Is legal action possible if a bank does not follow through?

[Robert Courtney]

I have been trying to close on a short-sale Duplex since July of 2016. The process has been long and very, very stressful. When I first seen the property in July, the bank would not take my offer because they were already in the negotiation stage with another buyer. Once this deal fell through, I moved in and made an offer, negotiated and I had an accepted offer by September 14th, 2016. I realize that the short-sale process is a long process, but I have met several other roadblocks along the way. Since I am using an FHA loan, there were several issues flagged in the inspection. I personally went to the house and fixed all the issues and patiently waited for a month and a half before the listing agent would meet with the FHA inspector again to allow him to inspect the property again. The property passed, the slow short-sale process continued and we hit another roadblock. My lender performed a title search and found that there was a second mortgage on the property. The listing agent had never run a title search. The second mortgage was through a separate financial institution as well. When this was discovered, the two banks had to negotiate between each other to divide up their part of the accepted offer. I was recently informed two days ago, that they had finally completed this process. I also found out, two days ago, that the property is being scheduled for auction on the last day of this month, and now the very incompetent listing agent is scrambling to get things done.

My question is, if they fail to follow through with this deal and the house goes to auction is legal action possible? Again, to reiterate, I’m wondering if there is an incentive on the bank’s part to make sure this deal goes through. If there is possible legal action, I would assume that they have an incentive to follow through with this deal and not allow it to go to auction.

[Russell Brazil]

Your contract is with the seller, not the bank. It is likely contingent on the seller being able to deliver clear title. If it is not contingent on that, then you could be in a bad spot as they could could take legal action against you to take the property with the liens in place