Seller reneging on contract - Posted by Bill

Posted by Rich-CA on May 15, 2007 at 22:33:51:

Back when I used to manage a set of contracts at a Fortune 100, I used to say that a contract is for when things are not going well. As long as all goes well, the contract is never even looked at.

Seller reneging on contract - Posted by Bill

Posted by Bill on May 08, 2007 at 21:54:34:

I went into contract to buy a small $1.1 million commercial building 5 months ago. The original due diligence period was to end 2 months ago but was extended due to the necessary Phase 2 Environmental report. I paid for the Phase 1. The Phase 2 was finally accepted by the city. The sellers still have not finished with the construction contingency nor have they got the estoppels finished. I paid over $6000 for a lawyer to form LLC’s and also transferred the money out of the stock market into LLC. Of course the market went up 1500 points since. Now the second due diligence period is ending and the sellers want to get out of the contract. Of course the brokers aren’t happy since they are out $60000 of commissions. What are my options?

Re: Seller reneging on contract - Posted by Sailor

Posted by Sailor on May 12, 2007 at 09:23:24:

I’d want to know WHY they want out. Usually it is because of a
higher offer; if so, the agents are probably still due their

Was there something special about your LLCs or did a secretary
print the forms off a computer program? Is there a reason you
can’t knock on doors & get the estoppel letters yourself? If not,
you might get better info.

I like to have face-to-face mtgs between principals. Often things
can be handled more directly & simply that way. Are the agents
filtering the info you are receiving? Sitting down over a cup of
coffee can frequently untangle big messes. If not, you need an
attny–not your regular one, but someone who specializes in RE
deals like this. Good luck!


Re: Seller reneging on contract - Posted by Bill

Posted by Bill on May 12, 2007 at 21:13:50:

Thanks Tye. As far as I know, they like the structural changes we had agreed upon and the additional space that was leased. The cash flow looks better to them. Also the Phase 2 Environmental was cleared so the long-term prospects look better. the information I have is they have decided to keep it. We are waiting for more information, trying not to push them. The skeptic part of me is that they want to float the threat so I don’t negotiate for anything else …, after I see the Estoppels. Bill

Re: Seller reneging on contract - Posted by Sailor

Posted by Sailor on May 12, 2007 at 21:28:31:

I had the seller try to back out of my last deal, which involved 2 adjacent properties. I made some mild legal noises via my agent, who also passed on the info about a recent judgment on a similar local case. It worked, but the situation prevented me from doing any further negotiation post-inspection.

Also had my last buyer try to back out & it cost me 20k to keep him in the deal. Yes, I could have kept his deposit & let him go, but I’d have had a hard time finding another buyer for a unique property. I still made plenty of $$$, but I was a tad cranky for a few days.

Folks often think negotiations stop w/a signed contract, but sometimes that’s just when the real action starts. You still have to keep on your toes even after the ink dries–

Good luck on your deal!