Seller/buyer mess - HELP please! - Posted by NH


#1

Posted by JPiper on November 28, 1998 at 15:13:11:

First, I?d like to discuss this situation from the standpoint of the buyer. As a buyer you owe it to yourself to gain the knowledge necessary to protect yourself in real estate transactions. If you don?t have the knowledge seek out competent advice. It?s a cold world sometimes, and there are people who are willing and able to screw you.

As a buyer, perhaps rule #1 is?..DO NOT give the seller any money UNTIL the conditions of the contract have been met. Rather, deposit any earnest money in an escrow account held by a neutral third party such as a title company, an attorney, or an escrow company. Make certain that your purchase agreement references this money, where it is to be held, and the conditions specifying it?s return. Typically this money would be turned over to the seller when the conditions of the contract have been satisfied, and the seller simultaneously executes a deed, or some other instrument evidencing your interest in the property.

Some of the things that you would want to verify prior to closing and the release of your money to the seller would be the condition of the title, the status of any existing loans that you will assume or wrap, and the condition of the property. In the case of a contract for deed, as the buyer you would want your attorney to take a look at the language in the contract so that you understand it?s implications. You would also want certain safeguards built into the transaction, like perhaps a performance mortgage recorded against the property, perhaps an executed warranty deed to be held by a third party escrow agent, a plan as to how your payments will be handled and the underlying mortgage paid (a collection account). IF ANY of these steps are short circuited you will take on an unacceptable risk in the transaction.

An example is this particular type of seller. First, she is given money upfront before the underlying loan is verified?.and then uses the money for her personal purposes. She then is unable to perform on the contract, and is unable to return the money to the buyer. The buyer is left s u c king their thumb. But even if that had not been the case, would this seller have received the payments on the contract for deed, and then made the payment on the underlying loan?? Good luck. It looks to me like when the seller has a need, the seller takes care of that need, without any regard for what her agreement may have been. Would the seller have had other financial problems during the period of the contract?? Would these have resulted in judgments, or an inability to transfer title at the completion of the contract according to the agreement?? Who knows?? One thing we know for sure, if you?re COUNTING on the seller to perform, you?ve taken an unacceptable risk, and that risk can easily result in a consequence that this buyer is now experiencing.

As to advice to the seller in this situation. My advice would be to honor your agreement, one way or the other. Get the $7K from someone else and give it back to the buyer. Short of that I have no sympathy or respect for the situation that you are responsible for. At a minimum you have breached your contract. I would also wonder if you are guilty of fraud?.but I will leave that determination to the attorneys.

JPiper


#2

Seller/buyer mess - HELP please! - Posted by NH

Posted by NH on November 28, 1998 at 12:55:37:

A friend of mine’s needs some quick advise, so I’m posting her predicament below

I was desperate to sell my house and needed fast cash to
stop it from going to forclosure and to stop from loosing a house that I had put a deposit on. I had stopped paying on my house in desperation because I couldn’t sell it (needed to move because I am no longer able to do the upkeep) I felt
desperate and made a huge mistake

A couple advanced me
the funds in exchange for signing a purchase agreement
to buy the house under a land installment. My attorney
was preparing the papers and called me to let me know that
I could not sell them the house due to the fact that my
mortgage co says I am still in default I had signed a paper
and sent it back to them (my lender) The paper stated I still owed
a balloon payment of $4000 due in May 99 I did not consult
my atty before returning the document. I was suppose to close on the land installment in Nov. 98.

I have already spent the money that was advanced to me and
the couple is no longer interested in buying my house as
I have not cleared up the dispute with my lender.
My purchase agreement says that I am to refund the money if
I did not sign the land installment. Which I never did We were supposed to close within 10 days of the purchase agreement.

My attorney says that they can sue, but they are not really
protected against my failure to go through with this.
I want to do right by this couple but don’t have the funds
to repay them the cash outright What can I do? Are there
any legal remedies that will keep them from being left out
in the cold. They want their money back and I still have
to sell my house.

I owe them $7000. My house appraised
for $91000 and my mortgage co says my payoff bal is
$79000. They Dont qualify for a mortgage, which is why
they agreed to the land installment but they aren’t willing
to take it while the loan is still in default because they
would have to come up with additional monies other than what we had agreed on.


#3

Re: Seller/buyer mess - HELP please! - Posted by Irwin

Posted by Irwin on November 29, 1998 at 09:41:13:

Pardon me if I don’t have any sympathy for either buyer or seller in this case. Seller is going to be sued by buyer, foreclosed on by lender, lose her credit, etc… and deserves it.
These buyer’s prove the adage that fools and their money are soon parted. They’ll probably blow another $1,500- 2,000 trying to sue to recover their money.
They have only two possible options IMHO.
They can either get a deed to the house from seller and try to work out something with the lender to keep it, as they originally planned, or get the deed and sell house on l/o and try to recoup some of their $ that way.


#4

Re: Seller/buyer mess - HELP please! - Posted by phil fernandez

Posted by phil fernandez on November 28, 1998 at 17:27:03:

NH,

I am not an attorney, but it certainly sounds like the seller took the buyers money and used it as the seller pleased with no regard to the buyer. Again I am not an attorney, but this has fraud written all over it. I would not want to be in the sellers shoes.