Take a lesson from me…please! - Posted by ScottE
Posted by ScottE on February 22, 1999 at 11:45:06:
I just had some bozos circumvent me on a deal and do exactly what you said. The people I flipped to gave me a story that they were pre-approved and everything. We had 45 days to close so, it seemed like plenty of time. My investors I flipped to had contact with the original sellers. To make a VERY long story short, we had a Friday closing and my investors dragged their feet saying that they had last minute lender requirements that needed to be met and wouldn’t be able to close on Friday, however, they said they contacted the sellers and Monday would be alright. These guys assured me up and down that they wouldn’t cut me out of the deal, even up through Monday morning. It turns out that they signed a contract with the sellers on the previous Friday(the day we were all supposed to close). They closed with the sellers on Monday and when I finally got a hold of them on THURSDAY, they said “Oh, we closed on Monday”. I asked where my $4,500 fee was and they said “Our contract with you was up on Friday” and cut me out of the deal. I had already handed them $30k in equity ($98k appraisal - $66.5k sales price), but they felt compelled to take another $4,500. When I talked to the title company’s attorney where the closing took place, he was astonished that I had not been paid, as apparently he was led to believe. The long and the short is that we have a small claims case pending and every attorney I talk to says my case is strong. Next time, if I can’t get all of the assignment up front, I will either 1)stipulate that it is paid when the title clears by having the investor place ALL of the fee in escrow subject only to clear title or, 2)stay in control of a simultaneous closing. In either case, until you find someone you have built a trust in, YOU have to keep the wheels in the deal cranking. If getting paid is subject to the title being clear, light a fire under the closing company’s butt and get it doen pronto! Classically, the closing/title company will wait until the last minute to finish everything & write a title policy.
I hope this helps keep you from the same disappointment and frustration I have endured.