What would YOU do?? Ethics question (concessions, buyers agent, settlement, contracts)

[bookworm2768]

We are in the middle of buying a house.
Price negotiations done, signed checks for option money and earnest money. Earnest money was deposited by title company who mailed the option money check (for a 7 day option period) to the sellers.
Inspection took place asap, inspection found major flaws in HVAC, HVAC company recommends replacing all 4 units, we send in our amendment asking for repairs or concessions.
The seller's agent now says we don't have an option period (this is told to us on day 7 of the 7 day period) since the option money check did not arrive in the first 48 hours! The check has not been deposited yet either. So, according to this fine lady, we are obligated to purchase the house.

So, is this ethical?? If you were the seller's agent and you knew that the check was written, you saw photo copies of the check, the check was mailed to you but didn't arrive within 48 hours, would you consider it ethical to use that technicality as a way to force the buyers to purchase the house as is??

[Captain Bill]

Your information states that the option money was deposited with the title company. Do you have a receipt for that? If you have a receipt showing the option money was deposited with the title company within 48 hours then that should meet the 48 hour criteria.

We don't use that option money system in Arizona so I don't know the procedure.

[middle-aged mom]

I am not familiar with the concept of option money. Is this new construction? Perhaps it goes by a different name in my area or maybe it does not exist.

What state are you from and what does option money mean to you?

[olecapt]

You need a TX guy. That is pretty much a TX localism. I don't even know if it goes everywhere in TX.

For those who have not come across it a TX option is a kind of rent. You basically pay the seller to take the house off the market for some specific days for some specific money.

I would think however that regardless you have a right after the inspection to either have the units repaired, a monetary settlement or end the contract. Your agent should prepare a contract amendment. If you don't have an agent you now know why you should have one...

[rrufast]

Request a record of payment from the title company. They HAVE to have record of it.

You didn't mention whether or not your OTP had contingencies in it, ie. contingent on satisfactory home inspection, etc...

I'm not familiar with TX law but if you can prove you presented the title company with the check, I would *think* you're in the right.

[middle-aged mom]

Originally Posted by olecapt

You need a TX guy. That is pretty much a TX localism. I don't even know if it goes everywhere in TX.

For those who have not come across it a TX option is a kind of rent. You basically pay the seller to take the house off the market for some specific days for some specific money.

I would think however that regardless you have a right after the inspection to either have the units repaired, a monetary settlement or end the contract. Your agent should prepare a contract amendment. If you don't have an agent you now know why you should have one...

So this means paying a nominal sum for the privledge of taking a property off the market while it's under the home inspection/attorney review period? Are attorney reviews cusomary in Texas?

Did the original contract specify the option period or not.

It's fasinating how practices vary from state to state.

[keeperk]

Originally Posted by bookworm2768

We are in the middle of buying a house.
Price negotiations done, signed checks for option money and earnest money. Earnest money was deposited by title company who mailed the option money check (for a 7 day option period) to the sellers.
Inspection took place asap, inspection found major flaws in HVAC, HVAC company recommends replacing all 4 units, we send in our amendment asking for repairs or concessions.
The seller's agent now says we don't have an option period (this is told to us on day 7 of the 7 day period) since the option money check did not arrive in the first 48 hours! The check has not been deposited yet either. So, according to this fine lady, we are obligated to purchase the house.

So, is this ethical?? If you were the seller's agent and you knew that the check was written, you saw photo copies of the check, the check was mailed to you but didn't arrive within 48 hours, would you consider it ethical to use that technicality as a way to force the buyers to purchase the house as is??

What the heck?
Option money and earnest deposit. Checks? One to title co and one to seller?
What a mess! I would say as the seller's agent, if you knew the ck. was written, saw the photo copies and the ck. was mailed, it's as good as received. Why would they resist that?

OK, HVAC not good. do you want the house or not?

As for the sellers agent saying you are obligated to buy the house, the agent also has responsibilities to the buyer to treat Fairly and Honestly among other things. It's not a buyer beware situation working with the sellers agent. They have duties to a seller more to a buyer, but not to a schemeing detriment to a buyer.
Many sellers agents have not figured out yet, that they too, have a responsibility to a buyer to treat them with honesty and fairness.
Many have not just been called to the mat on it yet!

I do not act as a sellers or buyers agent. Honestly I've not figured out yet how to be more fair to one side more than the other.
I feel anyone working with me I take on full liability with either side, so I treat both sides just as fair, carefully and professionally as I can.

[bookworm2768]

Didn't get a chance to check this last night - yup we have an agent and she is really good. She just slipped up with this one thing.
We managed to bypass the problem ourselves. Hold on to your hats . . . we just dropped by and spoke to the sellers themselves. They see the whole option money thing as a technicality and so we will be getting a third opinion today on the HVAC system and will take it from there. The whole process is supposed to be easier with an agent so its strange how theirs just made it a big mess.
As to someone's question to do we want the house. Yes we do but would it not be foolish to pay the agreed upon price for a house in decent shape once we find out that it needs over 10k in repairs? So yes we want to negotiate. and also yes we will walk if no help is forthcoming.

[kevcrawford]

Nowhere in the TX contract does it state that the check has to be received within 24 hours. On page 8, there's an option receipt that should be filled in by whomever receives the check. It should be either the seller or their agent. The title company can't sign for receipt of the check. There's a universal problem with agents taking contracts that aren't 100% complete because they don't think it matters, but it does at times like these. My office has a very strict policy that our agents don't get paid until our reviewer has reviewed the contract and all the "I's" are dotted and all the "T's" are crossed. It's a good policy and 90% of the time the agents have the contracts correct very early on in the deal.

[LynnSlaney]

Yes, title company can not sign for option check reciept. However-I would discuss with Title attorney. Ethically-the Sellers Agent is wrong. Your lender may not approve loan based on condition!