Posted by Frank Chin on August 03, 2003 at 08:22:02:
Hi Mike:
I’m not a CPA or attorney. But did I understand you right that you sold it to FIVE people simultaneoulsy??
This is a big NO NO.
You also mentioned two of them all close to closing. How can you close with both unless you scr*w one of them.
You have to understand that buyers have to incur time and expense of getting mortgages, and how do you plan to handle them if they sue you for fraud, and expenese incurred.
And did you consult an attorney before all of this??
Here is my situation. I recently bought a property to quick turn as my first real estate investment deal. Subsequent to my purchase, I have entered into multiple contracts to sell (w/ 5 different peopele, all w/ different closing dates). Each of my contracts contains an addendum which includes the following special clauses:
“CLOSING DATE & PLACE: Closing shall be on or before x/xx/03 at a location to be selected by Seller. Time is of the essence. The property is subject to prior sale until such time as the Buyer named in this contract shows a written, unconditional, verifiable loan commitment (if applicable) along w/ proof of funds needed to close and all contingencies have been met.”
“DEFAULT: In the event Buyer defaults hereunder, Seller shall be entitled to retain any deposits paid hereunder as liquidated damages, or at his option, Seller may proceed to enforce specific performance of this contract. In the event Seller defaults hereunder, Buyer shall be entitled to the sum of $100.00 as total liquidated damages from the Seller plus return of Buyer’s deposit, if any.”
I have not received a written, unconditional, verifiable loan commitment and proof of funds needed to close w/ all contingencies having been met by any of my buyers, though a few of my contracts’ closing dates are coming up w/in the next two weeks. There are two buyers who are very close to being able to close.
Question: How do I properly cancel a contract? There are two particular situations in which I would want to do this here:
Either their contract has expired and I do not wish to extend w/ them (one guy is a complete psycho I never want to see again, who will not be able to close by the closing date and I’d prefer to never have to deal w/ him again) or
The property has been sold to someone else
I realize this is a unique case and the best thing to do is talk to my attorney…believe me, I am doing first thing Mon a.m. But just trying to get some feedback from you all. I’d appreciate any thoughts based on the limited info I’ve been able to provide in this post. Thanks.