What happens if you can’t close on time tips, Calgary buildings buying guide, Alberta real estate selling advice
What Happens If You Can’t Close on Time
January 24, 2022
One of the biggest fears as a buyer is if for some reason you can’t close the deal on time. There are penalties if this happens, and this is something you want to avoid. When a closing date is missed it is usually the buyer, so let’s look at what to be aware of so this doesn’t happen to you.
What Happens If You Can’t Close on Time – buying Calgary real estate
Per Diem
If the closing date has passed, the seller can decide to extend the deadline or charge you a daily rate for the inconvenience to cover any additional mortgage tax and or insurance payments. This is called a per diem rate and it is typically one-thirteenth of the seller’s housing expenses.
Lose Your Earnest Money Deposit
Your earnest money deposit is also known as your good faith payment and the seller can request these funds to be relinquished due to not closing on time. At this point, your earnest money deposit is non-refundable.
The Deal Is Cancelled
Greg Kennedy of Calgary House Finder.CA says, “If you do not close on time the seller can cancel the sale altogether. This usually isn’t in the best interest of any party, but if the seller believes they can get a better offer they can choose cancellation due to your inability to close on time. There are legalities involved in this that your agent will have to walk through with you.”
Legal Recourse
If you missed your closing date the seller can seek legal action even if it was out of your control. They can ask to be compensated for monetary damages. Usually, a contract will have specific language in it that will prevent this in the worst-case scenarios, but you will want to check on this with your agent to make sure a lawsuit is not an option.
Time of the Essence Clause
If your purchase agreement includes this clause, then you have a hard deadline to close regardless of financial issues that can arise. This cause means the contract would become null and either party could walk away. This clause is unusual to run into, and in some cases, you can negotiate with a seller for an extension.
Work With an Agent
For these reasons and many more, you want to work with an agent to help you navigate the buying process. An agent will help you avoid these penalties by ensuring you will meet the closing date.
Your real estate agent will work to help you find your home within your budget and manage all your expectations while working under a realistic timeframe to ensure everything goes smoothly in your escrow process. If anything were to go wrong your agent should use their expertise to help you negotiate a reasonable penalty that allows you to still purchase the home, you so desire. Therefore working with an experienced and trusted real estate agent is so important for any of your real estate needs.
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