to force the seller to accept such a situation. If the buyer fails to complete the contract as written and there are no contingencies in place to allow for the termination of the contract, the buyers usually have a valid claim to retain the earnest money the buyers put down. The seller has taken the home off the market and often invested money into the sale based on the contract. They are not expected to walk away with a loss when it is not their fault the sale did not reach completion.

  5. #5
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    Thank you for the feedback. Actually our contract does state we are using FHA financing. I feel they are trying to wiggle out of the repair credit since FHA has advised us to remove that from contract.

  6. #6
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    Quote Quoting weezjna1
    View Post
    Thank you for the feedback. Actually our contract does state we are using FHA financing. I feel they are trying to wiggle out of the repair credit since FHA has advised us to remove that from contract.

    advised or required?

    If I remember correctly, FHA requires the work to be done by closing (it's been awhile since actually working in the industry though).

    If your contract does state you are seeking FHA financing, what is the basis for refusing to sign the FHA amendatory clause? It also appears it would be something to be signed way back when the original offer was accepted and become part of the contract at that point. It really does not amount to much, especially since the appraisal far exceeds the contracted price. It is to allow the buyer to escape the contract without penalty should the appraisal be less than the stated value on the amendment. That would typically be the contracted price.




    I would think a refusal to sign the document could amount to the seller willfully acting to delay the sale and as such, put them in breach of the contract.

    as far as wiggling out of the repair clause: as I said, I believe FHA does not allow a repair credit but that the repair they find necessary to be completed by closing. I'm trying to remember but I recall a situation years ago where a young couple were purchasing a home and the detached garage was a huge problem. It had to be repaired for FHA to approve. It was actually beyond repair (at a cost that made any sense anyway). I am having difficulty recalling the specifics but if I recall correctly, the lender allowed an agreement it would be razed and oddly enough, after closing. Dammit it sucks to get old sometimes.


    here is an idea (and while this would have worked in the above situation, I do not think it was how it was worked through) : ask your agent if it is possible to complete the sale without the repair if there is a repair escrow established for the roof. If that is acceptable to FHA requirements, it would get you over that issue.




    If that is taken care of, it gets you back to the amendatory clause. This is where it gets tough. Do you have the money to hire an attorney? If so, you may be headed that way very quickly. It could go as far as suing to seek performance of the contract. That is difficult due to timing issues on financing locks and such.

    as to them re-listing the house: yes, they can but that doesn't mean they can accept a contract to replace yours. Your contract stands until terminated, completed, or invalidated somehow. Generally, they could actually receive and approve an offer as long as the buyer is aware they are "in line" after your contract.

  7. #7
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    Jk- appreciate the feedback. After meeting with an attorney, we were told they legally do not have to sign the documents. We cannot secure financing without those documents signed. Seller knows that and using as a way out. Fortunately, their realtor finally got back to us and stated the seller wasn't prepared to pay the roof costs out of pocket at closing. We were able to negotiate that into a new contract and adjust selling price slightly lower and remove roof credit which we are fine with so we are back on

    Too bad they didn't communicate with us what the issue was to begin with instead created panic on our end by ignoring and relisting.

  8. #8
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    Quote Quoting weezjna1
    View Post
    Jk- appreciate the feedback. After meeting with an attorney, we were told they legally do not have to sign the documents. We cannot secure financing without those documents signed. Seller knows that and using as a way out. Fortunately, their realtor finally got back to us and stated the seller wasn't prepared to pay the roof costs out of pocket at closing. We were able to negotiate that into a new contract and adjust selling price slightly lower and remove roof credit which we are fine with so we are back on

    Too bad they didn't communicate with us what the issue was to begin with instead created panic on our end by ignoring and relisting.
    Yea!!!!!




    but...

    does FHA require the repair prior to closing? If so, how are you addressing that?

  9. #9
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    Fha never required the roof to be repaired. Inspection gave 3 years of life left so FHA has no roof issue but homeowners insurance has a problem with the age of roof (22 years). We have a policy written as long as we replace within 30 days which we are prepared to do and already hired a roofer. Feeling relieved

  10. #10
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    Default Re: Seller Won't Amend Purchase Contract to Include FHA Clause

    Oh heck. All this time I thought it was an FHA requirement.

    If I had known that, it could have been as simple as dropping the allowance. That would have effectively put that $4500 back into the sellers pocket, at least if you were willing to do that as well.

    good luck. Hopefully the seas remain calm and allow this to reach its destiny with nary a wave to slow you.

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