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Obstacles that may prevent or delay a new home closing

On Behalf of | Feb 28, 2023 | Commercial Real Estate, Real Estate |

Real estate transactions can contain a minefield of possible deal-killing obstacles. The clock starts ticking from the moment both parties sign the purchase contract, and then the complicated business of selling and buying a home in New York begins.

Home inspections

We strongly suggest a home inspection by a qualified home inspector before the contract is signed.  A home inspection can uncover many hidden defects. There may be structural issues with the roof or foundation, evidence of termites and the primary appliances may not work. There may be mold inside the home if there’s a history of plumbing leaks.  These issues should be the subject of negotiations before the contract is signed.

Appraisals and Mortgage Contingencies

Lenders order an appraisal after the contract is signed and the loan application is submitted to the lender. If the appraised value is lower than the contract price, the amount of the mortgage which the lender agrees to grant will be less than the mortgage in the contingency provision in the contract.  For example, if the mortgage commitment clause provides for an 80% loan to value mortgage and the appraisal is lower than the contract price, then the lender will only give a mortgage of 80% of the appraised value, but the contract price stands, so the buyer would have to make up the difference.    If the buyer cannot do so, they may cancel the contract and receive a full refund of the contract deposit.


Buying and selling real estate can be full of surprises, and a seller discovering that someone has put a lien on their property is one of them. Hopefully, it’s not the IRS, but it could be a contractor who never received payment for their work. The lien may be so large that the seller will cancel the sale and refund the contract deposit.


The buyer may not obtain a loan approval before the deadline. In this case, the buyer can cancel the deal or ask the seller to agree to an extension.

Closing date extensions

The contract’s closing date is a “target date” only, unless in rare cases where the agreement states that “time is of the essence.” After the date provided in the contract has passed, with no agreed upon date, either party may set a “time is of the essence” actual closing date as long as a “reasonable” period of time to close is given, based on the facts of the particular transaction.  People generally believe that a 30 day extension of a closing date is “reasonable” but the cases which are litigated say that the question of what is “reasonable” depends on the facts of each case.  Is the requested adjournment the first or the fifth request? How long is requested?  What reason is given?

Generally closing dates are set by agreement, after the lender which is giving the mortgage loan “clears” the transaction to close and all participants (buyers, sellers, attorneys for each, lender and its counsel and title company) in the transaction agree on a date.  Once a date is set the lender generates various closing disclosures and the parties agree on adjustments and how the proceed of the loan and the balances due at closing will be allocated.

Some closings are still “sit-down” actual closings; others are virtual, with monies wired and documents in escrow until payments are made.  Much preparation for a smooth closing is necessary and experienced attorneys necessary to make the deal close without problems.