Buyers may lose earnest money if they back out of deal
Q. We sold our home about a month ago. The contract had a paragraph that stated that if the buyer could not get financing, they could get out of the contract. The contract said they would have to give us notice by a certain date if they wanted to get out.
On that date, their attorney sent our attorney a letter stating the buyers could not get financing and they wanted to cancel the deal. This has really hurt us because we are planning to move out of state and this is messing up our plans big time.
Our Realtor started digging into this and found out that the buyers have signed a contract to buy another home in our area. It looks like they found this home after they signed the contract with us and decided to get out of our deal so they could buy this other home.
Can they do this? The buyer's attorney is demanding we release the earnest money but we are wondering if we have a right to keep it. It does not look like the buyers have been straight with us and we could really use the earnest money. What do you think?
A. Most form contracts require the buyer formally apply for a loan within 5 or 7 days after acceptance of the contract. I would demand proof of formal application and proof the application was denied. Failure to formally apply for a loan per the terms of the contract is a default by the buyer and may serve as a basis to claim the earnest money deposit.
If the purchase price of the new property being purchased by the buyers costs substantially the same as your property, this would indicate your suspicions are probably correct. It does not make sense that the buyers could not qualify for your property, but could qualify for another property in the same price range, unless there was something particular about your property that caused the denial.
Q. I own a piece of vacant land that is currently zoned residential property. The property is on a road that was once a small, rural road but is now a four-lane road. There is a business about a quarter mile down from me, but other than that, the property has remained residential.
What would be involved in changing the zoning to commercial and would it be worth the effort? What do you think my chances would be?
A. Only you can determine whether or not it makes financial sense to obtain the change in zoning. What is involved varies from village to village.
I would suggest contacting the building and zoning department of the village where the property is located. Ask if you could meet with someone from their department. Tell him or her what you are considering and ask what you think the chances are of obtaining approval. The department representative will probably be able to offer an opinion of your chances of successfully petitioning for a zoning change and will be able to detail to you what would be procedurally involved.
Usually, the process commences with filing a petition with the building department. Notice of the petition must be sent to all property owners within a certain distance, often 200 feet. The noticed property owners are given a chance at a public meeting to voice their opinion on your petition. The building department would then make a recommendation as to whether or not to allow your petition. The village board may, but is not required, to follow the recommendation.
• Attorney Tom Resnick's column appears every other week in Homes Plus. Send your questions to Tom Resnick, 345 N. Quentin Road, Palatine IL 60067, by e-mail to tdr100@hotmail.com or call (847) 359-8983.