Including Costs in Contract
Has anyone heard of a contract that explicitly says that the buyer is entitled to their costs (legal fees, mortgage application, etc.) as well as their escrow if the seller walks away?
Has anyone heard of a contract that explicitly says that the buyer is entitled to their costs (legal fees, mortgage application, etc.) as well as their escrow if the seller walks away?
I wish I had known of and taken advantage of the wiki wisdom that can be had here. We waited far too long to recognize problems that were developing in our situation and even longer to realize that we had important rights we could stand on.
For better or worse, I feel a need to keep picking at these scars and probably won’t stop before you resolve your situation.
Good luck and I would love to hear the outcome.
slopefarm, noooo! don’t leave me!
These pep talks, I need them.
I get it. We did that, too. Thinking at one point we might get bought out, we looked at a few places. It is such a weird limbo to be looking at houses while fighting for one in contract.
I’ve got to give up this website. I keep hoping to exorcise my demons from that nightmare, but instead circumstances like yours get me exercised all over again.
I think you have stumbled on to the answer to your question. It is probably a bit too non-standard a term to negotiate into a contract, but you really do have sufficient protection under your current one, and the term you want won’t get you money from someone who doesn’t have it.
One further thought — if your sellers are “absurdly dishonest,” kick the tires really hard in your 48 hour walk-through. Make sure that everything that is supposed to be there is there. (In our case we learned that there may have been attempts to sell off the marble mantles — fortunately, they were still there when we took title). There is no end of mischief that can go on. And have lots of extra cash equivalent at the closing, in case the bank attorney gets things wrong or the numbers shift a bit, so you can cover whatever comes up. They will no doubt be looking to default you.
Fear not. We’re not letting them out of their contract.
But while we’re waiting for that to play out, I started looking at listings again. I mean, this is a pretty market rate building, it isn’t like it is some kind of steal that can’t be replaced and isn’t the market supposed to be tanking?
So I’m looking at listings.
While I look, I’m thinking about how to avoid this in the future. I kind of know that there is no answer. In this case, they couldn’t afford the damages even if they were in the contract. Supposedly. All we really know is that they are absurdly dishonest. In some other case, with less broke sellers, we wouldn’t have this problem because we could just say “fine. pay our expenses and we’ll give you back the contract.”
I agree with slopefarm. Don’t the Seller’s whining drive your actions. I have seen contracts which allow seller to cancel if the costs to cure title defects or violations exceed $1,000. As far as I am concerned this should always be modified to a more reasonable amount.
If your seller does not have a clear contractual power to cancel and they refuse to convey, you must seriously consider filing a lis pendens and bringing an action in court. The lis pendens will 1) prevent the seller from selling to anyone else, and; 2) possibly alert the lender that there is a big problem if they don’t know allready.
Unfortunately, in this crazy world I wouldn’t put it beyond a seller to fabricate anything if they thought they could get a better deal somewhere else.
If the court route is not to your liking, at least use it as leverage to get your legitimate costs reimbursed to you; regardless of the contract details.
Serpentor, are you still messing around with those sellers (or perhaps letting them think they can mess with you)? Our sellers jerked us around tremendously and started insisting that, under the default clauses, all we were entitled to for a breach of contract was our deposit back. But that’s typically for failure to be able to deliver title or some similar type of default beyond their control. Take a close look at what the contract says triggers a default with remedy limited to return of deposit. Chances are it does not cover your circumstances. In my case, we didn’t buy their BS and we got a better deal after going the lis pendens route. If your sellers are still refusing to close, you should have all the normal contract remedies available to you (as your lawyer has surely advised). Specific performance and/or whatever the law allows on contract damages. So don’t sweat whether the contract specifies anything on costs in the event of a default. It sounds like a red herring. Discuss with your lawyer and don’t let the seller smell your fear.
Standard form contracts frequently provide that Seller will pay purchaser’s costs of title search in the event they cannot convey. Escrow (downpayment) is also returned to purchaser if seller does not convey (sell). Mortgage application & legal fees are not usually included in the form contract version, but could be included in a rider.
Serpentor, I sense that you have not gotten any resolution of your seller’s default problem.
I have heard of such a contract, but only because I just finished reading your post.