Title Company refuses to close, asking seller for more documents

[Amir Kiani]

The title company (underwriter) refuses to close on the closing date (which has already passed), asking the seller to provide more legal documents of the property and the trust in which the property exists. (Apparently the property is under an LLC in a family trust)

We extended the contract for one more week, so the seller can provide the requested documents.

But my question is what happens if the closing date comes, and the seller can not satisfy the underwriter's requirements? What are my options as the buyer? I've spent hundreds of dollars on appraisal and inspection, put a move out notice for my current apartment, made arrangements for my move, etc. Do I get any money back for the financial damages done to me? I live in Texas.

Thanks for your help!

[Jon C.]

I don't know what Texas law states, but what does your contract state? What is your attorney saying? You should have your attorney serve them with a TIME IS OF THE ESSENCE Closing Notice stating that they must close by a certain date (usually 30 days from notice) or otherwise return the down payment and be subject to whatever damages at law or in equity, as your contract provides for. It doesn't seem like it's a willful default so trying to enforce specific performance would be useless and costly.

Whenever you buy from a Trust there are a lot of documents required. Organized Seller's should be able to obtain them without issue. How long have they been trying to clear title?

Alternatively, you may want to see if your title company's underwriter is being too overly cautious. Is it a national insurer (ie., Chicago, Stewart, Fidelity, Commonwealth, First American)? Perhaps a different underwriter would be willing to insure based on the documentation that Seller has provided, or is willing to take some sort of undertaking and/or affidavit. (These are purely speculative ideas, having no knowledge of the specifics involved in your title clearance issues.)

As a lesson for the future - when I am the purchaser I always include a contract provision to the effect that if Seller is unable or unwilling to close beyond any adjournment rights they must promptly return my down payment and reimburse me for the costs of my appraisal, inspections, survey and the actual costs of my title commitment and searches. If they give me push back I agree to a cap on such monetary expenditures.

Before you do any of the above, always seek the advice of your local legal counsel.