Forum
« Butcher Block Treatment Landmark Doors »
November 9, 2009
Seller wants out of Contract
We signed on a home last week. Some mistakes were made by sellers agent. We corrected those mistakes, and 1)being the option fee money coming back to us after 10 days, 2)Correcting a typo on my name, adding a 'T' to my last name. He got an attorney to write a termination letter after we found out he had a better offer over the weekend. The offer was 11K more than what he signed for us. The contract was executed. The brokers of both sides along with a compliance officer met after the seller turned away the inspection man one morning. Its a mess. I am speaking with an attorney this week. We had a closing date of November 18th. The termination letter stated the reasons for termination were-1)name change, and 2)the option fee box was not initialed by seller. BUT our agent and the sellers agent verbally agreed on that. It was his mistake for not having the box checked right, before sending it our way. We adjusted the 100 fee to the correct box, and now that is the sellers way out. Does anyone have an opinion about this? We are honest and just people... we want to do what is RIGHT. thank you!
Comments
I am not a lawyer, just a CPA with some experience in Business Law.
My understanding is that when it comes to real estate, the actual contract must be in writing stating all terms. Contemporaneous and verbal agreements are essentially unenforceable.
That is the depth of my limited knowledge on the subject. Hopefully a real estate attorney will chime in with something more concrete.
Posted by: newsouthsloper at November 9, 2009 9:24 PM
What do you mean by executed? In NY, until both sides sign the contract and the downpayment money is deposited, you have nothing. Verbal representations are pretty much worthless.
Posted by: Maly at November 9, 2009 9:50 PM
Earnest money was given, it doesn't appear it has been deposited yet. The seller signed the contract after he and his agent drew up the contract. The contract was drawn up based on email discussions with the buyers/our Realtor. The Seller and his Realtor then sent the contract to the title company to have it executed. The Seller was trying to get out of the contract 4 days later, and his Realtor was forced to meet with his Broker and our Realtor to resolve the issue. The sellers broker and their compliance officer went on to state that we have a binding earnest money contract executed by the seller and the buyer.
The Seller then tried to get out of the contract on the pemise that the house was bought through a trust, and that his wife had to sign. We know this reasoning is false based on what his agent has stated. Plus now he has an attorney stating that the seller is released from the contract based on our changing the recipient of the $100 option. Not the trust issue.
If he can get around the contract with a simple mistake, that even his agent agrees was his fault- then whats to prevent everyone from making a slight mistake intentionally and going along with the contract until it no longer serves them. He was fine with everything until he got another offer, 4 days later.
Posted by: AndreaSun at November 9, 2009 11:35 PM
This is where your Lawyer earns the big bucks. If you both have a signed copy of the contract (I assume that the owner signed the modified copy) then I believe you have an executed contract but I'm not a lawyer.
There are serious consequences if an owner breaches an executed contract, why would he do it over 11k is beyond me. Also, if the other buyer finds out that the property may be tied up in litigation in the foreseeable future, it’s hard to see them sticking around.
Posted by: Crownlfc at November 10, 2009 12:17 AM
OP's reference to earnest money & no mention of buyer's attorney sounds very foreign to those of us in Brooklyn. Andrea's profile says non NYC. Perhaps venting on Brownstoner is therapeutic, but not likely to get useful responses here.
Posted by: Bklnite at November 10, 2009 8:20 AM
Contract and property law varies state to state, so if you are not in NY, you need to consult a local lawyer and can't rely on this site. The apparent fact that you don't have a lawyer and that seller needed to get one to try to terminate strooongly suggest that this isn't NYC where we're lawyered up the wazoo.
That said (and none of the following is legal advice, just stuff to mull over and discuss with your own lawyer), how badly do you want the house and how hard are you willing to fight for it (i.e., are you willing to invest the time and money for legal fees)? Also, are you prepared for a rocky path to closing, because if you beat back this threat it could be a real pain all the way to closing, with seller looking to default you every step of the way. Take a gut check.
In NY, the aggressive move, if seller didn't back down, would be to file suit quickly -- i.e., before the house is re-sold to someone else -- seeking specific performance and file a lis pendens. That will cost you a bit in legal fees but it will make other buyers go away and seller will have to resolve dispute with you before he can do anything with the house.
If you don't want to fight, you could try telling the seller you'll walk away for your deposit back plus $5k and your costs.
In any event, whereever there's bullsh*t, there's bound to be more, so be prepared. Do what's right for you, which may not always be the fair and just outcome. Sometimes the fight is worth it and sometimes cutting your losses is the better bath.
But only by consulting a lawyer will you know whether you have a binding contract, whether seller is in a position to declare breach or declare the contract void, and what steps are avaialble to you. All of these things will effect the strength of your position. Good luck.
Posted by: slopefarm at November 10, 2009 9:06 AM
Good catch about the earnest money and lack of lawyer. Andrea, where are you located? Either way, you'll need a lawyer to figure out how expensive it would be to enforce the contract, if indeed your contract is valid.
Posted by: Maly at November 10, 2009 10:26 AM
My experience in NYC is that when a contract is executed, i.e. both parties have signed the contract and sent copies around, and the buyer has forked over 10% deposit, if either party want to back out of the deal, they forfeit 10% of the proposed purchase price. So if you have a legal contract and the other party wants out, you get your 10% back, plus an additional 10% because the other party backed out without a legal basis to do so.
That said, if you are spending hundreds of thousands of dollars or more on a purchase, don't you think it's prudent to get an attorney involve from the get go? Just my opinion for what it's work, and I am anot an attorney.
Posted by: bohuma at November 10, 2009 11:37 AM
bohuma -- in NYC, which may not apply in the above case, seller doesn't usually have the right just to decide to get out and return the deposit. Usually the terms that allow for this are limited to defects in title and such. But it isn't an option contract. Buyer may have the right to go to court and compel seller to go through with it (specific performance). Buyer can walk away but the penalty is forfeiting the deposit, far more onerous than mere rescission.
Here we dont' know what state we are talking about or what actually went down with the contract -- was it signed by both parties, for example. But your advice and everyone's is right -- get a lawyer.
Posted by: slopefarm at November 10, 2009 12:04 PM
I was thinking it was the return of deposit plus another 10% of the purchase price as damages, e.g. $1,000,000 contract price, $100,000 deposit. If buyer can't or won't close, they lose $100,000. If seller can't or won't close, the $100,000 deposit in escrow is returned to the buyer, plus the seller has to pay $100,000 in damages to the buyer (total back to buyer = $200,000). However, I bow to others' knowledge.
Get a lawyer.
Posted by: bohuma at November 10, 2009 4:40 PM
Post a comment
Please be patient while your comment is published. It may take a moment.