Friday, June 8, 2012

Just When You Begin to Breath Easier

Just when you get to breath easier about all the things going on in your life, a kink comes along. With the home inspection completed on my current house and the appraisals going on for both the current and new house, I was beginning to focus my attention elsewhere, namely trying to decide if I want to take the time/money off and move myself or pay someone to move me. I've done it both ways and honestly, having someone move you is just the greatest thing. Lots less stress involved in the whole ordeal. You just sit on the couch with your favorite beverage answering the occasional question as a small team packs up all your worldly possessions and carries them out to the truck. Then you drive over to the new place to meet the truck and with your favorite beverage in hand, direct them to place each box in whatever room you have decided and even watch as they set up your beds. Of course, all this comes at a slight premium. The other way involved borrowing trucks and trailers, packing everything myself after scrounging for weeks for materials, making repeated trips over the course of a week or two, never having anything you need because it is always at the "other" place not to mention the wear and tear my body feels after horsing around all my worldly possessions not once but twice. But then, I save some money.

So while placing some calls for some quotes to make my decision easier, I get a call from the owner of the house we are buying. He told me he found a house for him to buy but in order for him to close on it, he needed the cash from us closing on his current house. Could we close a month sooner and keep the date of possession the same?

Our contract was not contingent on him finding new housing so I don't think contractually, he has any legal way to force us to meet his demands. On one hand, I have my house sold, or so I hope, and I would like nothing better than to get this move over sooner rather than later and get started on fixing up the place while there is still summer and fall to work on it. But there are all kinds of problems. First, at the end of this month when he wants to close, my wife will be graduating from her residency and we will be hosting guests from both sides of the world for a couple weeks. Second, it elevates my risk level or my costs associated with the closing. I can either put 20% down on the new house but now instead of a few days until I close on our existing house and get my equity out of that, I have over a month. Which means if I close on the new house and the deal on my old house goes south, I have two mortgages and a small amount of cash. The alternative is that I put less than 20% down on the new house and pay mortgage insurance until I get the equity out of my current house to put the 20% down I need to not pay the mortgage insurance. This costs me extra money that I really didn't need to consider paying until this situation came up.

The other big problem is that even though the house will be owned by me a month sooner, the seller wants to still live there another month until our original and contractually agreed upon closing date. I can't think of any benefit to me in this situation but I can think of tons of heartache that could come from it. Best case, I still have to worry about renters insurance with liability and come up with some way to prorate taxes, insurance, etc on a house that I own but can't live in. Worst case, something catastrophic happens and I end up with a destroyed house on my insurance. Then there is always the middle of the two extremes case where significant damage occurs to it and now I have to try to get a settlement out of this guy.

So after thinking it over, I told him that we can work with him on the closing date but that the date of possession will be on the same date as the closing. If he wants this other house bad enough, he can figure out where he wants to live as long as it isn't in my new house. He said he would make some calls to see if he could figure out a place to live and if his wife was agreeable to moving yet this month and I have yet to hear back from him. I suppose now there is a real possibility that he could try backing out of the contract now which would really throw a hitch in everything. To add irony to this whole situation, he originally wanted a closing date well into August to give him time to find another place to live and we ended up compromising by choosing the end of July. I guess I'll just wait and see for now.


R. Sherman said...

You could've charged him rent.

Nonetheless, you did the right thing. I've seen too many disaster where the closing and possession dates don't match. I always advise my clients not to do it.


Ed said...

R. Sherman - I figured I could have charged rent but I wasn't sure what kind of renters/liability insurance would be necessary. Since I haven't heard from him in a week, I'm guessing his deal is either proceeding with a later closing date or it fell through.

Vince said...

Yes, that fellow was out for his cake and eating it also. Further his new house could have fallen through and you could have been the one renting not him. No, whatever good re. Good Will with him not bad mouthing to the new neighbours. Something worth a bit btw since they will keep an eye out. But that a short course. Anyway you are facilitating him enough. To list one of Judge Judy's maxims 'A good deed never goes un-punished'.

On the 'moving'. There are certain things that change throughout life. In ones 20s, sleeping in hostels is grand. 40s not so much. And lets face it you are training a girl, so you might as well point her towards a man that has the wherewithall mind-wise to aim for management.
Hayhoo anyhoos. Best of luck.

sage said...

Yes, I want my cake and to eat it too! (and as soon as I typed this, I see Vince has beat me to it!)

kymber said...

i am totally with Vince and Sage - you owe this guy no more than your contractual obligations! tell him to go and stay in a hotel - it's not your problem buddy!

your friend,

PhilippinesPhil said...

Its all about the money and what you can afford, isn't it? Pretty much covers just about every situation there is...