Posted by John Behle on October 26, 1998 at 16:16:28:
I am a strong believer in not making a commitment to buy a property that I have no intention - or capability - to close on. Yet, any time you are in any way dependent on anyone else, you need to plan for that contingency.
Any time you are depending on bank or investor financing, you always have the chance they will back out. Even if you had a pre-approved loan with an institution, they may still back out. For example, we had a funding source we were brokering to (as a mortgage company) that declined a loan they had pre-liminary approval on. Two thirds of their company had left to form a new one and the “executives” were all of a sudden in charge of the underwriting and they just dumped us.
With private investors, they can change their minds or their criteria. I even called one with a deal a few years back to find he had just introduced his plane very abruptly to a mountain top.
So, unless you have cash in hand, you generally have “contingency clauses” to protect you. If you are dependent on a bank for financing, then you should have a contingency clause that allows you to get out of the deal if the financing falls through.
Many standard offer forms have that clause built in. I couldn’t tell if your question was hypothetical or if there is some current situation that you are in. If there is not a “financing” contingency clause, you may want to carefully examine the offer to see if there are any other clauses that might let you out.
If it is a current situation, give us some more details and maybe we can help. If not, make sure you have contingencies in your offers.