Canceled Contract - Posted by reinvestor

Posted by Dave T on March 26, 2001 at 21:17:03:

Equivalent to the mentality that says, “What do you mean we don’t have the money, I have plenty of checks left in the checkbook?”

Canceled Contract - Posted by reinvestor

Posted by reinvestor on March 25, 2001 at 20:55:07:

I recently had a house under contract. The sellers were a divorced couple that were selling their home as stated in their divorce decree. The wife contacted me on numerous occasions recently and informed me that regardless of the circumstances she no longer wished to sell her house. She came to me with a letter that she typed up stating that she wished to cancel the contract and offered to release my deposit monies from her attorney’s escrow fund. I agreed and also signed on the paper that I would not pursue further legal action against her for breach of contract (there are many more deals to get). I informed my Realtor who then contacted the “other side” Realtor and told her about it. They are telling my Realtor that they will sue me if I don’t go through with the deal because the wife had no right to do that. Now, I have already contacted my hard money lenders and informed them that the deal was done. Am I right to believe that I am in the “right” because the “seller” initiated the cancellation of the contract? I no longer have access to the funds and am honoring her wish. So, I believe I can walk away correct?

Investor in NJ

Re: Canceled Contract - Posted by dewCO

Posted by dewCO on March 27, 2001 at 12:09:45:

I agree with Ed, the commission most likely has been earned by the listing company regardless of whether the deal closes. BUT to be sure one has to check the verbage in the listing contract! When in doubt READ IT!!! It should say when a commission has been earned! If the buyer has an agent, it should likewise be spelled out in their written contract/agreement to work together.

Re: The commission has been earned. - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on March 26, 2001 at 13:19:31:

When the buyer and the seller are brought together the commission is earned, and owed by whoever agreed to pay it. In this case the divorcing sellers. The commission is owed by them (her) and she probably cannot pay.

There is a chance that anyone who conspired with her to terminate the deal (YOU) may have assumed part or all of the liability for the previously earned commission. The act of terminating the deal may also be considered contempt of court.

You can as others have suggested tell everyone to “pound sand” or salt or whatever, but if it was my deal I would be talking with my attorney, like yesterday.

Oh well a good strong checkbook will set you free… (poor substitute for correctness).

Re: Canceled Contract - Posted by Nate

Posted by Nate on March 26, 2001 at 08:33:40:

Also, if they were to sue you for specific performance, that would require the husband and wife to cooperate on something, and we all know how unlikely that is…

I would tell the other realtor to go pound sand. Call their bluff. I think it’s pretty clear they don’t have a case.


Re: Canceled Contract - Posted by SueC

Posted by SueC on March 26, 2001 at 08:31:46:

If the wife was indeed a party to the sale, and she backed out, they have termianted your contract. Just because the other seller still wants to sell, they are just SOL. (The other party’s suit should be against HER, not you.)

Specific performance usually doesn’t apply going in your direction, i.e., they can’t force you to buy the house, but they can get $$ damages if they lost another sale, have to put it back on the market, etc. But ALL of that is ONLY if you breached, and you didn’t - they terminated.

In fact, you certainly are being the big one here, in that YOU could have force a specific performance sale to you - good for you though for being forward thinking. Assuming that is that you didn’t let a really big one get away! :slight_smile:

Let us know how it comes out, and good luck.

Sue Caskey

Re: Canceled Contract - Posted by B.L.Renfrow

Posted by B.L.Renfrow on March 26, 2001 at 08:11:59:

I am no attorney, but it sounds as if the seller’s agent is simply blowing smoke because he/she sees their commission evaporating.

If the wife has a legal interest in the property (i.e. she has not already quit-claimed her interest to the husband), she signed a contract with you, then she provided written notice of her intent to cancel the contract, I wouldn’t see where you have any further obligation. In fact, it seems – had you not waived your rights to do so – YOU could correctly argue that SHE is in breach of contract.

Regardless, lawsuits for specific performance in these situations are expensive, and from what I understand, rarely successful. Of course, anyone can sue for anything if they find an attorney willing to take the case. But it doesn’t sound as if you have anything to worry about here.

Brian (NY)

Re: The commission has been earned. (I disagree) - Posted by emily

Posted by emily on March 26, 2001 at 13:45:16:

If your logic is correct, then you are proclaiming that a re commission would be due for every contract that it written that does not complete for whatever reason. The commission is earned on a completed deal where transfer of title, etc. takes place.

Re: That’s what I said - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on March 26, 2001 at 18:08:57:

When buyer and seller are brought together is when the commission is earned.

You indicate contingencies. None were mentioned. Now if the offer is contingent on something, like financing then at that it is not a contract it is an offer with a financing contingency. Buyer and seller are not “brought together” until all the contingencies are removed. In the original question no contingencies were mentioned, so since none were stated; I assumed that none existed.

My original answer is correct, if applied to the original question (no contingencies).

Re: The commission has been earned. (I disagree) - Posted by Dave T

Posted by Dave T on March 26, 2001 at 15:16:06:

From the details provided, I assume that the buyer was ready, willing, and able to close the deal. The seller withdrew from the contract. All listing agreements I have seen, stipulate that the commission has been earned and is due in this situation. Again, assuming that the seller is entirely responsible for paying the sales commission, the realtor could sue to the seller to get his commission.

It gets a little cloudy about the specific circumstances of the seller’s withdrawal. It appears from the details in the post, that the seller and the buyer entered into a side agreement to cancel the sale and did not include the realtors in the discussions. The seller’s agent may have grounds to sue the buyer for tortious interference with the completion of a contract.

I agree with Ed that the buyer should get competent legal representation on board immediately.

Re: The commission has been earned. (I disagree) - Posted by B.L.Renfrow

Posted by B.L.Renfrow on March 26, 2001 at 16:21:38:

How could the buyer possibly be guilty of tortuous interference, when he was a PARTY to the contract? Furthermore, he said he was ready and able to perform, and the wife REFUSED to sell. He then released the seller from further liability TO HIM.

You may well be correct that a commission would be owed by the SELLER to the listing broker. But I don’t see how the buyer could have the liability you state.

Anyway, the poster e-mailed me privately to say he did consult his attorney today, who advised him he has no liability as a result of the SELLER’S breach of contract.

Brian (NY)

Re: The commission has been earned. (I disagree) - Posted by Dave T

Posted by Dave T on March 26, 2001 at 16:30:55:

There are two contracts involved. The purchase agreement for the property and the seller’s listing agreement with the realtor.

If the agent is unable to get the seller to pay the sales commission, the agent could sue the buyer for interference with his listing agreement with the seller, to recover his commission. As someone noted, one can be sued for anything these days.

Re: I used to be married - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on March 26, 2001 at 18:39:49:

to a woman who thought like the seller in this case.

It seems that she decided that she “didn’t want to” (sell).

So she said NO. Never mind the fact that the commission is owed.

Never mind that the ex-husbands’ equity (if there is any) is now being held hostage (by her) until she gets ready to do something.

Never mind that the divorce decree is a court order (the judge can just get in line with everyone else and wait).

Never mind the cost and inconvenience to the proposed purchaser.

This is the kind of mentality (I used to be married to one like this) that says, “you don’t have to worry about paying for it because I wrote a check…”

Little wonder that they are getting a divorce.

Thanks for your advice and assistance. - Posted by Dave T

Posted by Dave T on March 26, 2001 at 21:35:36:


I live in SC, and do not know the OH territory. Some time ago I asked you about the local custom for who pays which closing costs and also for a qualified intermediary referral for my Warren County OH property that I want to 1031.

Just to update you, I now have a purchase contract to sell to my tenant, who is trying to qualify for one of the first time buyer financing programs.

A lawyer drafted an exchange agreement for me, and the trust department of a local bank has agreed to serve as the escrow agent for the 1031. We are just waiting for the buyer to get qualified for financing. Meanwhile, I have already made an offer on a potential replacement property in MD.

You were kind enough to give me some general guidance and a helpful suggestion. It looks like I am going to complete this long distance exchange. A belated thanks for your assistance.