Anyway, actually reading through the contract and the public report left me with more questions than answers, so I made a list of everything I needed confirmation or a clearer understanding of and resolved to nail someone down about it before we turned over the earnest money the next day.
My clients also met with the lender they intended to use in the morning before our appointment back at Montage, and he had similar concerns and also gave them a list of questions. The thing was, my client had a personal connection with the lender they wanted to use, and had decided against going with a ‘preferred lender’. According to the Montage contract, this made them more of a risk and thus required they give an earnest money deposit of $20,000 versus the $10,000 of going with a preferred lender.
When we finally were able to speak with a sales person and ask our questions, it turned out that I had read correctly, if they did not go with a preferred lender and that lender was not able to fund the loan for any reason, their earnest money deposit ($20,000) would not be refunded. YIKES. Also, flood insurance was not included in the association fees of the condo. Because of this, their chosen lender was fairly certain his underwriters would not approve a loan for this condo. As you can see, this information stopped the deal in its tracks. My clients were floored at the idea that they could have lost $20,000 if they had not investigated what they were getting into before submitting their earnest money.
For several minutes after discovering this, the three of us sat in lobby of the Montage sales office, sick to our stomachs over what might have happened, and disappointed at what seemed like the likely possibility that the condo was again, out of reach.
Finally, we determined that before letting this all go, they would see what the preferred lenders had to offer. If they went with a preferred lender, they were guaranteed to get their earnest money back if the loan couldn’t be funded, and they were only required to put down half as much money. Plus, because the mortgage companies were doing so many of the units, they would have the red tape taken care of to begin with.
This ended up being a good solution. The preferred lender was able to accommodate my clients at a somewhat comparable deal to what they had been looking at for their other lender, and we managed to keep the deal in place.
I’m still dealing with trouble getting much information about how the transaction is progressing, but I feel pretty confident I will be able to pry that information out of them in the next couple of days.
All was well that ended well… but it’s a good lesson. READ what you are signing. QUESTION what you don’t understand. Don’t be afraid to be difficult. It may just save you a lot of money.