Time Deadline On Lease/Purchase Deal

Q: My wife and I entered into a lease/purchase with a couple and we are trying to get the deal financed.
 

The owner has stated that she has been made an offer and is telling me that I have to give her an answer in writing stating that we are going to be able to finance the house within 24 hours. She is telling me that the law says that we only have 24 hours to answer the offer.

Is this true? Or is she out of line by telling me that I only have 24 hours to get this letter? The man that I am talking to at the mortgage office is out of town for the day and will not be back until tomorrow and this will exceed 24 hours.

This out of my control and I am just wondering if the law does state I must respond in 24 hours.

Thanks for your timely response,

A: If you have entered into a lease/purchase agreement, otherwise known as a lease with an option to buy, and you and the seller have agreed on the price and terms and the offer was accepted in writing, then you have to see what the contract says regarding the financing contingency.

But I'm a little confused. When you lease/purchase a property, typically you rent the property for a year (or more) and move into it before buying it. Are you living in the property now?

If you already live in the property, and have an option to buy it, I can’t understand how the seller would be able to accept another offer. But you should read your contract and see what it says.

As for the 24-hour so-called "law," I'm not sure your seller knows what she is talking about legally. I'm not aware of a state or federal law that requires you to respond to her within 24 hours.

However, she could be referring to (inaccurately, it seems) about a kick-out clause.

In purchase contracts with contingencies, like financing contingencies, sellers will often insert a "kick-out" clause. The kick-out clause means the seller can accept your offer, but if a better or "cleaner" (meaning without contingencies) offer comes along, the buyer has a limited period of time (usually 24 to 48 hours) to withdraw or satisfy the contingency or the seller can cancel the contract and sell to the other buyer.

Does your contract have a kick-out clause? If so, and it requires action on your part within 24 hours, then you may have to comply with the terms of the clause. That means you would have to withdraw your financing contingency within the time prescribed in the contract.

If your contract does not have a kick-out clause, and says nothing about the seller being able to cancel the contract in order to accept a better offer, then your seller is out of luck.

But that doesn't mean she isn't capable of mucking up this deal out of sheer greed. If you aren't already using a real estate attorney -- and I'm guessing you're not -- you better find a good one pronto and spend some time going over the contract you signed.

You need someone who does know the law in your state to read over the contract you signed and explain the terms and conditions to you so you know what your obligations are. Then, the attorney can contact the seller and (hopefully) set her straight.

While you may live in a state where buyers and sellers do not normally use attorneys to close house deals, you also seem to be doing this large transaction without the aid of a real estate agent. I know you probably thought you were getting a better deal by going it alone, but the road to homeownership can be pretty bumpy at times. It sounds like you need to bring in the professionals.

Please seek counsel before this deal completely falls apart.

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