Seller breached contract on my option HELP (long) - Posted by LeAnn

import · July 10, 2003, 1:24pm

Posted by LeAnn on July 11, 2003 at 13:36:37:

See you at sundown partner:)

Sorry that I got testy…I’m just bummed. Thanks for replying.
LeAnn

import · July 10, 2003, 1:24pm

Seller breached contract on my option HELP (long) - Posted by LeAnn

Posted by LeAnn on July 10, 2003 at 13:24:33:

Greetings-

Backstory:
Woman calls me on a ad I placed to sell a home on l/o–says that she owns current home, but cant afford payments and needs something cheaper. Says that credit is trashed and will need time to qualify. I pitched her to buy her current home with her holding a 10% note and then working with her on a l/o from another home. Went to sign it up and she backed out stating she was in foreclosure but got $$ from boyfriend to bail out. Fine.

4 months later calls me again, says that she can’t stay afloat and needs to sell home, do I want it…Says that she wants at least $142k but my previous check found FMV of $170k–with only cosmetics needed. Said she needed out like yesterday. I signed her up on a 30 day option and recorded a signed performance mtg vs. the property. Used Joe Kaiser’s CYA doc, etc.

I wanted a 60 day option, but she was in too much of a hurry to wait. She is a realtor and said she could just sell it herself in that time. Fine. 30 days then. I proceeded to try to sell retail by advertising for $168k and paying $5k closing costs. Put a couple ads in local paper and got a lot of investors and a several retail buyers interested. I had to leave town for week and a half to close on a home that I’m moving to in Houston. Seller offered to show property while I was away, but I explained I had someone that would do that for me if needed, but would probably wait until I returned to show it myself.

While in Houston, I created interest with about 8 callers that drove by the property and wanted in. I set appointments with them for my return. Called the seller last Sunday to tell her to get place ready to be shown, and she tells me that she decided not to move. Told her contract is contract and can’t change her mind. She proceeds to claim on prozak and not of sound mind. Reminded her that she signed acknowledgement stating she of sound mind, not on drugs, etc., etc. Said she gonna call atty-- Told her to go ahead and have him call me.

I’ve called her every day since to no avail, my 30 days were up last night-- Yesterday, one of my potential buyers stated that they were ready to buy house if inside was as I described (which it is), but still wanted in. I called seller 3 times and on third try her boyfriend answered and said that she had to leave town unexpectedly and he was not to let anyone in the home, and had no wy to contact her (yeah right). Ten minutes later I was at the home with my notice of intent to exercise my option, knocked on the door and no answer (surprise). I left it in the door because I know someone (seller) was in there.

Now what? I have a lien vs. her home that has been recorded at the county, but it secures the option agreement. What about the potential buyers that I had. What should I do?
Sorry this is so long, but I a miffed to say the least. She intentionally wasted the last 48 hours of my contract to let it expire. What recourse do I have.

Thanks-
LeAnn

import · July 11, 2003, 8:32am

I hope you talk to someone and let us know - Posted by Matt in Mich

Posted by Matt in Mich on July 11, 2003 at 08:32:15:

I hope you do talk to an attorney - and let us know
what happens on this.
Matt

import · July 10, 2003, 2:24pm

Re: Seller breached contract - Posted by Brent_IL

Posted by Brent_IL on July 10, 2003 at 14:24:45:

Notice by certified mail would have saved last minute trips. Your only legal recourse is to try to foreclose on an agreement securing an elapsed option. After spending time and money, you’re success may not be guaranteed. Assuming she had over $100,000 in loans, the back payments and charges are building up again, so where’s the equity that’s worth going after? A judgment against the woman is pretty much worthless.

In retrospect, 30 days was too short. I believe the seller was bluffing about selling her house within the 60 days. If she was sharp enough to whip out the Prozac excuse, she could foresee that the selling process would take some time.

You could file for specific performance in small claims court, slap on a lis pendens, wait for something to happen, and hope for the best. I?d settle for ad costs.

For future reference, this kind of thing is easily avoidable by using a purchase and sale contract with various contingencies instead of an option contract. One can use long escrow periods or a trust/RB arrangement to address the timing issue.

import · July 10, 2003, 2:12pm

I will be interested in answers to this - Posted by Matt in Mich

Posted by Matt in Mich on July 10, 2003 at 14:12:06:

Sorry this happened to you - you did a lot of work
here. Just goes to show the flakiness out there!
I will be interested in a response from the more experienced people here on CREO too…matt

import · July 10, 2003, 4:21pm

Re: Seller breached contract - Posted by LeAnn

Posted by LeAnn on July 10, 2003 at 16:21:38:

Thanks for your response.

As far as I am concerned, the issue of the amount of time my option was for is a non-issue… Even if the seller believed that I would not, or could not sell…That’s her problem and is now mine. As it stands now I had 3 SERIOUS buyers ready to sign pending seeing the interior of the home. One of which started the loan qualification process with my mtg broker. So whether the option was 5, 30, or 100 days, I believe I had or have that house sold.

70k worth of equity is quite a bit of money, as least to a small fry like me. My frustration comes from the issue of not knowing the steps or channels to take at this point. Can I forclose? How would I go about doing so? Or–should I leave the performance mtg in place and wait for her to refi or sell? I’m sure she would want to speak to me then when the lien shows up. I want to be proactive and get what is due to me. What would you do if you were in my shoes?

Thanks,
LeAnn

import · July 10, 2003, 10:38pm

I agree with Jim FL. - Posted by Brent_IL

Posted by Brent_IL on July 10, 2003 at 22:38:00:

Whether it’s $70K, or $21K, or $16K, spending $300 or $400 an hour for competent legal advice can help you fix an appropriate course of action. I wouldn’t take free advice from the board on something like this as my sole source of information, however well meaning we may be.

import · July 10, 2003, 9:04pm

Re: Seller breached contract - Posted by Arthur

Posted by Arthur on July 10, 2003 at 21:04:40:

"70k worth of equity is quite a bit of money, "

$170k - $147k = $23k, not 70k, and as you had agreed a price of $168k with you footing the $5k closing costs, your talking about $16k prfit to you, not $70k. (not that $16k is nothing).

import · July 10, 2003, 4:30pm

Re: Seller breached contract - Posted by Jim FL

Posted by Jim FL on July 10, 2003 at 16:30:56:

LeAnn,
Here is what I’d do in your shoes.
Go talk to a comptent local Real Estate attorney.
Tell them your story, show your docs and see what they advise.

Good luck,
Jim FL

import · July 11, 2003, 10:16am

Re: Seller breached contract - Posted by LeAnn

Posted by LeAnn on July 11, 2003 at 10:16:32:

Thanks Arthur-

Yes 168k - 142k - 5k closing costs is 21k…

When I said 70K worth of equity, I was responding to what the seller has as equity, which she would forfeit if I was able to forclose on her…That was in response to whether or not there was enough equity in the property to pursue forclosure if it came to that in a previous post.

But lets just say that to me, 21k is worth it. That’s why I signed this house up in the 1st place.

And yes, I will consult a real estate atty…I was just hoping to gain some insight from all the people on this sight that may or may not have experience with sellers breaching their contracts. From the answers I have received so far, I can see that nobody has encountered or dealt with this situation at all, but some have mastered the incredible task of 2nd grade mathmatics…

Thanks-
LeAnn

import · July 10, 2003, 9:57pm

Come again? - Posted by B.L.Renfrow

Posted by B.L.Renfrow on July 10, 2003 at 21:57:51:

I don’t know where she came up with that $70k figure either, but I think your number is off too.

She’s talking about selling for $168k, paying the seller $142k and paying $5k closing costs. I come up with $168k - $142k - $5k = $21k profit.

Brian (NY)

import · July 11, 2003, 1:22pm

Re: Seller breached contract - Posted by Arthur

Posted by Arthur on July 11, 2003 at 13:22:06:

ooooooooooh, check her out! Handbags at 30 paces!!!

import · July 11, 2003, 10:03am

Re: Come again? - Posted by Arthur

Posted by Arthur on July 11, 2003 at 10:03:16:

My mistake, used $147k instead of $142k for some reason.

But like others have said on this board, you will need to seek legal advice froma professional, as the wording of the contract you had will make all the difference. But definately seek advice, and let us know.

Good luck.