House is under contract but deal has yet to close

DEAR BRUCE: We sold our house 5-1/2 months ago to a woman who lives out of state. When I say we sold, what I really mean is, we went to contract. The closing has yet to take place. There is a contingency clause in the contract, which clearly states that if she doesn’t sell her house, the deal is off. The problem is, she said she had a contract on her house, and we took that into account when we allowed this provision in the contract. She continues to ask for extensions because she has not been able to close on her house. The potential buyer is offering her one excuse after another. My question is, how long do we have to keep giving these extensions? And because she has defaulted, can we keep her earnest money? – Reader, via e-mail

DEAR READER: She hasn’t in any way defaulted, in the usual sense. There is a contingency (the sale of her home), which has not been met. Because of this, you have no obligation to continue extensions. But you clearly have no claim on her earnest money because of the provision that her house must be sold before the contract can be enforced. Whether or not you want to continue these extensions is another question. I suspect you’ve had your property on the block for quite some time, and you are obviously anxious to sell it. Given that set of conditions, I would continue to give her extensions (and make those extensions short). But, I would also put the house back on the market. In the event that a more serious buyer comes along, you can yank the rug out from under her at the end of, say, a 10-day period (give her increments of 10 days) and sell it to the serious buyer. If she comes through and buys it, you will have accomplished your goal.

DEAR BRUCE: I am 60 years old and plan to retire soon. I am healthy, debt-free and frugal. I have $100,000 in my 401(k) and no pension. The bulk of my income for the next two years (until Social Security kicks in) will come from interest earned on current investments, which are primarily CDs. I am not a savvy market investor — being burned once was enough for me. I am extremely conservative, and I’m comfortable with that. I do not plan to withdraw from my 401(k) until the mandatory 70-1/2 years of age. Would it be wise to take some or all of my 401(k) and purchase I bonds? I am aware that a penalty will result if the bonds are cashed during the first five years. Any advice will be most appreciated. — N.O., Michigan.

DEAR N.O.: Why would you want to take the money out of your 401(k), which can operate as a shelter for the next eight years? I see no reason to do that. You didn’t mention how well your 401(k) is performing, but I suspect it is doing better than your self-directed activity since you are adopting such a conservative course. Assuming the 401(k) is performing well, I would leave it there until you withdraw it at the mandatory age.

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