This article is the second in a series entitled “When Can You Get Out Of A Contract Without Adverse Consequences?” In last month’s article the topics for this series were introduced, and the topic for this month is the financing contingency. The focus will be on the financing contingency in the St. Louis Association of Realtors Residential Sale Contract (the “Contract”).
As a reminder, the financing contingency language should be reviewed thoroughly to understand the rights and obligations of the Buyer under this contingency. Here are several points to remember:
1. The Contract requires the Buyer “to do all things necessary” to obtain the described financing; not cooperating timely with lender’s requests for action or information or doing something to cause the lender to decline the requested financing can result in the Contract being enforced against the Buyer even if the described financing is not obtained; for example, if the Buyer fails to timely provide a financial statement or verification of employment to the lender this would constitute a failure “to do all things necessary”;
2. If the Buyer is unable to obtain the described financing, Buyer must provide written notice from the lender to that effect; if Buyer cannot obtain written notice from the lender, Buyer must provide a notarized affidavit stating that Buyer has complied with the Contract regarding the financing contingency and is unable to obtain written notice from the lender — THE NOTICE FROM LENDER OR THE AFFIDAVIT (whichever is applicable) MUST BE DELIVERED TO SELLER OR THE LISTING BROKER ON OR BEFORE THE LOAN CONTINGENCY DATE STATED IN THE CONTRACT;
3. If the Notice or Affidavit (whichever is applicable) is not delivered on or before the Loan Contingency Date stated in the Contract, the Buyer cannot get out of the Contract because of the inability to obtain the described financing.