Buyer v Seller: help! - Posted by Terrance Hamel

Posted by JPiper on December 12, 1999 at 15:14:26:

Uh Terrance, you may be in the business of making a ?profit for being a problem-solver??.but right now it looks like the seller has a problem, and it?s because of you and his own stupidity for agreeing to your proposal. Next time you might try being a little more expeditious with your due diligence. There?s absolutely no reason to string someone out for over 30 days before you walk away from the deal. Further, in the future handle your business in a professional manner?.ie if you intend to exercise a contingency, do so in writing within the allocated time period. And if you have an inspection to make, make it. In short, live up to your obligations and don?t string sellers out.

I would send the seller a letter stating that you are formally disapproving the property because of XXXXXX. It appears that you can disapprove this property for a variety of reasons, to include market value and others. So simply reject it based on one or more of those reasons?.in writing. I wouldn?t deposit the earnest money at this point.

It appears that your liability is limited to the earnest money deposit, which you did not deposit. I?d leave it as above, and see where it goes. And keep in mind, I?m not an attorney. I use attorneys, I seek their advice when confronted with legal problems. I?m sure an attorney could give you some good advice for next to no money at all. If you?re really ?in this business? that?s one of your business expenses. It?s worth a phone call to your attorney.

By the way, if this seller is furious, it?s hard to see why that isn?t justified.


Buyer v Seller: help! - Posted by Terrance Hamel

Posted by Terrance Hamel on December 11, 1999 at 18:25:16:

Here’s one for legal minded…

I put my first deal under contract on a FSBO for a woman who was leaving to another state for a job. We got the key the day of the signing and they left a few days later.

As agreed, they had a professional cleaner come in, but we found things that weren’t cleaned to our satisfaction, so we cleaned those ourselves. We trimmed back all the trees and bushes, removed all the weeds and even removed a whole garden of rotting tomatos on the side of their house. They left a few large boxes of junk in the center of their garage and a large, rusting metal shelf in the driveway. We loaded up my truck and dropped it off at the city dump for $30.

In the contract terms it states that $500 will be put in escrow within 3 days of building inspection; building inspection will occur 30 days from date of agreement; days are defined as business days.

During that time, I am trying to find buyers. I find several prospects, but I soon find out that these people cannot make the payments necessary due debt/income ratio, not enough income, or bad credit. In fact, the market rent is hundreds lower than what I need to clear my offer. Didn’t do my homework on that end; lesson learned.

On the day the inspection is to be made, the Seller calls. I ask for one more day, she agees.

I made the mistake of not making a building inspection and not putting $500 up. I didn’t realize I could do a note for $500. Her Significant Other calls the Title Co and then leaves an angry voicemail stating violation of contract and demanding satisfaction.

I call back and agree (to my dismay) that I had defaulted and would give them their $500. The SO leaves another VM the next day demanding it by Friday noon or he would fly back and have me arrested for fraud.

Legal action withstanding, can I minus the dumping fee and FMV for services rendered? Is this advisable in this situation? Any other suggestions?

Buyer v Seller: help! - Posted by Terrance Hamel

Posted by Terrance Hamel on December 12, 1999 at 14:45:02:

Thank you all, for your responses. To answer some questions, in hopes it will bring more answers. I am involved in RE to buy and sell to/from others and make a profit for being a problem solver.

It has been 35 business days since the Agreement. The Seller called on the 30th day, at which point I asked for another day. I declared unobtainable financing and Buyer’s partner non-approval on the 31st. I got the ‘fraud’ call on the 33rd, which would have been the last day I could put earnest money in. The closing date is 45 days from Agreement.

Some of the clauses of this specific contract state:

Cash Deposit to be held in escrow by “TBD” in the amount of “500” within 3 days of acceptance of satisfactory building inspection.

Buyer agrees to make application for, and to use reasonable diligence to obtain said loan. Should Buyer fail to obtain the same ot to waive rights herunder within said time, Buyer may cancel contract.

…all personal property on the premises and real property, including lawn, shrubbery and pool, if any, shall be maintained by Seller in the condition they existed as of Effective Date.

In the event that Seller should fail to consummate the transaction contemplated herein for any reason, except Buyer’s default:
(1) Buyer may enforce specific performance of this Agreement in a court of competent juristiction and in such action shall the the right to recover damages suffered by Buyer by reason of dealy in the acquisition of the Property, or

(2) May bring suit for damages for breach of this Agreement; in which event, the deposit made hereuder shall be forthwith returned to Buyer, or

(3) Declare a default, demand and receive the return of the deposit. All rights, powers, options or remedies afforded to Buyer either hereunder or by Law shall be cumulative and not alternative and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein by law.

In the event Buyer should fail to consummate the transaction contempalted herein for any reason, except default by Seller or the failure of Seller to satisfy any of the conditions to Buyer’s obligations, as set forth herein, Seller shall be entitled to retain earnest money deposit, such sum being agreed upon as liquidated damages for the failure of Buyer to perform duties and obligations imposed upon it by the terms and provisions of this Agreement and because of the difficulty, inconvenience and uncertainty of ascertaining actual damages, and no other damages, rights or remedies shall in any case be collectible, enforceable or available to Seller other than as provided in the Section, and Seller agrees to accept and take said deposit as Seller’s total damages and relief hereunder in such event.

Subject to Buyer’s approval of satisfactory building inspection within 30 days.

Subject to approval of Buyer’s partner.

It is agreed that Buyer will have 30 business days from the date of this agreement to perform due diligence. This procedure may include confirming market value, determining any needed repairs, or researching the title to the property. In the event Buyer determines that the property does not meet with their approval, this contract will be null and void and the Buyer deposit will be returned immediately.

Re: Buyer v Seller: help! - Posted by JPiper

Posted by JPiper on December 12, 1999 at 09:32:56:


Here?s the good news??they don?t throw you in the jail for breach of contract.

The question is, did you breach the contract? That?s going to depend on how the contract reads. Obviously you did not put the $500 up in earnest money. But was depositing this money contingent on approval of the inspection? What did the contract say happened if the inspection was not performed? Has it been 30 days since the date of contract? When is/was the closing date?

Without the contract it?s going to be impossible for anyone to know whether you have actually breached the contract. But one thing for sure??you need to quit admitting to things. The penalty for breach of contract is DAMAGES as determined by the court?..not necessarily just your earnest money. But perhaps your contract limited damages to the earnest money?.again, we don?t know.

The first step here is to quit agreeing to your guilt. Second step is to call your attorney, fax him the contract, and let him tell you what your situation is.

DO NOT GIVE THE SELLER THE EARNEST MONEY. If you do, you lose a bargaining chip?and you may not get anything in return for it?.like a release from your responsibilities under the contract.

Here?s another side to it?.you may still have certain rights under this contract. This means the seller may not be able to sell to anyone else just yet. I think right now my stance would be that I would release the seller from their OBLIGATIONS under the contract, in return for a release of me under the contract. At least, that would be my starting point. BUT, you need to speak with your attorney?.right now, you look like you?re going from bad to worse. Again, understand that if the seller pursues this and files suit, that upon winning this suit they could receive damages, an amount that could potentially be significantly higher than the earnest money. Talk to the lawyer, let him read the contract, see where you stand.


Re: Buyer v Seller: help! - Posted by Lisa

Posted by Lisa on December 12, 1999 at 08:11:36:

I am not following this story.
Is your agreement with the sellers for a L/O or are you purchasing this house? Why are you looking for others? Do you intend to ‘sell’ your sighned contract to another buyer?

Sorry for such simple questions, but I am a beginner and am trying to learn as much as possible.

Don’t you wish folks would answer the question?! - Posted by Felix

Posted by Felix on December 11, 1999 at 23:56:19:


How was the deal structured? L/O? Owner finance? Cash in 30, 60, 90 days, etc.? What did the sales contract state about default? Always go back to the contract.

The SO is “acting tough,” but more than likely not going to spend time and money to “arrest you for fraud.” If the deal was structured correctly and you can fix the situation with $500, do it! The owner(s) didn’t have a solution to their house problem until you came along and won’t have onw if you are put out of the picture.

You need to rectify the situation NOW! As you said, you learned your lesson. All of us newbies make mistakes, but this experience will help in the future.

If you don’t have a RE attorney, get one to look over the contract. If you are in TX, I can give you the name of ours. But, first see if you can fix the misunderstanding. Often, you can.

Good luck!


Thank you - Posted by Terrance Hamel

Posted by Terrance Hamel on December 12, 1999 at 21:56:15:

As odd as this may sound, I appreciate everyone’s input. In hindsight, I see that I didn’t know much about the process, actions and alternatives available to me. At every stage, I have learned something. I wish I could have known what to do, who to call, what to say along each stage, but I didn’t. I especially didn’t want to make a bad relationship, let alone a bad deal.

However, they say you learn by doing. They also say the lessons learned best are the ones the hurt the pocketbook.

I will not make the same mistakes again; that is a promise. The next deal I make WILL be professional, timely and beneficial to both parties.

Thanks again, folks.

Re: Buyer v Seller: help! - Posted by thom

Posted by thom on December 12, 1999 at 21:21:51:

“I am involved in RE to buy and sell to/from others and make a profit for being a problem solver.”

You are the problem, you are the reason every person selling a house should use a professional realtor. In fact I think I’ll use you as an example while selling to FSBO’s. Thanks