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You are already under a legal contract and the buyer must pay the legal fees for the seller.
Suing for Specific Performance never goes to trial.
I think people forget that a signed real estate contract is a binding, legally enforeable contract and not some flimsy piece of paper riddled with loopholes.
I hope the holiday inn gives you your money back for the law degree they gave you.
One thing to be aware of is all real estate transactions are governed by the states, and each state is different. So blanket statements may not be accurate.
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Originally Posted by bbronston
I highlighted the part of your statement because I was curious. You said your contract has a financing contingency and the buyer had 10 days to provide you with a loan commitment. Did he provide written notification within that ten day period that he was unable to get a loan or did the notification come after the 10 day period had expired? The fact that anyone said anything about cash is probably not going to matter much (it depends on your contract) but that 10 day period and the timing of their notice (if any) will probably be key to your attorney's advice.
This is a key point. In Texas, our std residential RE contract has many time limits. In most cases, if you pass one of those limits, unless you notify the title company in advance, it's as if you accepted that limit. Real life example: Just sold a home last month. Buyers never inspected it. I didn't say anything until after the closing, when I asked our realtor why they never inspected the property. She said they didn't realize it until the inspection time period had passed. At that point, the only way to do it was to ask us to extend it, which they were reluctant to do.
bbronston's point: If they didn't notify the title company within the ten days that they were unable to get financing, in Texas that would be the same as saying they HAVE secured financing. If the sale is called off, the title company will (eventually) give the escrow money to the seller.
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Originally Posted by Joe461
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."
This is one of the most ridiculous statements I've ever seen. I would guess over 90% of homes sold in this country are sold using standard realtor's forms, without either party EVER directly talking to an attorney. Seriously, a 200K second home, and you want to call in the big guns?
And your statement "a DIY contract" shows either your complete ignorance of standard practices, or your snark level is off the charts. Either way, you are contributing NOTHING to this thread.
Of course, neither am I (yet), but at least I'm not misleading people. Badly. Like you.
You are already under a legal contract and the buyer must pay the legal fees for the seller.
Suing for Specific Performance never goes to trial.
I think people forget that a signed real estate contract is a binding, legally enforeable contract and not some flimsy piece of paper riddled with loopholes.
Oh c'mon. The Buyer always must pay the legal fees for the Seller? Specific Performance lawsuits never go to trial??
Maybe you forgot to proofread your response before you hit "Submit Reply". Please try to be more careful next time.
One thing to be aware of is all real estate transactions are governed by the states, and each state is different. So blanket statements may not be accurate.
This is a key point. In Texas, our std residential RE contract has many time limits. In most cases, if you pass one of those limits, unless you notify the title company in advance, it's as if you accepted that limit. Real life example: Just sold a home last month. Buyers never inspected it. I didn't say anything until after the closing, when I asked our realtor why they never inspected the property. She said they didn't realize it until the inspection time period had passed. At that point, the only way to do it was to ask us to extend it, which they were reluctant to do.
bbronston's point: If they didn't notify the title company within the ten days that they were unable to get financing, in Texas that would be the same as saying they HAVE secured financing. If the sale is called off, the title company will (eventually) give the escrow money to the seller.
He provided nobody proof about not being able to get financing, ever. We STILL don't have a denial letter and we are almost at a week since he wanted out of the contract. His realtors first words about canceling contract were "he cannot come to terms with the lender, so we wants to cancel the contract". NOT he could not secure financing. That came later after we pushed a little more. Even still, he cannot provide anything saying he could not get financing and refuses to give my agent any contact information for the 3 lenders that supposedly turned him down. I have proof that he was, indeed, given financing and walked away from it. In fact, the whole time my agent was asking his agent about where we were at with lending (because they would never give us contact info to contact them ourselves) we were told the lender said everything was on track for closing.
This is not his first time doing this to someone either. I have found several posts from him saying he has a house under contract and then saying he cancelled the contract. It seems to me he has never closed a deal and maybe nobody has challenged him before.
I will take some responsibility on this as well. I usually have a pretty good BS meter and mine started going off about 1/2 way through this and I was pushing my agent daily to get updated information on this thing. She did and her agent kept telling us everything was great.
I could have easily gone online then and found all this stuff out about our buyer. But I did not, I believed what his agent was telling my agent. In retrospect - I should have trusted my gut.
The OP is absolutely right. The buyer, thanks to Big Government, has ALL the power. 24 hours after our listing went online we accepted a full price offer, cash, 30 day close, from a kid who, we later discover, backed out on the critical day - for the THIRD time this year. No inspection problems. Seems Daddy pulls Sonny Boy's strings. Both have been verbally abusive to at least two agents and two brokers.
Meanwhile, our home was off the market for over two weeks and we lost a backup offer.
I would encourage you to have a pre-approval letter next time you review offers with financing contingencies. Obviously, that sort of financing can fall through, but at least you know that the buyer is already working with a potential lender.
And depending who holds the earnest deposit monies, they may require a denial letter. From what I understand (and hopefully one of the experts around here will correct me if I'm incorrect), it's not actually the realtors who decide if earnest monies get returned. It's the title company who holds the funds in escrow who make that determination, and they make that determination based on the contract language.
So the buyer can request the money back, but if the title company requires a denial letter they may be SOL if they don't provide one.
This is one of the most ridiculous statements I've ever seen.
I am delighted that I could make your day any give you a reason to post where you (by your own claim) can contribute nothing to this thread.
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I would guess over 90% of homes sold in this country are sold using standard realtor's forms, without either party EVER directly talking to an attorney.
And I would "guess" you are wrong. Looks like we have a stalemate.
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Seriously, a 200K second home, and you want to call in the big guns?
In my book, $250k is still a decent amount of money. A local RE attorney is hardly a "big gun." As has already been mentioned, the "standard" forms are written by RE attorneys - not agents or homeowners. Why is it such a foreign concept to you that it might take to RE attorney to _explain_ the provisions of the contract or offer advice on what is best for your particular situation? Or do you simply advise signing a contract in ignorance because some lawyers in a distant city decided this "standard" form will completely cover all situations?
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And your statement "a DIY contract" shows either your complete ignorance of standard practices, or your snark level is off the charts. Either way, you are contributing NOTHING to this thread.
It certainly is a DIY contract. The form may be standard, but once you have a non-lawyer eliminate some provisions, add others and create riders, it is no longer a standard form. While this may be standard practice in some areas, and may work out in most situations, it does not mean someone should enter into a legally binding contract without a full understanding of what they are signing. My use of "DIY" is not derogatory. It simply underlines that while the individual parts may have been written by lawyers somewhere, the resulting assembly of those various parts may or may not be what was intended or agreed to by the two parties. It all depends on who did the assembly and how well versed they are with the meaning of each provision and how they interact with each other.
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Of course, neither am I (yet), but at least I'm not misleading people. Badly. Like you.
We can agree on your lack of contribution, so at least there is some common ground.
Let's see what I wrote:
People should fully understand what they are signing when entering into a contract (any contract).
Most people are not skilled in real property law, and should have a trained professional explain the contract.
The buyer's agent has told the seller he has no right to the deposit in escrow and the buyer disagrees. Based on this I stated it is now a legal dispute and will likely require a lawyer to resolve. Trying to play lawyer, the OP could inadvertently undermine his position.
Upon realizing there is only $2,000 at stake (<1% deposit!) I suggested walking away or possibly looking into small claims court.
Some quick looking seems to indicate that it is common practice in at least 38 states + DC to close a home sale with an attorney. Your "guess" would mean that 90% of all home sales take place in only 13 states.
Your statement ("big guns") also implies that one is foolish for even consulting with an attorney when entering into a contract for what is typically the largest and most significant purchase someone will make in their life. You seem to think that some attorneys who know nothing about the buyer, seller or transaction can design a standard "one size fits all" form that will perfectly cover all situaitons.
Who is misleading people?
I'm not here to argue or attack posters. I have already noted that I was unaware there are locations where RE agents put together the contract. Simply take my original use of "attorney" and replace it with "competent agent who is trained and qualified" to put together and explain the contract. If that's the case in this situation (as explained by the OP) then the seller should have the escrow deposit back quickly. If not, then he will have to fight for it.
No reason to get bent out of shape and invent statistics to push a "be your own lawyer for a home sale" agenda.
Had I been the sellers agent I wouldn't have made that offer contingent on financing, because the buyer definitely doesn't appear to need it.
The new rules now are that the bank has to state in the letter every cent that is in the bank account, rather then just stating the required funds are available. I hate it. As a buyer it may be to a disadvantage to have so much more and have to show it. Not wanting to derail your thread, just telling people that don't already know this.
You get around this by establishing a new account with only the amount of $ the buyer wants to put on the table. When I have made offers the last couple of times I would have the bank write a letter approving funding to the $ so that the seller didn't decide I had 5 or 10% higher to spend.
My 80 year old mother recently bought a house using a loan against her brokerage account as opposed to taking a mortgage or selling any assets. The sellers agent basically nosed into everything in site and was satisfied. But for a brief moment they did have hesitation since the proof of funds (basically she took the loan out separate from the house) is entirely different than a lender pre-approval.
On the flip side I had a two friends (who basically lived off his parents) put an offer in on a property pre construction and then when they wanted to spend $ elsewhere hit up their parents banks (her mom worked at one and his parents own a contracting business and multiple properties that have loans) to claim they could not finance. That was partly true since they were dependent on his mom letting them list against shared assets so if she said no they were sunk. But in truth they simply pulled a fast one on both ends. And no- I do not approve of that (or them.)
We will not be pursuing this any further. I have already lost almost $10,000 by keeping the home off the market for a month and a half and it is going to cost me A LOT more to go after him for $2000.00.
I am a member of bigger pockets investing site and he is also. I posted this to him. He will see it, because he has gotten pissed about other stuff I wrote about him on it. Will it matter to him, probably not. But it made me feel a little better.
Just wanted to come back and do another quick update. First let me say that as an investor, it makes me LIVID that these type of people give all of us a bad name. I own my own home (actually at 41 I am on my 4th home) as well as 3 rentals. So while I am no expert, I can call myself an investor. Someone who creates an LLC and calls themselves an investor even though they have NEVER actually purchased a property in the 2 years that they have been in "business:", not an investor.
Unfortunately, this "investor" is part of our BP community. Mine is not the only home he has gotten a contract on and then cancelled. I suggest to this person that he step back a little and realize what he is doing when he writes these offers on homes. Realize how many peoples time he is WASTING and how much money he is costing them. His realtor spent a lot of time and energy on this deal from the beginning and will get nothing for it. My realtor spent a lot of time and energy on this deal and will get nothing from it. WE have lost thousands of dollars (close to $10,000 when it is all said and done) because of this deal and I honestly don't think that he ever intended on actually purchasing the home to begin with. I think it makes him feel like he is actually doing something and "in the game" when he is doing it, but really has no way to actually purchase these homes. You are screwing around with peoples business and it is not OK.
Keep this in mind next time you want to feel excited about being a real estate investor and make another offer. Will you think about the others involved? Probably not. But at least I put it out there and hopefully gave you something to think about. Messing with people's lives and business is not going to make a good name for yourself. And the more times you do this and your name gets out as someone who never closes a deal, the less people are going to work with you. Because they know it will just be a waste of their time and money.
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