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Common reasons for residential real estate closing extensions

| Apr 5, 2021 | Real Estate Law |

Many Florida residents who enter in to a contract to purchase a home would ideally like to close and move in fairly quickly. That’s virtually impossible, though. How fast you can have a closing largely depends on the financing involved and any due diligence requirements you must meet.

The contract that you sign agreeing to purchase a home on a specific closing date is legally enforceable. This purchase agreement generally spells out that you have a due diligence period during which you can rescind the contract as the buyer or seller. Many factors may hold up the real estate closing process.

Structural integrity issues

Your purchase agreement likely spells out specific instances in which you can cancel the contract, such as if repair issues or pest problems arise. You, as the buyer, have an option to proceed with the contract if the seller addresses your concerns. You and your seller must both consent to extending the closing date so that they’ll have ample time to address the issues you bring up.

Financing issues

Lenders can often process minimal documentation loans in as little as 24 hours and schedule a closing date less than two weeks out. It takes lenders anywhere between 30 to 45 days to process an application, including underwriting the loan. Some federal government-backed loans can take up to 60 days to close.

Lenders may request additional information, which may delay the real estate closing. Many purchase agreements have automatic one-to-two-week closing date extension provisions written in to them to account for lender requests such as these.

Lack of relocation options

In some rare instances, a seller has to request a closing date extension. They may do so because they’re in the midst of a divorce or have a hard time finding a new residence. Delays such as these may put a buyer’s locked-in mortgage rate in jeopardy and force them to initiate the underwriting process again.

There may be many reasons that a buyer or seller gives for a real estate closing delay, some of which result in penalties. A real estate attorney can advise you of those situations and work to ensure that the closing process goes smoothly.

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