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Hi, weird question. I'm trying to buy a house. Made an offer, which
was accepted. The offer has a clause that says the deal is contingent
on me getting a 30 year fixed rate mortgage "at an interest rate not
to exceed 5.875% with ____________ points".
The underlines are a blank, it was supposed to be zero. My realtor
didn't fill it in and I didn't catch it and (as usual) I didn't use an
attorney.
Rates went up 0.25 yesterday, and because the mortgage is below $50k
the fixed rate the rate is now 6.25 at best, with no points paid. So
I want to cancel the purchase, payments were already near the top of
my comfort level.
But since I didn't fill in the number of points I was willing to pay
can the seller come back and say I have to buy the house, because I
can get 5.875% if I pay 2 points ?
Or because I left it blank does that 'mean' zero points, so I am
within my rights to cancel this ?
Thought I'd ask the world before asking a lawyer, in case there's a
cut-and-dried answer.
Thanks !
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roger61611@yahoo.com (Roger D) wrote in message news:<ebeed037.0401291255.fe0219b@posting.google.com>...
Hi, weird question. I'm trying to buy a house. Made an offer, which
was accepted. The offer has a clause that says the deal is contingent
on me getting a 30 year fixed rate mortgage "at an interest rate not
to exceed 5.875% with ____________ points".
The underlines are a blank, it was supposed to be zero. My realtor
didn't fill it in and I didn't catch it and (as usual) I didn't use an
attorney.
Rates went up 0.25 yesterday, and because the mortgage is below $50k
the fixed rate the rate is now 6.25 at best, with no points paid. So
I want to cancel the purchase, payments were already near the top of
my comfort level.
But since I didn't fill in the number of points I was willing to pay
can the seller come back and say I have to buy the house, because I
can get 5.875% if I pay 2 points ?
Or because I left it blank does that 'mean' zero points, so I am
within my rights to cancel this ?
Thought I'd ask the world before asking a lawyer, in case there's a
cut-and-dried answer.
Thanks !
I don't think there's a hard-and-fast answer. This is the sort of
difficulty that real estate lawyer make good money keeping their
clients out of and litigating when it happens anyway. A common answer
would be that a blank term does not make the contract voidable, unless
the presence of the blank indicated that one of the parties did not
really intend to make a contract. In that case, the blank is filled in
to stand for "whatever is reasonable".
In your case, "whatever is reasonable" is still not that useful an
answer: what's "reasonable" depends on what time "reasonable" is
tested. If it's when you signed, and 5-7/8% money was available at
zero points at the time, then paying 2 points would be excessive, and
you should be able to get out on the financing contingency. But if
it's when you lock in the loan, then if 2 points for the same 5-7/8%
money is the going rate, then paying 2 points is reasonable, not
excessive, and you're bound to go through with it.
Real estate law is very state-specific and further nuanced by local
custom and lender and title company policies and procedures, so you
really, really need good local advice to get a useful answer.
--
Not a lawyer,
Chris Green
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roger61611@yahoo.com (Roger D) wrote in message
news:<ebeed037.0401291255.fe0219b@posting.google.com>...
Hi, weird question. I'm trying to buy a house. Made an offer, which
was accepted. The offer has a clause that says the deal is contingent
on me getting a 30 year fixed rate mortgage "at an interest rate not
to exceed 5.875% with ____________ points".
The underlines are a blank, it was supposed to be zero. My realtor
didn't fill it in and I didn't catch it and (as usual) I didn't use an
attorney.
Rates went up 0.25 yesterday, and because the mortgage is below $50k
the fixed rate the rate is now 6.25 at best, with no points paid. So
I want to cancel the purchase, payments were already near the top of
my comfort level.
But since I didn't fill in the number of points I was willing to pay
can the seller come back and say I have to buy the house, because I
can get 5.875% if I pay 2 points ?
Or because I left it blank does that 'mean' zero points, so I am
within my rights to cancel this ?
Thought I'd ask the world before asking a lawyer, in case there's a
cut-and-dried answer.
Thanks !
I don't think there's a hard-and-fast answer. This is the sort of
difficulty that real estate lawyer make good money keeping their
clients out of and litigating when it happens anyway. A common answer
would be that a blank term does not make the contract voidable, unless
the presence of the blank indicated that one of the parties did not
really intend to make a contract. In that case, the blank is filled in
to stand for "whatever is reasonable".
In your case, "whatever is reasonable" is still not that useful an
answer: what's "reasonable" depends on what time "reasonable" is
tested. If it's when you signed, and 5-7/8% money was available at
zero points at the time, then paying 2 points would be excessive, and
you should be able to get out on the financing contingency. But if
it's when you lock in the loan, then if 2 points for the same 5-7/8%
money is the going rate, then paying 2 points is reasonable, not
excessive, and you're bound to go through with it.
Real estate law is very state-specific and further nuanced by local
custom and lender and title company policies and procedures, so you
really, really need good local advice to get a useful answer.
I don't agree that the contract should be interpreted to mean "reasonable"
points. We accept a contract interpretation which includes an inferrance of
a "reasonable" term when we think that's what the parties probably meant, or
would have meant if they had thought about it. But we don't imply or infer
a "reasonable" term when there is an indication that the parties would not
have agreed to insertion of the term "reasonable" if they had thought about
it. In other words, we can infer intent as long as we don't contradict the
writing. In this case, I think the blank is an indication that the parties
didn't mean, and wouldn't have agreed to, "reasonable" points. I think they
meant to use an offer form containing a blank, and intended that if the
buyer added a specific number, the seller would decide whether to accept or
not, and that if the blank was not filled out by the offeror/buyer, and
accepted in that condition by seller, then the parties simply intended not
to utilize that part of the preprinted form. I think the phrase: "with
______ points" should not be considered to be part of the contract.
I'm not speaking from knowledge here. I'm engaging in an academic exercise
in contract language interpretation. I wouldn't be surprised if there are
statutes or cases in some or all states reaching the opposite conclusion.
McGyver
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"McGyver" <Greyprof@msn.com> wrote in message news:<bvf35v$rcd0v$1@ID-75195.news.uni-berlin.de>...
news:<ebeed037.0401291255.fe0219b@posting.google.com>...
Hi, weird question. I'm trying to buy a house. Made an offer, which
was accepted. The offer has a clause that says the deal is contingent
on me getting a 30 year fixed rate mortgage "at an interest rate not
to exceed 5.875% with ____________ points".
The underlines are a blank, it was supposed to be zero. My realtor
didn't fill it in and I didn't catch it and (as usual) I didn't use an
attorney.
Rates went up 0.25 yesterday, and because the mortgage is below $50k
the fixed rate the rate is now 6.25 at best, with no points paid. So
I want to cancel the purchase, payments were already near the top of
my comfort level.
But since I didn't fill in the number of points I was willing to pay
can the seller come back and say I have to buy the house, because I
can get 5.875% if I pay 2 points ?
Or because I left it blank does that 'mean' zero points, so I am
within my rights to cancel this ?
Thought I'd ask the world before asking a lawyer, in case there's a
cut-and-dried answer.
Thanks !
I don't agree that the contract should be interpreted to mean "reasonable"
points. We accept a contract interpretation which includes an inferrance of
a "reasonable" term when we think that's what the parties probably meant, or
would have meant if they had thought about it. But we don't imply or infer
a "reasonable" term when there is an indication that the parties would not
have agreed to insertion of the term "reasonable" if they had thought about
it. In other words, we can infer intent as long as we don't contradict the
writing. In this case, I think the blank is an indication that the parties
didn't mean, and wouldn't have agreed to, "reasonable" points. I think they
meant to use an offer form containing a blank, and intended that if the
buyer added a specific number, the seller would decide whether to accept or
not, and that if the blank was not filled out by the offeror/buyer, and
accepted in that condition by seller, then the parties simply intended not
to utilize that part of the preprinted form. I think the phrase: "with
______ points" should not be considered to be part of the contract.
I'm not speaking from knowledge here. I'm engaging in an academic exercise
in contract language interpretation. I wouldn't be surprised if there are
statutes or cases in some or all states reaching the opposite conclusion.
McGyver
Agreed, there isn't a fill-in-the-blank "reasonable at the time of
delivery" the way there is with contracts under UCC. On the other
hand, the OP has a good argument that his financing contingency wasn't
for a 5.875% loan at just any number of points; I don't think it would
oblige him to take on financing at, say, 5-7/8% at 5 points (unless
maybe that's all his credit would get him).
I think that if points are customary in the OP's locale, then the OP
would be unreasonable in arguing that the omission means he should be
allowed to avoid the deal unless he can find financing at whatever
points (zero) he is willing to pay, but the seller would be equally
unreasonable in arguing that the omission means the OP must accept
financing at just any points.
One way to construct the contingency in a way that is still meaningful
is to observe that the OP is required to act in good faith despite the
omission -- here, I'd take good faith as seeking out and being willing
to accept financing at reasonable points. Reasonable would be whatever
the market will bear given the OP's credit rating, condition of the
property, phase of the moon, whatever.
But this still leaves the OP's original question wide open -- which,
if I understand it, is: has he made a good faith effort to comply if
he insists on zero points, which is what might have been reasonable
when he signed, or should he be bound to accept financing at the two
points or so that is where the market is when he actually goes to seek
financing?
--
Chris Green
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