Asked and AnsweredI just found out that the seller will be unable to close for an additional two weeks. As a result, I will have to extend my rate lock, at a cost of $1,200.00. Is the seller obligated to reimburse this cost?
Probably not. In most contracts, the closing date is stated be “on or about” a particular date. That means that the closing will take place within close proximity to that date, but not necessarily on that date. In fact, by custom, either side can theoretically adjourn the closing for up to thirty days from the date stated in the contract (an option that can cause havoc when an expected closing date is delayed without notice). Sometimes the closing date is stated to be “time is of the essence”. That language requires the closing to take place on a specific date, with the party failing to close being held in default. Time is of the essence closings don’t happen very often with residential transactions, so don’t expect to see that requirement in a contract.
Back to the question. Unless the contract specifically provides for reimbursement of rate lock extension fees (which is usually not the case) or provides for a time is of the essence closing, the seller is not be under a contractual obligation to reimburse the buyer’s rate lock extension costs. That doesn’t prevent the seller from doing the right thing and reimbursing those costs when the seller unexpectedly can’t close on time. I wouldn’t bet the ranch on that result, but it does happen.
For more about closings, see “The Closing—Time to Wrap Things Up.”