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December 15, 2008
Help! Closing Nightmare
Any and all advice will be appreciated...
Short story: I put an offer on a Brklyn house in July, offer accepted, contracts signed, 10% deposit put in escrow. Closing date set 45 days from contract signing, closing cancelled when title search pulled up two minor issues: outstanding hot water violation; old outstanding mortgage from decades ago.
Over the course of the last 5 1/2 months the seller's attorney and real estate broker (seller's, I don't have one) have barely lifted a finger to move this deal along. I call/email the real estate broker a few times a week to ask what is going on (I do not contact the seller's attorney, I've been advised no to). Little to no response, save for the explanation that "these things take time." I've tried encouraging, pleading, expressing impatience, frustration, anger and telling broker that I will walk away from purchase and then they make small baby strides one week, then again, nothing. A few months ago I received a memo via my attorney outlining two issues that we knew about and what was being done (amounted to an exercise in semantics). This is taking so long that I am honestly wondering if these minor title issues really do take this long or if these the seller's attorney and broker are such idiots that they will drag this thing on forever and not know how to resolve issues and close the deal!
1) HOT WATER VIOLATION: Have Dept of Housing come in a inspect violation, several inspections have, allegedly, been set up and cancelled (yes, formal letter of request was submitted). The main reason I was clued in to the selling team's cluelessness was because they were talking for a few weeks about making sure the oil tank had oil and the gas was working.... after trying to tell them that this house uses oil/gas for cooking and electricity for water, I eventually called Keyspan who confirmed this for me). The seller's team seemed surprised that I was able to make this call and figure this out! I then paid for a plumber to go to house and fix boiler to ensure that when inspector arrived it would work. Broker met me at house, again seemed clueless. Con Ed told me there is a work order pending to turn electricity off b/c of non-payment. I have told seller's attorney and broker repeatedly to pay off this bill (under $1,000) so that when city inspector does show up, it will all work and we'll be done with it. They have told me that all bills will be paid at sale... !
2) Outstanding mortgage with what was previously Chemical Bank from a few decades ago. Seller's attorney claims they are having a hard time locating the paperwork for said mortgage to clear it up. This baffles me....
Details to note:
1) This is an estate sale. The owner of the home (which had been in her family for several decades) passed away earlier in the year. The family member managing the sale is elderly and living out of state, I have not met her, and only have her name, no contact info.
2) The only thing that actually makes me think that the selling duo isn't playing games and actually wants to sell me this house is that each month when my low, locked-in mortgage rate the seller's attorney pays the fee to extend it.
3) Yes, mortgage rates and house prices are dropping. But, apart from 10% deposit I have sunk thousands of dollars in lawyer's fees, inspections fees, etc. I've stuck with this insanity because the house is a very good deal and I'd actually like to purchase it.
4) My attorney isn't able to get answers from either the seller's attorney or the real estate broker. I've had everyone from my mortgage broker to the bank's attorney (both wonderfully professional) call the seller's attorney to offer their help, mostly to no response. Part of me wonders if my own lawyer is just not aggressive enough?
Any advice how a very frustrated first-time homebuyer should handle this situation???? Thanks!
Comments
Weird, just weird (unfortuantely, I have experience with weird). Declining market favors you because they will do worse if you walk, unless you bought it under market, in which case they could be playing games. (I've had to deal with the latter.) So kick the tires a little harder on seller's diligence. First, the inspection shouldn't be an issue. You can agree to escrow for violations, costs for restarting Keyspan, etc. at closing. You would take care of these things after closing and draw down from the escrow to cover costs. Any balance would get returned to seller ocne you are done. Propose this as a way to remove this as an impediment to closing.
The mortgage is more troubling. You need to have this cleared up before closing. One suggestion: Have your lawyer propose to help do the diligence on the mortgage and ask for all of the documents and correspondence to date on the matter. Another: have your lawyer demand a small penalty payment for each month they can't get this to closing.
Also, rates are down a lot. Try to find a way to lock in a lower rate. Seller should be willing to accommodate your desire to lock in a lower rate, to the extent any accommodation is necessary to keep the deal together. At least you will have some benefit from these Keystone Kops antics.
The main thing is, if you start to push harder at the core of the problem, you will get a clearer picture from their responses as to how much this is about incompetence versus something worse.
Posted by: slopefarm at December 15, 2008 9:58 AM
As for the mortgage, this is never a problem. Back in the days the sats were not filed, the bank, however should have the payoff letter as well as the owner of the house...unless, the mortgage has not been paid off?
Those sort of issues are usually resolved at closing. You can always take the money in escrow and pay for the outstanding water bill too.
There is a possibility that they found a better offeror and are trying to back out of this deal without you suspecting it. There would be penalties if they did so maybe they are trying to play it like there are major clearance problems.
As to your attorney, tell him firmly that you are not paying for him to kiss their a... but to act on the issue. If he still won't do anything, find someone else.
Posted by: karo25 at December 15, 2008 12:57 PM
I bought my current home at a great bargain from an estate sale but it took two years to close. I had to clear up the title and had to go against the IRS, THE CITY, THE WATER DEPARTMENT AND THAN THE FAMILY HEIRS who did not want to pay the IRS late fees. It was a huge mess but I finally got the house at a pittance. These things do take alot of time.
Posted by: HOBOKENROCKS at December 15, 2008 1:04 PM
Thanks to both karo25 and HOBOKENROCKS for your thoughtful responses. You've both made me realize it's time to dump my overly polite lawyer and hire someone who can get to the bottom of this - also and protect me and my money. I've just placed a call to a RE attorney that a colleague recommended months ago. You've made it crystal clear as to what my own attorney just isn't doing, but should be: demanding for documentation as to how the seller's team are handling the title issues, helping with dillegence on outstanding mortgage, demanding a small monthly fee each month we are delayed, putting forth solutions (re: escow accounts), or being pro-active, so at the end of all of this, if they are trying to back out of the deal we will make them pay the penalties.
Many, many, thanks. I'll keep you posted as to how this works out.
Posted by: Queenie at December 15, 2008 1:38 PM
Who's the atty your colleague recommended?
Posted by: slick at December 15, 2008 2:23 PM
Good luck!
Bottom line is that you are in fact in the wining position so be aggressive.
Let us know the results.
Posted by: karo25 at December 15, 2008 3:45 PM
As your title company if you can resolve this with an ancient mortgage affidavit. It is not unheard of to have an old mortgage which is in fact paid, but the parties failed to file a satisfaction. the ancient mortgage affidavit says that the seller has paid the mortgage and has not been receiving bills for the mortgage. Sometimes a title company will insure title using this.
Estate sales can take longer, especially if the executor/administrator has to get court approval for the sale. Nevertheless, it sounds like the attorneys are not pushing this through.
Posted by: exlege at December 15, 2008 4:26 PM
Thanks also, Slopefarm, very helpful. I have to think this is all just plain incompetence. So much evidence of two supposedly professional real estate guys who don't know what they are doing. However, when you say "playing games," what exactly do you mean? The two worse things would be to take off with my deposit (which I understand is safe in esrow) or sell the house to someone else/hold out for better offer (most likely not so in this market, as you've all rightly pointed out), so I have to be on my toes. Meeting with new lawyer tomorrow to go over contract and title document. Going away for the holidays with this all so unsure makes me uneasy. Need to start kicking those tires!
Posted by: Queenie at December 15, 2008 11:15 PM
Queenie, I definitely know what you're going through. I also purchased my home through an estate sale. We signed the contract in Feb. 05, along with a $10k deposit to be put in escrow. Due to so many issues with the estate or incompetence on the seller's attorney's part, we closed on February 22, 2006. The entire ordeal took a whole year. Good luck!!! Keep us posted.
Posted by: faithful at December 16, 2008 11:57 AM
Queenie,
I'll third the suggestion to talk to another lawyer. We were getting jerked around and I spoke with two other real-estate attorneys who basically told us the same thing: sounds frustrating, but it doesn't sound like your lawyer is leaving rocks unturned. So we stuck with our lawyer.
Point is, don't be afraid to start talking to other lawyers.
-Amanda
Posted by: amanda at December 16, 2008 12:04 PM
Queenie,
I didn't mean anything other than what you think I meant. Deposit should be safe. Even the jerks who sold us our house didn't actually attempt to make off with the deposit; their escrow agent just chose not to respond for a while to our requests to confirm that the deposit was intact, presumably to let us think for a while that it might be gone. But I don't think you are, or need to be, at the level of suspicion we were at. If you play it through reasonably aggresively along the lines proposed above, you will find out if there is anything to be concerned about.
Write back and let us know what happened.
Posted by: slopefarm at December 16, 2008 4:57 PM
Most title companies will not remove the old mortgage from the Schedule B (the list of exceptions for which they will not insure against) without the seller agreeing to escrow a portion of the sale proceeds in an amount equal or close to the old mortgage. Then, the seller, if they can't find proof to establish that the old mortgage was indeed paid off, will have to start an action to "quiet title" and if successful, they then get the remaining balance of the proceeds that are held in escrow.
Posted by: jnjnjn2 at December 16, 2008 5:46 PM
Most title companies will not remove the old mortgage from the Schedule B (the list of exceptions for which they will not insure against) without the seller agreeing to escrow a portion of the sale proceeds in an amount equal or close to the old mortgage. Then, the seller, if they can't find proof to establish that the old mortgage was indeed paid off, will have to start an action to "quiet title" and if successful, they then get the remaining balance of the proceeds that are held in escrow.
Posted by: jnjnjn2 at December 16, 2008 5:46 PM
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