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posted: 6/17/2012 5:00 AM

New owners charged for each day closing was delayed

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Q. My husband and I signed a contract to buy a house being sold by a bank. We hired an attorney to represent us for our purchase.

We had some trouble getting our loan due to some credit issues we had a few years ago. We were able to go through with the deal but it took longer than we thought it would.

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At the closing, we found out we were being charged $50 per day for the extra 20 days it took for us to close. This wasn't our fault as we were ready, it's just that our mortgage company needed more time. At the closing, we were told we had to pay an extra $1,000 or we could not close, so we paid the money.

Was this right? It wasn't our fault we could not close on time. And, shouldn't our attorney have told us about the extra charge we were going to have to pay?

A. Many if not most of the sales contracts with lending institutions or government agencies (Fannie Mae for instance) contain penalty provisions regarding the closing date. This is why it is very important to negotiate the longest closing date possible and to discuss with your lender the anticipated time frame for loan approval prior to entering into these types of contracts. Some of these sellers are more lenient than others in granting extensions without penalties, but in most cases, they retain the right to charge the purchaser for the days the closing is delayed past the contract closing date.

In regards to your comment that the delay was not your fault, from a legal standpoint, it was your fault. Your mortgage company could not process the loan within the time period specified in the contract. That becomes your responsibility.

Of course, your attorney should have reviewed the penalty provision in the contract and discussed with you or the lender whether or not the lender was on board for closing by the specified date. If there was any doubt, the attorney could have addressed this in the attorney review period, possibly requesting additional time to close without penalty. If the request was denied, you would have had the option to terminate the contract and not expose yourself to the penalty.

One final thought. If your credit history was fully disclosed to the lender, they were made aware of the closing date and represented they could get the deal closed on time; perhaps you would have some recourse with your lender. I would speak to your loan officer to determine what exactly caused the delay. If it was something the lender was initially aware of, I would demand at least part of the penalty be paid by the lender.

Q. I have been attempting to negotiate a deed in lieu of foreclosure with my mortgage company and I believe we now have an agreement. Over the several months we were discussing this, they filed a foreclosure complaint and I have been served. The summons says I must file an Appearance within 30 days of being served.

It will cost me over $200 to file the Appearance. Do I need to do this if I am just giving the house back to the bank anyway? I'm pretty sure I could use the $200 more than the bank.

A. By filing an Appearance in a court case, you insure that you will receive notice of anything that occurs in that case affecting your rights. Once you let the 30 days go by, you can be defaulted and orders can be entered without your knowledge.

That said, if you have a written agreement with your mortgage company approving the deed in lieu, filing the Appearance and paying the fee is probably a waste of time and money. Just make sure once the deed in lieu is consummated that the mortgage company dismisses the foreclosure case and furnishes you with an Order entered by the court dismissing the case, with prejudice.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.

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