Homeowners want to move the closing date by a month?

Question

We are first-time home buyers. Our closing date was supposed to be on June 29th. Our attorney just contacted us and told us that the sellers are unable to purchase the home they had intended due to inspection issues and request that we extend the closing date to July 31st. Our attorney says that we can keep the date and charge rent or extend the date.

I don't mind extending the date as long as they pay to extend the lock on our mortgage, but is there something else I need to worry about being that we've never bought a home before?

Obviously, I don't want them to extend it beyond a month. Is there a legal way to discourage that? I rent now and am not under any pressure to move out.

The family we're buying from is very nice and recently had some terrible circumstances, but we still can't have it extend any further than the 31st of July.

Answer 1

DO NOT take the option to keep the June date and have them pay rent - you could easily end up with two types of problems:
1) damage to the house after closing, but before you take possession
2) the need to file for eviction in court if they don't leave by july 31st. Eviction proceedings take several months *and* it would make you feel bad to have to do that to a "nice" family

Extend the closing date until July 31st, but make sure you have an agreement in writing that specifies huge escalating penalties for every day past July 31st that you have to wait for closing (i.e. $200 August 1st, $400 August 2nd, $800 August 3rd, etc). Also, specify monetary penalties if the house is never transferred to you, in case they try to back out of selling before end of July. This may seem unneccessary now, but it is best to have all your bases covered. If the sellers are sincere about closing in a timely manner, they will have no problem with signing such a document.

Answer 2

Your attorney is correct. You are in the driver's seat here. If you close on the original date, it is generally accepted that you won't make a 'profit' on the rent charged. A typical rent fee would be the value of a mortgage payment (based upon the full purchase price, even if you don't mortgage the full purchase price), plus taxes, insurance, and any other expenses you would incur for owning the property. In addition, you should ask for an amount of money which would cover the expense of extending your mortgage lock until the closing date.

Of course, you are entitled to ask for whatever you want, but if you get too far out of line, the sellers might just decide they can't afford that and refuse to close. In that event, they would probably forfeit any earnest money you have put down, and you would be in a position to sue them for non-performance of contract.

If you want to discourage them, stick to your original date of closing and charge the rent. At WORST, if they refuse to move by July 31, you are now a landlord and can have them evicted.