Posted by JohnBoy on September 18, 2005 at 20:51:47:
It would had been better to just state the option price to be 96% of market value which shall be determined by appraisal along with comparable sales
What to do when seller lies? - Posted by Randy
Posted by Randy on September 17, 2005 at 13:41:18:
For a couple of years I was in a very hot market. The only way I could find a lease purchase was to offer fair market value at time of sale minus a discount.
Selling Price: Fair market value at time of sale minus 4% of selling price.
I told seller I needed the discount so I could resell it and make a profit. At the end of the 2 years he told me 4% of 800k was to much and he would go to court in order not to pay. He now claims I told him I was a licensed realtor and the 4% was to be my commission. That’s 100% bs. He a lied on 2 other accounts which I have in writing.
I have closed 3 other properties using the same method. No claim for commission and none paid out.
I am being sued by the tenant who wanted the property for failure to perform. If you were on the jury, who would you believe?
Documentation - Posted by JT-IN
Posted by JT-IN on September 17, 2005 at 17:38:28:
Randy:
If push comes to shove, and you do end up in court, you probably don’t have enough margin left in the deal to pay the cost of legal fees to defend your position. Unless you have lots of cash, and wish to do so for the sake of defending the honor of your reputation and your word.
In the end, it would boil down to what your contract states, and nother more. Whether you said you need a 4% discount, 6% or 7%, a discount is a discount, and not a comm… I would hope that you paperwork for the Option states only a option price, and isn’t convoluted by anything else. If so, you should be able to force the seller to honor the contract, just as your buyer is attempting to force you to do the same. Is the paperwork that you are selling with, the same as the paperwork that you are buying with…? (Same doc format, differnt names, etc.?)
It is impossible to say who we might or might not believe w/o examining the paperwork. You may need to run this by an Atty and get their opinion as to how you stand in the probable outcome. This also depends on how much $$$ is at stake here. If it is a sizable amount, then maybe you stand and fight, but only you can determine this.
Do you suppose that the Seller is in any way colluding with your Tenant Buyer, in an attempt to run your out of the deal, and split the profits…? Sounds like it is possible, and that’s what I would look for.
As I re-read your post, I get more confused on what you are saying here. Does your option state an exact price of 768K, or does it state 800K, less 4% for selling expenses… hence, 768K… being implied, but not so straight forward…?
JT-IN
Re: What to do when seller lies? - Posted by Don Dion
Posted by Don Dion on September 17, 2005 at 15:23:07:
Are you a licensed real estate agent or broker?
Re: What to do when seller lies? - Posted by Jack
Posted by Jack on September 17, 2005 at 14:09:36:
I don’t know what your contract says, but “4% of seling price” sounds like a Agent comission to me.
Re: What to do when seller lies? - Posted by Phil
Posted by Phil on September 17, 2005 at 13:51:08:
Ok, sounds like this will end up in court. Get your attorney. In the future, get everything in the contract, period. This he said stuff should not hold up, but who knows what kind of judge you will have. Also, in your contract(s) it should state, something to the effect, "This contract(s) represents all agreements between the parties, nothing said after these contracts is vaild, unless contained herein.
Re: Documentation - Posted by Randy
Posted by Randy on September 17, 2005 at 19:53:01:
It did not state an exact price because we didn’t know what the price would be a time of sale. If we had an exact price I wouldn’t have this problem.
Thanks, Randy
Re: What to do when seller lies? - Posted by Randy
Posted by Randy on September 17, 2005 at 17:40:17:
No, I am not a licensed real estate agent or broker and I made that perfectly clear to the seller.
Thanks, Randy
Re: What to do when seller lies? - Posted by Randy
Posted by Randy on September 17, 2005 at 15:08:25:
I used a lease purchase agreement which indicates a selling price and nothing about commissions.
Thanks, Randy
Re: What to do when seller lies? - Posted by SKI
Posted by SKI on September 17, 2005 at 19:46:28:
Put it in writting. nothing more nothing less…
I’m trying to think… - Posted by JT-IN
Posted by JT-IN on September 17, 2005 at 21:11:53:
Of what I might pay for your position… but I have no change in my pocket.
Less smuggly put, I think you are in for a rude awakening. I can’t exactly imagine entering into the contract in the first place, let alone imagining what takes place from here. I just don’t think that any Civil Justice system, will produce anything close to that, in your opinion, when all the dust settles.
As I stated earlier, there isn’t enough spread in the deal to cover potential legal costs, (both yours, and any other parties costs you are ordered to pay), to get in there and slug this thing out. Not to mention the emotional drain of such an ordeal.
I would attempt to negotiate some “Exit Money”… If the seller will pay you cab fare to leave, I’d take it. Sorry, there is that smug thing again… If you could negotiate some amount of money from seller, and at the same time a release from you tenant buyer, for an outright assignment of your position with seller, then I’d take it and go. At the same time, I would have a copy of this contract “bronzed”, and hang it on the wall in front of your desk, because these kind of lessons can end up being far too motivating. How do I know…?
JT-IN
Re: Documentation - Posted by whyK-CA
Posted by whyK-CA on September 17, 2005 at 20:05:47:
How do you determine the sales price on the first L/O? By appraisal? Or is it depending on the second L/O?
Re: What to do when seller lies? - Posted by whyK-CA
Posted by whyK-CA on September 17, 2005 at 15:35:29:
I agree with Jack on this. Just using “%” makes it appear it is a commission, even if you don’t use the word commission in the contract.
You have a sandwich L/O situation, correct?
Re: Documentation - Posted by Randy
Posted by Randy on September 17, 2005 at 20:15:07:
By appraisal.
Re: Documentation - Posted by JohnBoy
Posted by JohnBoy on September 17, 2005 at 20:42:15:
So exactly how is all this worded in your contract?
Something to the effect stating option price shall be determined by appraisal less 4%? Or option shall be 4% less actual appraisal?
Provide us with the exact wording you used in your contract. This is what everything will boil down to if it goes to court. What the contract actually says. So how “exactly” did you word all this in the contract?
Re: Documentation - Posted by Randy
Posted by Randy on September 18, 2005 at 20:42:38:
Tenant has exclusive option to purchase the above described premises for the sum of: Selling price: Fair market value at time of sale minus 4% of selling price. Fair market value to be determined by comparable sales and/or appraisals.
If I had added “discount” after “4%” then the seller couldn’t claim I was asking for a “commission.” He blantly told me he was going to try and screw me out of my profit. I’m just wondering what a jury might believe especially since he lied on 2 other accounts that I have in writing.
I did 3 other properties the same way and had no problems at closing.
Thanks for your input, Randy
Appraisal = Opinion, and they vary - Posted by JT-IN
Posted by JT-IN on September 19, 2005 at 07:45:02:
Randy:
The seller could easily find an appraisal that is 10% above FMV, just as you could find one that is 10% below FMV. Your contract doesn’t appear to address “how” the appraisal is to be done…?
I see this as a legitimate way for the seller to sandbag you in this deal. He just never agrees that the appraisal is fair, as could be your approach as well. Bottom line is, the deed never transfers until both side agree on “appraisal”. Unless you have addressed this in further detail in the contract, elsewhere.
JT-IN