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Sorry for the long, drawn out 'story', but trying to present all the facts as I know them......
At the end of Sept. we found a house that we really liked up in the mountains in Kern County, CA.
The house was over our 'cash' budget, but was listed as a possible owner-financed property.
The property was owned by sellers that lived out of state and (very occasionally) visited the house.
We made an original offer that included some furniture and some owner financing.
The counter offer was made with a higher price than our offer (to be expected).
We countered that, going a bit higher than our original, but lower than there counter.
They countered and after some discussion between agents, we agreed on the price, and owner financing terms.
I thought at the time ALL the furnishings were to be included except for 3 items the sellers wanted.
We did this for 2 reasons:
First, since our budget was stretch, having the house sold 'as-is' saved us from buying anything (right now, we could buy other furnishings later on).
Second, since the owners lived out of state we would help 'dispose' of any items neither of us wanted, saving them from having to come out here.
The 3-items could easily be removed by their agent/broker/friend.
Escrow was set for 30 days.
Since it was out of town the home inspection took longer than 'usual' (2 weeks) and some issues were discovered.
The 2 'major' issues were that, although in the listing, the back-up generator was not working.
And because of the slope the propane tank was situated on, it looked like is was 'rolling'.....though only a bit, it was still not vertical by looking at the tangs on the tank that the company used to lower the tank in place.
The sellers replied that they were not going to fix the generator, and that the propane tank was a matter for the 'owner' and the propane company. They would fix some of the smaller items, and credit $500.
We thought about this and and told our agent that we would take care of everything for a credit of $5000.
She told us that the seller's agent/broker did not think this would be acceptable, but was told to write it out anyways.
The counter was refused and we were told that because we were so far apart in repair requests we should 'move on'.
At first we decided to move on......I got information on how to cancel escrow, but did not cancel escrow.
At the 11th hour we realized that this was the house we were looking for, and finding another like it would be nearly impossible.
So we told our agent we were going forward with the purchase.
She said if we were sure, to sign the seller's counter for repairs.
We were then told that the seller's were coming into town for the septic & 'wood destroying organism' reports.
What we got instead was an addendum from the sellers stating that because we countered their repair offers the original sales contract was void, and that if we wanted to continue we would have to agree to new sales terms.
These were not 'majorly different' than the original terms, with the biggest stating that if the owners 'took, gave away, or trashed items valued at less than $100' we would have no recourse!
I asked our agent what the $100 was based on?
Replacement cost? Ebay or Craigslist value? Who determined what the value of the item taken would be?
She said not replacement value, and that her broker had seen where couches were valued at less than $100 in court.
No way we were signing that.
But in the process we discover that items that we thought were included in the contract were not!
Our agent wrote that the items in addendum 1 & 2 (items that were discussed while offering a lower selling price) where included, excluding the 3 items the sellers wanted.
That left A LOT of items unaccounted for!
We heard that the seller agreed to ONLY take the 3 items, and leave everything else, but that was not how the contract read when we signed it.
Our bad, but leave a bitter taste for our agent.
BUT we also got news that the septic was bad!!
Odd, because if the original contract was not valid, why use an addendum to change the original offer & why the septic report??
So our broker tries to find out what company did the septic to figure out the damage.
Small town with only 2 or 3 companies that can do this.
What he finds is that an inspection was done 2 or 3 years ago that found the septic to be bad!!
That was NOT disclosed on the 'Seller Property Questionaire'.
Our contract states that sellers are to get a report on "septic pumping, inspection and certification"
By this time we were getting tired of all this and got (our) broker involved.
He said that there was definitely a valid contract & that we did not have to sign the addendum.
By this time the date for closing escrow had come & gone.
I mentioned this to our agent who said not to worry the escrow stays open until the parties cancel.
So our agent sends out a request to extend escrow to the sellers agent without a reply.
This goes on for about a week before I ask that someone (agent or broker) CALL the sellers agent to find out what their position is.
A call is made and sure enough, their position is that we don't have a contract.
My broker calls and talks to the agent (who is also the broker) and they agree (as I understand it) that the offer/counter was for repairs & not an offer to buy.
Now it looks like the seller's are dragging their feet.
No response to the extension of escrow, and they are supposed to get an estimate on septic replacement.
If I read between the line, I have this nagging feeling that the brokers will try to split that cost between buyer & seller on the septic replacement.
We feel we're in limbo....
We want the house, but feel like we can't do anything to make this happen without a NSP....but if they don't escrow cancels and we don't get the house.
Not the option we want.
So is suing for 'Specific Performance' the only route?
Is our case strong enough?
Feels like purchasing a home either goes really smoothly, or is very rocky!!
Although it has only been about 6 weeks, it feels like a lot more.
I stated the 'facts' as I recall, and the timeline. Things happened very closely, so if there are concerns about the timeline I can recheck to verify, but I believe them correct.
Thanks for any opinions/replies.......or questions.
That is quite the situation there. Lets try and clarify the above a bit first.
You via your agent successfully negotiated a residential purchase agreement which both parties signed.
You opened escrow by depositing the earnest money.
You contract to purchase, as written is then valid and enforceable (warts and all).
During the due diligence period you identified issues that required mitigation or consideration.
Terms for mitigation/ consideration were not reached.
Sellers Real Property Disclosure failed to identify septic issue.
Due diligence period as stated in your purchase agreement expired without resolution of open issues.
Is this correct?
I took it as
1) They executed a contract with a close in 30 days
2) Earnest money deposited into an escrow account
3) Home inspection was completed
4) A repair request went to the sellers
5) Seller rejected the repair request
6) Buyers said they would back out
7) Buyers decided not to back out
8) Listing agent isn't clear on contract 101 basics and seems to advise sellers that the deal was terminated.
9) Buyers involve the principal/managing broker who sets the listing agent straight.
10) The sellers failed to disclose the failed septic system.
11) The closing date has come and gone, so NOW there is really no valid contract.
12) The sellers haven't signed an extension.
I don't see how you could sue for performance when you don't have a contract. At least out here, when the contract fails to close and there is no extension signed, the contract is no longer valid. Then you get into the issue that the sellers can make the extension contingent on other things now.
I took it as...
11) The closing date has come and gone, so NOW there is really no valid contract.
12) The sellers haven't signed an extension.
I don't see how you could sue for performance when you don't have a contract. At least out here, when the contract fails to close and there is no extension signed, the contract is no longer valid. Then you get into the issue that the sellers can make the extension contingent on other things now.
Not saying you are wrong but our (Florida) association legal Q&As website specifically addresses this point:
A. A closing date on a contract is not an expiration date. Therefore, if the parties don't close on the closing date, the contract still exists. The issue then becomes why the contract failed to close and whether either (or both) parties breached the agreement.
Since verbal agreements and understandings are unenforceable, I imagine there would still be a contract and it will be up to the parties or their attorneys to figure out how to proceed.
Not saying you are wrong but our (Florida) association legal Q&As website specifically addresses this point:
A. A closing date on a contract is not an expiration date. Therefore, if the parties don't close on the closing date, the contract still exists. The issue then becomes why the contract failed to close and whether either (or both) parties breached the agreement.
Since verbal agreements and understandings are unenforceable, I imagine there would still be a contract and it will be up to the parties or their attorneys to figure out how to proceed.
Ours say that it would be terminated because an agreed upon term was not met. Do you have a time is of the essence clause in your original agreements or do you need to call for that?
Out here a contract can be terminated with earnest money in dispute, and the sellers can go under contract with a new buyer. I know in some states, sellers can't move on if they have an open escrow. We can here. That way sellers can't be held hostage by a buyer when the EM is rightfully theirs.
Our contracts do have an "essence" clause built in. The reason your statement triggered my memory about the Q&A was that I thought for many years that missing the closing was a clear "out-of-contract" deadline kind of thing until I happened upon this answer while searching for something else. Honestly, it made sense but it was a complete surprise at the same time.
That is quite the situation there. Lets try and clarify the above a bit first.
You via your agent successfully negotiated a residential purchase agreement which both parties signed. YES
You opened escrow by depositing the earnest money. YES
You contract to purchase, as written is then valid and enforceable (warts and all).
During the due diligence period you identified issues that required mitigation or consideration. YES
Terms for mitigation/ consideration were not reached. Sorry if I was not clear.....if we are speaking of the 'Request for Repairs', we asked for certain items to be repaired.
The 'counter' from the seller was that the generator would not be repaired, and propane tank was between the owner of the home and propane company, some minor items would be fixed and a $500 credit.
We countered with $5000 credit and we would fix everything.
They did not respond other than to say that we were too far apart 7 we should move on.
After some thought, we agreed to the sellers terms.
Sellers Real Property Disclosure failed to identify septic issue. YES
Due diligence period as stated in your purchase agreement expired without resolution of open issues. Unknown, but probably so.
Silverfall & bbronston, just going by what our agent said (and verified by her broker), we still have a contract.
What we are waiting for is the certificate for the septic as spelled out in the contract.
My understand is that without the septic being 'good', no certificate will be issued.
There was no mention of a $$ amount for repairs, so I am being told that the sellers HAVE to fix the septic.
But I feel we have been given misinformation before, that this may not be the case.
So here we sit, feeling like we're damned if we do & damned if we don't.
We countered with $5000 credit and we would fix everything.
They did not respond other than to say that we were too far apart 7 we should move on.
After some thought, we agreed to the sellers terms.
Based solely on the above, my interpretation would be that you do not have a contract. You countered and they rejected. Once rejected, you can't just go back and sign a previous offer and have it be a valid contract.
Otherwise, what am I missing?
Quote:
Originally Posted by AJIA
My understand is that without the septic being 'good', no certificate will be issued.
There was no mention of a $$ amount for repairs, so I am being told that the sellers HAVE to fix the septic.
Unless you have something in writing to the contrary, Sellers do not have to fix the septic.
(Ignoring for the moment that I don't believe that you have a contract.)
Last edited by jackmichigan; 11-14-2015 at 05:18 PM..
Based solely on the above, my interpretation would be that you do not have a contract. You countered and they rejected. Once rejected, you can't just go back and sign a previous offer and have it be a valid contract.
Otherwise, what am I missing?
I understand in the original back and forth for a selling price, once the buyer counters the sellers offer is off the table. But this was AFTER a 'buying' contract was signed and was for 'repairs' only.
Countering a repair proposal would void the original selling contract??
Our agent & broker do not agree with you.
Quote:
Originally Posted by jackmichigan
Unless you have something in writing to the contrary, Sellers do not have to fix the septic.
(Ignoring for the moment that I don't believe that you have a contract.)
That might be true, but the sellers need to provide a "certificate" for the septic.
Can they get one without it being good?
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