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The RE agents write a legal contract? You are selling a home without an attorney?
Sorry to say, but that's your problem right there. A home sale is a big ticket item with many details. It may not be how it is done around there, but I cannot fathom entering into such a contract that is written by real estate agents and not an attorney. I would certainly never sign any contract without having an attorney review it first. A real estate agent is not qualified to write a detailed legal contract.
I guess you have learned why you should have an attorney, despite what the "norm" may be in your area. At this point you can only hope there is some clause in the contract that protects you. Likely, the buyer knows how to work this scam and you will not see the money.
I couldn't imagine how someone could pull off a scam like this. Now - realizing that it was a DIY contract - it makes sense.
Either way, my original point still stands. This is well out of the "agent" realm (unless the buyer simply agrees to let yo have the deposit). Your only recourse it to get a real attorney. DIY got you in this deep and will only get you in deeper. Unless real estate agents also file and prosecute court proceedings in your area. Perhaps you can get selected for "People's Court."
Do you have ANY idea how many states use standard RE forms and title companies? No lawyers involved at all.
The first house I ever bought was in a state like that (Arizona). I was sleeping with an attorney at the time (yes, I said that - it was a long time ago) and I asked him to refer me to a RE attorney to review my docs. He explained that was totally unnecessary. Frankly, I didn't believe him, so I got out the yellow pages (yes, I said it was a long time ago) and called 3 "real estate attorneys". Each one refused to take my money to review the standard forms for a standard sale.
I recently did some no-contingency RE deals and produced a bank letter. The letter did not give any details on balance. It simply stated I had available funds in excess of $xxx (xxx being the purchase price of the property). I specifically didn't want my balance to be made public and the bank had no problem honoring that request. It was actually the bank that suggested the wording. It would not surprise me, however, if different state have different rules on this.
It used to be that way here and no longer is. I have asked more than one bank what their policy is now that I have this problem. The only thing I can do is transfer money from one account to another before getting a letter written. Just doesn't seem right, but I don't know what else to do.
Sorry to say, but that's your problem right there. A home sale is a big ticket item with many details. It may not be how it is done around there, but I cannot fathom entering into such a contract that is written by real estate agents and not an attorney. I would certainly never sign any contract without having an attorney review it first. A real estate agent is not qualified to write a detailed legal contract.
There are attorney states, where things are done using an attorney. But that is not true all over the country. The state has an approved contract (approved by the state), and the Real Estate Agent/Broker fills in the blanks where needed to write the contract. In those states, the licensed real estate agent, is authorized by the state to have a limited practice of law as they call it, to do the contracts, and must only use the state approved contracts. Some of those states, will authorize the agents to close their sales, and some will require an escrow company to close the sales. Some of the states, the brokerage will hold the escrow funds, in a designated escrow account, and others will require a 3rd party escrow company.
I found out over many years, too often an attorney would be brought into the sale/closing, that knew far less than the agents, and even less than the buyer/seller about real estate closings and contracts. A divorce attorney, is one example of one I was involved with one time, who had the closing papers on a large investment property so screwed up, that it would not be possible for the Title Insurance Company to even insure the title. After getting the papers correctly drawn up, the attorney was going to conduct the closing did not even know what had to be signed by who.
So if an attorney is involved, make sure they understand real estate law, and not just an attorney that normally handles divorces, etc.
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Except he did get financing - and he did not like the terms so he walked away from it. I have proof now that he did this. He had financing and decided he no longer wanted to do the deal. THAT is not covered under the financing contingency. His own agent wrote in PR under the rate and not an actual number so he cannot use the "the interest rate was to high" because it wasn't. It was prevailing rate. And at this point - I am getting a lawyer involved because I feel that he is in breech of contact. He thought he was just going to state he was not able to get financing and not have to prove it. He cannot produce a denial letter (it has now been 3 days) and it is because he was not denied. He thought we would just accept that as his excuse. I don't think he thought that we would dig further in this.
It depends on the wording in the contract financing contingency in the contract, and the terms of loans offered. They do not usually say, that the buyer has to accept the loans available, if the loan terms and rates, are not reasonable. I have seen many mortgage offers by lenders, that no sane person would accept or be expected to accept. There are often reasons other than interest rates, that make a mortgage not acceptable to any sane buyer. Sometimes if the lender does not really like the property, and will only make the loan at unreasonable rates and/or terms. Especially non owner occupied properties, that are investments such as this one appears to be. And I understand that there were more than one place that the buyer was applying for a loan. If the buyer is actually qualified to finance a property, a pre-approved buyer form/letter means the buyer is acceptable to the lender for a certain amount, but does not actually apply to the property itself. The property under contract, then must be taken into consideration by the lender.
There are three things that may have happened. 1--The lenders may have been less than happy with the property itself, and may have make terms of the loan so unfavorable for the buyer, no sane buyer would accept the financing. 2--Something that turned the mortgage company off of the property, may have in turn turned off the buyer when it was brought to their attention as the reason for an unfavorable loan. 3--The buyer may have thought he could get a mortgage similar to a single family home for a personal residence, and when they saw that the loans would be much different and would not make it profitable to own the property as an income property they no longer want the property. This would have been something that a knowledgeable investment real estate broker would have discussed with the buyer prior to writing the contract.
The state has an approved contract (approved by the state), and the Real Estate Agent/Broker fills in the blanks where needed to write the contract. In those states, the licensed real estate agent, is authorized by the state to have a limited practice of law as they call it, to do the contracts, and must only use the state approved contracts.
That is very interesting. What states have real estate contracts approved by the state? What states allow a real estate agent to have a limited practice of law?
That is very interesting. What states have real estate contracts approved by the state? What states allow a real estate agent to have a limited practice of law?
Michigan, for one. It is acknowledged that certain activities of a real estate agent may venture into that gray area of practicing law. Clearly, someone who is not licensed as a real estate agent can not perform for a fee many of the activities taken on by real estate agents. Real estate agents can perform certain limited tasks which might otherwise might be considered the practice of law--but they can only do so in the context of providing overall brokerage services. Still, we cannot provide actual legal advice, even though we often provide guidance on issues which are legal in nature. Some of our best advice, however, is to consult with an experienced real estate lawyer.
I know that's probably not very clear, but that's the nature of our business.
Do you have ANY idea how many states use standard RE forms and title companies? No lawyers involved at all.
No, I don't. How many are there, exactly? Probably quite a few. In NY we all use standard forms and title companies. Have done quite a few RE transactions in the past few years and never saw a "standard" form that didn't need at least some modification. I'm pretty sure we also don't _require_ an attorney for contract or closing, but I don't know anyone who would consider a home sale/purchase without one.
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Your snarky remarks are way off base, dude.
Snarky? You are free to misinterpret, "dude." (FWIW, I'm not a surfer, but I am a fan of both Ian Hunter and David Bowie.) I'm simply incredulous that someone would enter into a contract for a home sale without any advice from a legal professional and a full understanding of the terms of the contract.
If, as some others have stated, the agents in that state are effectively involved in a "limited practice of law" then it was the agent's responsibility to draft contract changes and properly explain the contract to the seller. Based on the story as told, this apparently was not the case.
I'll take your word for it that it is common practice for people to enter into complex $250,000 deals without a full understanding of the paperwork they are signing. Trusting the details to a generic form or a real estate agent is not something I would do.
Regardless of the "common practice" in that area, it seems an attorney will now be needed to sort things out to the seller's satisfaction. One simply has to hope either the "standard" form used or the real estate agent's revisions to the financing sections are adequate to protect the seller. I find it sad that the seller had to do all the legwork to track down the buyer and uncover the fraud.
Since there was no attorney to protect the seller's interest, the only ones who are truly "off base" in all of this are the buyer and the buyer's agent who didn't properly qualify her client (who made a cash offer with a fraudulent letter).
I'm in the OP's corner. This is a legal issue. Suggesting (however strongly) to speak to a lawyer is usually considered good advice, not "snarky."
*Edited to add: according to this site: http://sandygadow.com/state-by-state-closing-guide/ it would seem that having an attorney close on a RE transaction is common practice in at least 38 of 51 states + DC.
Michigan, for one. It is acknowledged that certain activities of a real estate agent may venture into that gray area of practicing law. Clearly, someone who is not licensed as a real estate agent can not perform for a fee many of the activities taken on by real estate agents. Real estate agents can perform certain limited tasks which might otherwise might be considered the practice of law--but they can only do so in the context of providing overall brokerage services. Still, we cannot provide actual legal advice, even though we often provide guidance on issues which are legal in nature. Some of our best advice, however, is to consult with an experienced real estate lawyer.
I know that's probably not very clear, but that's the nature of our business.
Interesting. In that context, who drafts revisions and riders to the contract? Is that a function of the real estate agent in a place like Michigan? Wouldn't advising a client on the need for and content of a rider constitute legal advice? At what point does a real attorney get involved?
Or are virtually all deals simply boiler plate that use the same, unmodified contract form?
All honest questions. I have closed on three properties in the past year. Two were similar homes in the same neighborhood. All three deals were structured completely different and had numerous changes to the standard form, along with one or more riders. While relatively simple deals, there were just situations the standard form couldn't account for (or non-applicable items it did account for). All three contracts started out as standard forms, but ended up as three completely different things.
Simply trying to understand how these things are handled in your neck of the woods.
Interesting. In that context, who drafts revisions and riders to the contract? Is that a function of the real estate agent in a place like Michigan? Wouldn't advising a client on the need for and content of a rider constitute legal advice? At what point does a real attorney get involved?
Or are virtually all deals simply boiler plate that use the same, unmodified contract form?
All honest questions. I have closed on three properties in the past year. Two were similar homes in the same neighborhood. All three deals were structured completely different and had numerous changes to the standard form, along with one or more riders. While relatively simple deals, there were just situations the standard form couldn't account for (or non-applicable items it did account for). All three contracts started out as standard forms, but ended up as three completely different things.
Simply trying to understand how these things are handled in your neck of the woods.
In most cases, I would say that a Michigan real estate agent handles minor contract revisions. As long as we're working with someone under a listing agreement--or under an agency agreement--we can provide those services. (And the client might be well advised to consult with their own attorney as well.) We cannot, however, provide those services to just anyone off the street--it has to be in the context of providing overall brokerage services.
Most real estate agents in Michigan use standardized, fill-in-the-blank contracts--especially those in residential real estate. For the most part, it isn't difficult to make minor changes. It's important, though, for an agent to recognize when they're in over their head and need to recommend to their client that they should consult with a good real estate attorney. And the emphasis is upon good real estate attorney. I'm continually amazed at how little many--if not most--lawyers know about real estate or real estate law. But...I shouldn't be. Experience is key.
Some states have state board of realtors that have contracts that are dozens of pages with addendums that are dozens of pages all written as well as forms for numerous options that could come up. They are already written by attorneys and periodically need to be updated according to the attorneys. And classes are taught regularly on those contracts and anything that might come up. I know one where the office has, in addition, a slew of it's own pages to add, again drawn up by particular attorneys.
Interesting. In that context, who drafts revisions and riders to the contract? Is that a function of the real estate agent in a place like Michigan? Wouldn't advising a client on the need for and content of a rider constitute legal advice? At what point does a real attorney get involved?
Or are virtually all deals simply boiler plate that use the same, unmodified contract form?
All honest questions. I have closed on three properties in the past year. Two were similar homes in the same neighborhood. All three deals were structured completely different and had numerous changes to the standard form, along with one or more riders. While relatively simple deals, there were just situations the standard form couldn't account for (or non-applicable items it did account for). All three contracts started out as standard forms, but ended up as three completely different things.
Simply trying to understand how these things are handled in your neck of the woods.
I get what you're saying, but the kinds of amendments used in the typical sale aren't full of legalese- I.e., the "standard" contract includes the drapes, but the seller is keeping the drapes in the master bedroom, etc. as for "riders", in my area nearly all of those are standardized too - seller renting back the property for a week after closing, etc. you (and your attorney) are not likely to be the first people ever who wanted to sell with a particular condition.
in any case, the board re-writes & polishes the contract (and the riders) constantly, based on anything that causes litigation in our area. Further, the number 1 consideration for preventing lawsuits is the "meeting of the minds" - the discussions that happen between the agents/buyers/sellers before those amendments/riders are crafted. The contract just memorializes the understanding of the parties.
A "standard" deal puts 2 agents & buyer & seller (4 parties) on the same page - adding two more attorneys as parties isn't going to simplify anything or *improve* communications between the principals (who are the only people who should really matter in a deal).
I think if you dissect a hundred lawsuits, you'll find at least ninety where both parties complied with the letter of the contract, but one side felt "slighted" for some reason, then they went back to the contract looking for a "loophole" or a poorly-worded section as a tool to re-negotiate or back out. That "opening" is a lot more likely to happen with a newly-drafted rider or amendment that's written in by an agent or an attorney.
Attorneys only see lawsuits, not completed successful deals, so it's easy to blame the agent for ambiguity, even though the amendment or rider isn't the real issue, it's the "slight" or perceived disrespect that caused the lawsuit.
To be totally honest, the more you look at the *actual* contract wording, when there are lawsuits that create headlines (I.E. "Sellers must disclose neighbors who walk around in their underpants") - the lawyer's argument isn't with the wording of the contract, but "implied" or "reasonable man" type stuff. "The seller *should have* told me I was buying property 50 feet from an airport!".. The contract is usually fine, they're just pulling arguments out of their asses to create an ambiguity where none actually existed.
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