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Just found out about a refi the owner did on a home we are weeks into escrow on, Any advise?

We are the buyers and are two weeks into escrow on a home.  We submitted the repair list for negotiations.  Our agent called us later that night to tell us that they found out the owner had refinanced the house recently and must legally own it for the next 7 months before she can sell it.  We were suppose to close escrow the end of Aug. We have spent hundreds of dollars already for inspections and quotes from tradesmen. How do we continue with the sale?    It seems our options are either to walk or extend escrow 7 months. We would still like to move in to the home when we planned in Sept., which would mean renting the home for a time. We really want to go through with the purchase. Do we need a lawyer? Any advise is welcome.  The good news is that she did agree to do all of the repairs we requested.
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August 01 2012 - US
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Profile picture for sunnyview
If the owner made a mistake by refinancing that is really not your problem as a buyer. Agents n both sides may try to soothe you, but you should not listen in this situation since they will say almost anything to try to avoid legal entanglements in the deal.

Call a local RE attorney ASAP. You need to know if you can force the owner to repay your costs plus damages for the delay and you need to know if you can press the contract forward to close escrow as planned. If you agree to move forward, you also need to know what will happen if you lose your current mortgage lock if rates go up in that time.

Sellers who sign binding contracts should not be allowed to make you wait for 7 months for only their benefit. They should have told their agent when they refinanced and removed the house from the market.
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August 01 2012
 
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