Posted by CH on July 18, 2002 at 20:39:27:
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Seller Wants Out Of Contract - Posted by John (CA)
Posted by John (CA) on July 18, 2002 at 24:45:20:
If a seller were to suddenly get cold feet and decide to not sell his property (after accepting an offer) what, if any, can that seller do to unravel the transaction?
The seller I’m referring to is a friend of mine who was in foreclosure, but has suddenly rectified his financial problems and now has the ability to reinstate his loan. Now that his financial problems are behind him he wants to keep his home.
I guess what I’m looking for is a creative back door solution out of this deal…what would you pro’s do if you suddenly wanted to not sell a property that you already accepted an offer on and the transaction was in escrow?
TIA
John (CA)
Re: Seller Wants Out Of Contract - Posted by Sean (TX)
Posted by Sean (TX) on July 18, 2002 at 15:51:39:
I am also not an attorney but I seem to remember that, in order to sue someone for money, you have to have been “damaged” in some way. A few years ago I had to move and break a lease. The owner was sympathetic and I paid for the owner’s newspaper ad and credit/background check on the new tenants. Total cost $98. The apartment had no vacant time. Six months later, his partner decides to sue us for breach. His lawyer told him he couldn’t because he had suffered no “damages”.
This is just my isolated experience but I would think that, if everybody got their money back promptly, they’d have a low probability of success in suing your buddy.
Good Luck,
Seán
Re: Seller Wants Out Of Contract - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 18, 2002 at 13:24:27:
John–(CA)------------
I agree with Nate(DC). The proper statute to look at is probably the equity purchase statute sec 1695 of the CA civil code. There are a lot of technicalities there.
Good Investing*Ron Starr
Re: Seller Wants Out Of Contract - Posted by Carmen_FL
Posted by Carmen_FL on July 18, 2002 at 13:24:25:
The Buyer’s “remedy” to the Seller’s backing out is normally to sue for specific performance, if that is in the contract. Will he do it? Depends on how good a deal it is; how fast he has to move; how long the property’s been under contract; how many other similar houses are in the market; how much he’s already spent on the deal. I think there is usually a way out.
Let this be a lesson to everyone - have a seller “weasel clause” as well! As a Seller, I cross out the “specific performance” clause on every contract. The most the buyer does is get back his deposit. I think that’s fair; we can’t sue the buyer for not buying the house! If I can get away with it, I also try to cross out the Realtor fees in that clause as well; sometimes they catch it and complain, but usually they don’t. I do try to be fair to Realtors, though.
If your friend does not want to take the chance of getting sued, the best thing to do is negotiate. See if he legally has a way out (read all the clauses: has the buyer turned in the lender qualificiations?approvals? deposits? etc. on time as per the contract?).
Then consider telling the buyer ASAP that the seller is not moving; offer to give back all their deposit (which you have to anyway) and if they’re really upset, pay for their out-of-pocket expenses so far (appraisals, surveys, inspections). If there is an agent involved, he may also be liable for the agent’s commission.
I’m no attorney, but I doubt that if this case went to court the judge would force the sale to go through; judges tend to be “for” homeowners, and possession is 9/10 of the law as they say. If this guy got his act together, probably the worst the judge would do is make him pay the costs as delineated above; and the buyer probably knows this. Chances are, the buyer will be upset, but will move on to solve HIS problem, which is finding another place to live ASAP.
Re: Seller Wants Out Of Contract - Posted by Jonathan RexfordFL
Posted by Jonathan RexfordFL on July 18, 2002 at 08:12:07:
John,
I have to agree with JoesS. There are too many deals out there. Specific performance “lawsuit” is costly. If you are out any money just say hey I am glad you solved your problem how about solving mine and hand him the bill. If he had an ounce of good faith in him he will pony up and pay
Re: Seller Wants Out Of Contract - Posted by JoeS
Posted by JoeS on July 18, 2002 at 06:16:58:
Here is something to consider; since we should view ourselves as problem solvers not makers, this problem looks like it is solved. And because it is a friend involved you should walk away, in my opinion. There is a solution but you will not remain friends…sue for “specific performance of contract.” I have done it when a seller wants to back out of my signed contract in order to sell to someone else for a higher price.
When I did this I of course won but we were not friends afterwards. Even their attorney did not like me, he said that I should have let the poor guy out of the deal! The guy was not poor and I suspect that the attorney had his eyes on the property!
Anyway…my suggestion is to congratulate your friend for working out his problem and move on to your next deal.