Do You Remind the Other Side of Contingency Deadlines?

Sep
2011
21

posted by on Random (Un)Common Sense

During a recent SWS Teleseminar show (Negotiate with Soul) a discussion arose as to whether or not a listing agent should “remind” the buyer agent of the buyer’s contingency deadlines. We didn’t exactly call it “reminding,” but rather “checking in” or “following up,” but to my ear, it’s the same thing as “reminding.”

For example, in Colorado, there is a loan approval deadline which somewhat functions as the Drop Dead date in a transaction. If the buyer does not have loan approval by that deadline (typically a few days to a week prior to closing), he can do one of three things. He can:

1. Terminate the contract and receive a refund of his earnest money, no questions asked, or

2. Ask for an extension of the loan approval deadline (which the seller has the option to grant or not), or

3. Do nothing.

Please note – the onus is on the BUYER to notify the other party if there is a problem with the loan. If the buyer does nothing, it is assumed that the loan is fine, and the earnest money goes “hard” – that is – if the transaction does not close on time, the seller has the option to keep the buyer’s earnest money. But NOT HAVING LOAN APPROVAL DOES NOT TERMINATE THE CONTRACT and if it still somehow can close on time, great!

So, back to the question, (assuming an agency relationship exists) should a listing agent remind the buyer agent about the loan approval deadline?

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