Could be carpenter ants, not termites. Different type of destruction, but they come out when it's warm. Get a pest inspector over to examine the material and consult the attorneys and title company. They may be able to do a hold back from seller funds to remediate, or if damage is extensive and was known and not disclosed by sellers, contract may be voidable.

I want to look at the termite rpt first. If it is not cleared title company will demand a clearance rpt. The lender will not grant loan. How did it get messed up so badly? Cash offer?

Treat the house.

Get the termite inspection done.

Stephanie - I would absolutely get a pest professional out there to see whether it is termites or something else. In our contract, it is the seller's responsibility to have the home in the same condition as when the offer was accepted at closing, so I would play that card. If the treatment can happen same day, then it would still be possible to close on schedule, and the monies may be able to be taken out of escrow at closing (by the seller) to pay the pest company.

Unfortunately, it's spring and swarms happen, This does not nercessarily mean that there's an active infestastion though Stephanie Leon | Miami Lakes Realtor®. Check the certification for further detail and how to remedy?

It is best to get legal advice. 

I would call the inspector back out that did the termite inspection and find out what it is.  If it is a wood destroying insect, I would see about negotiating it out with the sellers.  I am not sure who would be at fault here but worse case scenario, I would make the deal happen-unless the buyer changed their mind- even if you and the listing agent have to take care of it.  Also if there was an issue and there was a loan being made on the property, the lender may not move forward without the issue being resolved.  You could also play that card with the seller.

If you have the buyer you would have a good shot at it being repaired at the sellers expense if your home inspector could show that this was a new infestation since the time of the inspection.  The house must be in the condition at the time of the offer being accepted and if the seller did not disclose there were termites this must be a new infestation and according to our contract the seller would have to make it right.  It is worth a shot.  They could also be flying ants as they look like termites.  Only an expert would know.

Hi Stephanie -- how does your purchase contract address such issues?   

Contact attorney and advise, as well as Seller and ask for immediate remediation with extermination contract, at Seller's expense.  You may want to make sure buyer is comfortable with this.  Closing may have to be delayed.

Termites fly in.  It happens in the blink of an eye.  Quickly get someone out there to take care of it and close.

Generally if they show up before closing it falls to the seller to treat and make it right. I would be calling the termite inspection people to see what they are going to do about it.

Are you sure they are termites, and not carpenter ants or some other insect?

 Termites return to the ground every day and travel back and forth in termite tubes.

Simply follow the terms of the contract. The agent that failed to comply with the timeline should step up with the cost to cure.

You didn't say which side of the fence you are on...Either way, the optimal solution is for the agents to talk and try to come up with a solution.

Call Terminex or a similar company.