What are my legal options in this situation? Bank has not delivered house to me and contract has expired.

The reason the deal hasn't closed is not because of me. I even wired the $24k to the title company for the closing. the person holding up the closing is the law firm who handled the foreclosure. Apparently they will not approve the sale of the house because there is an old mortgage on the property that was never cancelled. Normally something like that would be easy to take care of but apparently there have been some complications in getting this done.

Here is the kicker. The title company has already said they will write the title insurance on the property. So the title company is ready to go. I'm ready to go. there is nothing that should keep this home from being sold to me.

Yet here I am today with an expired contract and I don't know what to do. I'm really ticked off about this. What are my legal options here? Can't I sue the seller if he refuses to sell the house to me? we have a contract. or at least we had one.

Any help would be appreciated.

Edited: 06/26/2010 at 08:59AM

Stephani Davis

Real Estate Investor · Tampa, Florida

190 posts
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Icon_minipost Jul 15 '09, 03:41 PM

Hi Stephen,

I've had this happen to me before on several different occasions, and I just ended up having to wait, and wait, and wait. One deal last summer ended up taking 3 months. I can't remember the specifics of why, but it had to do with an old mortgage..

I had another one last month where everything was ready to go at the title company, and all the asset manager had to do was sign the deed package, but he wouldn't. This went on for almost two months, and in the meantime, the roof of the house caved in due to heavy rains, and the bank refused to lower the price to account for the damage. I ended up having to walk away from that one in the end.

If you still want the house, you are pretty much at their mercy, and will have to wait until they get the problem straightened out. If you don't, you should be able to get out of the contract and get your earnest money back.

Good luck,
Steph

P.S.
It helps to call them every single day to check the status. Otherwise, your deal tends to get lost in the shuffle. I make it my mission to irritate the crap out of them with phone calls and emails until they get the job done.

Edited: 06/26/2010 at 08:59AM

Chris Martin

Real Estate Investor · Holly Springs, North Carolina

972 posts
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Icon_minipost Jul 15 '09, 07:30 PM

Stephen, check your state laws... you can most likely sue for "performance" of the contract in the unlikely event the bank refuses to honor the contract and puts it back on the market. I've never seen this before on an REO. They tend to take their time on some closings.

Edited: 06/26/2010 at 08:59AM

Jon Holdman

Real Estate Investor · Denver, Colorado

11859 posts
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Icon_minipost Jul 15 '09, 09:41 PM

Read your contract. I doubt you have any legal options. If the contract states you have the remedy of "specific performance", then you could sue. Even then, I suspect you have a weak case because there's likely a clause in your contract or the numerous addendums that states there's no deal if the bank can't deliver a marketable title. Even though you think they can, they think they can't, so no deal. However, I suspect your contract actually doesn't even allow specific performance. It probably says if the deal can't close your only remedy is the return of your earnest money.

Welcome to the fun world of buying REOs.

Get your money back from the title company. This could take months, and there's absolutely no need to have the money just setting there.

Edited: 06/26/2010 at 08:59AM

Jon Holdman, Flying Phoenix LLC

Aly L

Real Estate Investor · Middletown, New Jersey

636 posts
2707 Influence
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Icon_minipost Jul 15 '09, 10:17 PM

Originally posted by Stephani

P.S.
It helps to call them every single day to check the status. Otherwise, your deal tends to get lost in the shuffle. I make it my mission to irritate the crap out of them with phone calls and emails until they get the job done.

Steph, this is great advice for many situations :)

Edited: 06/26/2010 at 08:59AM

Anson Young

Wholesaler · Denver, Colorado

354 posts
2599 Influence
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Icon_minipost Jul 20 '09, 02:50 AM

Most likely, the option for 'liquidated damages' was chosen for the recourse in this situation, therefore the best you get is your earnest money back intact. Bank addendums are written to protect the bank, and even if they just walk away from the contract the most you get is your earnest money back. (and I have read about 25+ different bank addendums for banks we work with).

Specific performance (suing to get control of the property per the contract) will be tough, if you have signed the state contract that has 'liquidated damages' and the bank addendum which is the same.

Edited: 06/26/2010 at 09:02AM