WA state real estate law, breach of contract home purchase and sale agreement, dispute with agent

The written contract will control. If, however, the written contract is mute as to who will pay the closing costs, then parole evidence might be introduced to prove what the parties' agreement was. Also, if the written contract says nothing about who will pay the closing costs, then the escrow company won't know how to close the transaction. Your sister will have some leverage at closing. She may decide not to sign if the closing docs indicate that she will pay the closing. THIS IS NOT INTENDED AS LEGAL ADVICE, BUT IS A SIMPLE STATEMENT OF SOME POSSIBILITIES IN THIS FACTUAL SCENARIO. YOUR SISTER SHOULD CONSULT A LOCAL REAL ESTATE ATTORNEY. Good Luck
David C. Beyersdorf

Your post is not clear, so I have had to make some assumptions to fill in the blanks and resolve the ambiguities. If the following answer contains facts that are not accurate, my answer won’t be accurate either:

The coworker is the buyer. Your sister is the seller. The verbal agreement required the buyer to pay closing costs. By "closing costs" you mean the costs of escrow and related fees, not loan closing or loan processing fees.

The written agreement did not say who would pay the closing costs. That leaves the parties with an equal obligation for the closing costs. Assuming that the written contract is valid (I can't tell because I haven't seen it), the contract is enforceable even though it doesn't accurately reflect the verbal agreement. The contract could be corrected by a court action called reformation. That's possible in spite of the parole evidence rule because the lack of any mention of closing costs creates an ambiguity. Parole evidence can be introduced to resolve an ambiguity. Your sister would probably win because the contract was drafted by the other side. But if there is an escrow and the parties signed escrow instructions which say the parties are equally responsible for escrow fees, then there is no ambiguity, parole evidence should not be admissible and an action for reformation should not succeed.

And, an action for reformation would be more expensive than the possible gain. If the closing costs turn out to be $7,500 (hypothetically) and if the bank is putting up $6,500, that leaves $1,000. Your half is $500. You don't want to sue for reformation when the impact is only $500.

There is nothing immoral about the bank's plan and nothing immoral about your sister signing it. The bank wants the extra money to go to the seller along with the rest of the loan money. The bank wants the seller to use the extra money for closing costs. That will leave the buyer with a reduced or zero obligation for closing costs, so the buyer’s cash can be used for the garage. This plan is harmless to the seller if the closing costs are less than $6,500.

If the amendment has already been signed, then your sister is stuck with the original agreement and the amendment, unless she starts an action in court for reformation of the contract. That would be economically unwise. So your sister should simply pay her half of the closing costs.

If the buyer or the bank thinks that the term "closing costs" includes loan closing or loan processing fees, that is not a problem unless the escrow officer agrees, and distributes the escrow after subtracting the bank fees from your sister's share. In that case, your sister's distribution from the escrow would be reduced and she would have the right to sue the buyer and the escrow company for the improper charge.

You said: “She is making my sister's life a living hell trying to change things,” Change what things? Do you mean she wants the amendment signed? Great, that means it hasn’t been signed. In that case, you sister should simply refuse to sign until the contract is corrected to state that buyer pays the remainder of closing costs.

This answer must not be relied on as legal advice for the reasons posted here: http://mcgyverdisclaimer.blogspot.com . And I am not your attorney.

David

Your sister's situation is one example of why it is a bad idea to do-it-yourself in real estate transactions. Having a professional whose duty is to look out for your sister's interest may have prevented these problems.

It is not too late for the sister to contact an attorney to review her facts and options.

Besides talking with the sister, the attorney likely will want to review all the documents.

It can be a federal violation to falsely sign bank applications.