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View Full Version : Legal Advice...I know there are lawyers in the house...


JohnnyB
10-06-2008, 07:43 PM
My home sale was supposed to close today, but tanked because my buyer failed to secure financing.

Before we moved out of our home, we had the buyer acknowledge, in a written addendum, removal of all contingencies, including financing. They had a financing committment letter from their lender before removing the contingency...I have a copy.

We're living in a rented duplex and my plan is to move back into our house and try again in better economy.

What is my legal recourse? I have costs incurred for the sale of the home (inspections, etc), moving costs for the move from the house to the duplex, the cost of the duplex lease through the end of april, the cost of moving from the duplex to home. My plan is to move back into our house and try again.

I'm getting referrals for local attorneys as we speak.

The buyer wants an extension to try to secure financing but is unwilling to pay costs for 20 of 30 days of the month. I've asked them for non-refundable earnest money to cover this cost should the extension not work and I've asked for 20/30 of the monthly expenses due at closing should it actually go through. They refused the earnest money portion.

I believe I'll be looking for an attorney to recover damages. What damages am I entitled to?

SkiDog
10-06-2008, 07:56 PM
My home sale was supposed to close today, but tanked because my buyer failed to secure financing.

Before we moved out of our home, we had the buyer acknowledge, in a written addendum, removal of all contingencies, including financing. They had a financing committment letter from their lender before removing the contingency...I have a copy.

We're living in a rented duplex and my plan is to move back into our house and try again in better economy.

What is my legal recourse? I have costs incurred for the sale of the home (inspections, etc), moving costs for the move from the house to the duplex, the cost of the duplex lease through the end of april, the cost of moving from the duplex to home. My plan is to move back into our house and try again.

I'm getting referrals for local attorneys as we speak.

The buyer wants an extension to try to secure financing but is unwilling to pay costs for 20 of 30 days of the month. I've asked them for non-refundable earnest money to cover this cost should the extension not work and I've asked for 20/30 of the monthly expenses due at closing should it actually go through. They refused the earnest money portion.

I believe I'll be looking for an attorney to recover damages. What damages am I entitled to?

This is a good one. Did you get earnset money from these people to start with. If not, Why? Are there realtors involved? If so, they should be on your side too. I'd be pi$$ed!

Roonie's
10-06-2008, 08:02 PM
keep the earnest money for sure.....

Just sold our house and will close at the end of the month. If they back out after signing the purchase agreement then earnest money is yours to keep. Since you have more signed paperwork that puts you in a better spot and I would think you have more recourse on your side if wanting to go that route.

JohnnyB
10-06-2008, 08:14 PM
Got $1500 non-refundable earnest money and $1000 general earnest money.

I just looked them up on our Circuit Court Access site, on top of a long list of misdemeanor bad check writing and DUIs for both....husband had foreclosure with a judgment date of 1/30/2006 and wife filed for bankruptcy on 10/30/2007.

Now I'm really sick, the lender pre-approved them and gave us a committment letter for the financing.

Logging off....going home to open a bottle of wine with my wife....

coz
10-06-2008, 08:28 PM
Got $1500 non-refundable earnest money and $1000 general earnest money.

I just looked them up on our Circuit Court Access site, on top of a long list of misdemeanor bad check writing and DUIs for both....husband had foreclosure with a judgment date of 1/30/2006 and wife filed for bankruptcy on 10/30/2007.

Now I'm really sick, the lender pre-approved them and gave us a committment letter for the financing.

Logging off....going home to open a bottle of wine with my wife....

I'm sorry to hear that JB :mad: I think you need to find out why you were misled by the lender up until the day of closing :rant: this is not right and I wish you the best of luck.

cbryan70
10-06-2008, 08:31 PM
I think brianM may know some things about this

Roonie's
10-06-2008, 08:37 PM
that sucks..... I will only look at at least 10,000 for earnest money on my homes. Anything under that and I don't bother. Also they have to prove they have the money through bank confirmation not just a check written. I always tell them if they are serious in buying my home they need to show it with the earnest money.

D3skier
10-06-2008, 08:40 PM
dude that sucks... I hope you can find a way to stick it to someone especially for all the expenses incurred.

kev88
10-06-2008, 10:28 PM
I have been a banking/mortgage lender for 15 years. Unfortunately the contract probably has a "subject to financing" clause which gives your buyer a legal out. However depending on how the approval letter is worded - you may have a case against his lender. If the lender is solid, he probably gave himself an out as well....

coz
10-06-2008, 10:46 PM
you may have a case against his lender. If the lender is solid, he probably gave himself an out as well....

It was business as usual for some of these big lenders until the bail out and someone mentioned accountability. Those people were probably approved with the old crooked system but things have changed real quick and that's probably why they were denied approval now.

I think there's gonna be alot more lawsuits against these lenders like the 3.5 billion judgement Countrywide has to pay out to all those states including Calif. http://www.ktla.com/landing_topstories/?Countrywide-Settlement-Could-Give-35-Bil=1&blockID=84459&feedID=1198

Age Fighter
10-06-2008, 11:25 PM
Got $1500 non-refundable earnest money and $1000 general earnest money.

I just looked them up on our Circuit Court Access site, on top of a long list of misdemeanor bad check writing and DUIs for both....husband had foreclosure with a judgment date of 1/30/2006 and wife filed for bankruptcy on 10/30/2007.

Now I'm really sick, the lender pre-approved them and gave us a committment letter for the financing.

Logging off....going home to open a bottle of wine with my wife....

Looks to me like more of a case of "predatory borrower" than predatory lender...and you got the shaft. Those folks knew about the bad checks and DUI's and bankruptcy before they approached you or their lender.

bcampbe7
10-06-2008, 11:33 PM
Looks to me like more of a case of "predatory borrower" than predatory lender...and you got the shaft. Those folks knew about the bad checks and DUI's and bankruptcy before they approached you or their lender.

Agreed, but the lenders had something to do with this as well. Had they done their job there would have been no way that they would have written a pre-approval letter.

6ballsisall
10-06-2008, 11:57 PM
Agreed, but the lenders had something to do with this as well. Had they done their job there would have been no way that they would have written a pre-approval letter.

Maybe things have changed more recently, but my experience (and I haven't bought any real estate for about a year now) is that getting that pre-approval letter is a 5 minute phone call w/ a lender. Basically in my opinion I thought the document didn't mean very much at all except it was a formality in the buying process.

kev88
10-07-2008, 12:07 AM
6ball you are correct. Most lenders put a clause in the approval letter to protect against the unexpected. The approval letter could have been issued and then Freddie or Fannie changed a quideline - this is happenig frequently. DUIs or bad checks have nothing to do with the approval process and there is still financing available for past bankruptcy (depending on the chapter).

kev88
10-07-2008, 12:20 AM
JohnnyB I just re-read your post about removing the subject to financing contingency - I missed that - you should def. be able to keep his earnest money and sue for additional damages.

sethro
10-07-2008, 12:39 AM
Wow,

Same thing happened to me once. The night before the scheduled closing, my realtor called with the news that the lender for the buyer of my house backed out at the last minute. We had the approval letters for financing too, though I was aware the buyer had "sketchy" credit. The buyer was warned NOT to use her credit card for any large purchases prior to the closing, and of course she went out and did just that.

So there I sat in my empty house as I had moved [U]everything[U] into the new place, because the buyer was to get possesion at the closing. Needless to say, I don't ever recall being as angry as I was that evening. :mad:

I had a happy ending, however, as both realtors ended up eating their commission and somehow got another lending agency to step in and we actually closed on the deal one week later. I was also seeking legal advice, but never got through the "yes, you have a legitimate case here" from a local attorney as another deal was made.

Good luck, and don't give up just yet!

Ski-me
10-07-2008, 03:04 PM
Your contract should have a "subject to financing" deadline. Once this deadline has gone by and the contract fails due to financing, the earnest money is non-refundable and yours to keep. In most cases, your contract usually says that you will only collect the earnest money as final settlement if the contract were to fail......without the ability to sue for other damages such as rentals, moving costs, storage costs, etc.

When both parties were originally signing the contract, there usually is a choice to collect "earnest money" or choose "liquidated damages" as methods of resolution if there is a problem. Most choose the earnest money option as this is the easiest to define.

That really stinks. :( What does your Realtor say?

JohnnyB
10-07-2008, 07:18 PM
Realtor says I should talk to an attorney....got an appointment for Thursday.

Like was stated earlier, we have a loan committment letter from the sellers bank and the seller, in a written addendum, removed the financing contingency and all other contingencies. Basically we had a contract for purchase with no remaining contingencies which was the basis for our moving out.

ttu
10-07-2008, 07:35 PM
this kind of reminds me of when my "then" wife:D and i sold our first house. 1st day of open house we had 3 bids. one low ball,one at asking price and one 3K over asking price.

my realtor, who is a client of mine, he said to take the one that was asking price. reason being, that one had excellent credit, 30% to put down and was a solid credit risk. the couple that offered over asking had low to mid credit and only 5% down.

ended up taking his advice and closed in 3 weeks.

BrianM
10-07-2008, 07:52 PM
Follow your Realtors advise and talk to the attorney. If they did in fact remove the financing contingency with an addendum then most likely your recourse is going to be keeping the deposit. All of the contracts I write have a "demand specific performance" clause ie make them buy it but those are just about impossible to enforce and if they can't get financing you can't hardly make them buy it.

Don't know how much the property is worth but that deposit was pretty weak. That is usually a warning sign right there.

Roonie's
10-07-2008, 07:54 PM
Don't know how much the property is worth but that deposit was pretty weak. That is usually a warning sign right there.

Agree 100%..... more than likely even the earnest checks are bad would be my guess.

JohnnyB
10-07-2008, 08:34 PM
Agree 100%..... more than likely even the earnest checks are bad would be my guess.

Earnest checks were certified bank checks put into a trust....unfortunately, in the market and the area, what I asked is more than typical for earnest money. Looks like I may as well take my screwing.....house was just a fuzz under 250K.

Depended on my real estate agent to know his business and protect me as he's a top area producer, has been in the biz for 18 years and came with several recommendations.......we'll see how well he took care of me.

Lawyer did a similar case for a buddy of mine who came out "whole" on the deal...still hope.

Will keep ya all posted....

BrianM
10-07-2008, 08:52 PM
Depended on my real estate agent to know his business and protect me as he's a top area producer, has been in the biz for 18 years and came with several recommendations.......

Unfortunately just because an agent is a top producer and has been in the business for 18 years doesn't necessarily make them worth a sh!t. I know a lot of 'top producers' that are absolutely horrible real estate agents who just happen to have a lot of friends at the local country club. Now the recommendations are usually a good indicator but still.

With that said don't be quick to blame your Realtor. From the limited info it doesn't sound like he could have done anything. Crap like this is generally way beyond their control. You had a deposit that was apparently the norm for your market and you apparently had a commitment from the lender. With all of the madness in the economy lately apparently the lender had second thoughts on the apparently marginal buyers.

Shi!t happens. Sometimes sh!t happens to you.

JohnnyB
10-08-2008, 01:43 PM
BrianM...all good points...

I certainly don't blame the broker. I've trusted him to take care of me to this point and he has done well.....just counting on him knowing his $H!+. You're right, as he's appologized to me several times, I've reminded him that this was beyond his control. The buyer seems to have some issues but it falls back on their lender. There is some detail that has surfaced in the last day or so on negligence on the part of the lender....forgot to send to the underwriter, submitted the wrong paper work to the wrong underwriter, forgot to file for some extension with the FHA, etc....also found that the lender fired their agent working this account two weeks ago and the owner is working the account himself.

In reading the contract, I found that:

If buyer defaults, seller may:
1) Sue for specific performance; or
2) Terminate the offer and have the option to: (a) request earnest money as liquidated damages or (b) direct broker to return earnest money and have the option to sue for actual damages

Will be interesting to talk to my attorney tomorrow and see what I can salvage out of this situation. I'm out some serious $$$...moreso than anyone else involved.

h2oskifreak
10-15-2008, 12:02 AM
Johnny,

Get out your listing agreement. The Listing Agreement many times says any defaulted E $ is to be split equally w/ the Broker as long as their 1/2 doesn't exceed their total commission. Many Brokers won't enforce it, as they realize you are the ones w/ the trouble but many will depending upon the circumstances. Your Broker should give you the advice he has but also should be willing to form an opinion from his knowledge and being close to the forms and the laws in your State. Good Luck.

Ric
10-15-2008, 02:20 PM
Been there done that johnny and I hate it for you!

I've always laughed at realtors and realtor ads which state that realtors only bring qualified buyers into your home for sale.................... AHAHAHAHAHAH what a sack

JohnnyB
10-18-2008, 05:58 AM
Buyer called me directly yesterday to tell me that they have financing. They are going to write an amendment and get it to us today. They will be paying us for our carrying costs and will close next week....they're out of their home at the end of the week. I"ll be apprehensive until I've gotten my settlement check and handed over the keys.

It ain't over 'til the fat lady sings.

I called and had a direct discussion with the mortgage broker on Thursday. He walked me through where he was at and how he was going to get this mortgage done for the buyer. He also told me that the agent who wrote the original loan committment and set the original closing date did so without ever pushing the loan to an underwriter....did it to five other people to.....I had a hard time not reaching through the phone and strangling him. He did fire the agent....I think the agent belongs in jail :mad:.

This has sucked for everyone involved!

jbfootin
10-20-2008, 03:38 PM
Buyer called me directly yesterday to tell me that they have financing. They are going to write an amendment and get it to us today. They will be paying us for our carrying costs and will close next week....they're out of their home at the end of the week. I"ll be apprehensive until I've gotten my settlement check and handed over the keys.

It ain't over 'til the fat lady sings.

I called and had a direct discussion with the mortgage broker on Thursday. He walked me through where he was at and how he was going to get this mortgage done for the buyer. He also told me that the agent who wrote the original loan committment and set the original closing date did so without ever pushing the loan to an underwriter....did it to five other people to.....I had a hard time not reaching through the phone and strangling him. He did fire the agent....I think the agent belongs in jail :mad:.

This has sucked for everyone involved!

That is great new! may give us something to celebrate if we make it out Thursday night!!!:toast: