I had a purchase contract with the Bank of America on a house. They "cancelled" the purchase contract and told me I am not getting my deposit back. They are not in a strong position legally, but they will likely be stupid about this. So I need to prepare to serve them. I've heard that can be the hardest part.
Has anyone out there successfully served Bank of America?
I am assuming you put earnest money down with the REO agent for this property correct?
That money does not go directly to B of A but it goes into the RE agents Brokers escrow account and if you have a legit reason to get your EM back then you should be able to get that back. Your agent who submitted your offer and their broker should be able to make this happen.
Why was the contract canceled ?
Bank of America cancelled the purchase agreement because I refused to pay the water bill at closing. I had been very clear with the agent that i would not agree to pay the water bill. But they hadn't told Bank of America. Bank of America adamantly protects their right to stick the buyer with the water bill the foreclosed upon owner ran up.
This caused quite a bruhaha at the closing. BofA felt blindsided, the agent didn't want to look bad with BofA. But I am not going to pay the water bill and BofA won't close if I don't. So that leaves the deposit in question. BofA says they won't return it because I have violated the purchase agreement. It's legally a week position, so weak it may be a negotiating posture. Or it may be a bunch of people who don't want to look stupid.
In the meantime, I am preparing to go to small claims.
Any experience with this?
No experience with this but I would get your broker or your agents broker involved to handle this. Also go back and read any fine print in any of the documents you signed to make sure you didnt mistakenly agree to their terms which would hold you liable.
Very interesting situation you are in. I hope it works out in your favor.
I've read the documents, so has my title insurance company and my lawyer. They both think BofA is mis-reading the clause. But it is a subtle legal point.
Fortunately, the bank violated the contract in two other unrelated ways. They love to put really aggressive closing dates that they subsequently fail to meet, rendering the contract invalid.
In any case, its not too hard to make the point that they owe me my deposit.
But, serving them? How the hell do you do that?
As to serving them, check with your sec of state, corporate division. The banks usually have one of the "corporate registry" type firms as their designated agent. I would also serve them at whatever address is shown on the deed where they got the property back at foreclosure. If there are any addresses in their 18 page contract addendum, serve them there too. As to the issue at hand, I'm not so sure it's as clear cut as you believe. They are delivering insurance title, albeit with exceptions I'm sure for the water bill. Their addendums are pretty broad as to ways they can stick it to you on the smaller things. Obviously, communications with your agent about the water bill is irrelevant to the legal issue with B of A. Ask about deposit disputes, and possible ways to resolve without a court order. Here if the deposit is held by a RE brokerage, there is an alternative to a court proceeding, which is required when it is held by a title co. But, I assume the EM is with B of A's title co.
After thought, if the closing agent is an attorney firm, they likely B of A's law firm that handled the foreclosure. Serve them too.
auction.com is the agent. They've been professional in the past about returning deposits but the water is clearly a sore point. I also feel there is some other issue between them and the bank. They moved so quickly to attack me and cancel the contract and pull my deposit over this. Had a strange feeling... It was an over reaction that really is not supported by the contract.
@Katharine Chartrand Another angle to try is to file a complaint about the broker with the state regulatory agency.
boa sucks. How much was the water bill?
How much is the water bill in question? Their contract would likely state that they can cancel the contract at any time, but with a refund of your deposit. It also should say that they will provide clear title, which an outstanding water bill inhibits. Unless you were planning to buy the property without clear title per the auction. I would bid again on the same property but less. You'd be surprised but they might take it. In regards to your deposit, why doesn't your attorney handle the matter?
It'll be interesting if this is all about a bill under $1K.
@Katharine Chartrand How much was the water bill? I've been stuck with a few bills and squatters. It has always been worth the problem and cost.
I cannot believe someone will complain over a little water bill when they are getting a good deal.
@Joe Gore no one has said how big the water bill was yet. We don't know if it was $500 or $50,000, or somewhere in between.
You are right 100%. I guess we can sit back and wait until she tells us how much it was.
I'll admit I feel a certain affinity with anyone who wants to stick it to BOA, for whatever reason.
I know, I need to let it go....... ;)
The water bill is $1400, just above what people seem to think is reasonable to fight about. I appreciate that I need to put this in perspective.
The house itself is worth about $40K, so we're talking about a water bill that is 3.5% the value of the home.
There are two issues ... first I was clear that I would not pay the water bill from the beginning. At closing, it was clear that the communication between auction.com and the bank was poor and my offer hadn't been communicated correctly. I stuck to my offer. They cancelled the contract with no discussion.
I supposed I could pay the $1400. But I don't know why I should have to make that decision on the spot given that it is a significant change in terms.
My sense is that there has been a pattern of this issue coming up at their closings. I got caught up in some larger internal debate. They've probably had a rash of people challenging this. The contract and the law are ambiguous. It's probably not worth it for them to set a precedent and assume the water bill or the whole house of cards falls down.
I have someone from auction.com trying to reach me today. Perhaps to do some mopping up. This may get resolved.
But if i need to serve them, I'd like to know how.
Thank you @Wayne Brooks for answering my question.
I have found instead of relying on an agent or broker to relay this information it is best to put it on the purchase agreement upon making the offer that way you are protected. I did run into a similar situation where the previous owner owed a water bill and the lien transferred with the property instead of sticking with the previous owner. I called the water company and explained I was trying to buy the house but couldn't b/c of the situation b/c it wasn't my water bill so why should I pay it, can you help me? They did negotiate the balance down for the previous owners debt and I had the previous owner sign a notarized document that they would pay it off or go to court. The previous owner was a help in the matter. She had to do a short sale b/c she couldn't afford 2 homes and agreed it was her debt and paid the bill so I could close.
In your situation I would be inclined to hold the agent responsible for my deposit or to pay the water bill out of their commission and you will close but they are responsible for one of the 2!!!!!! If they didn't do their job hold them responsible, that's what they are getting paid to do!!!!!
Just to reiterate, nothing communicated by you regarding the Walter bill legally overrides whatever language is in the B of A/auction.com documents you received and signed from gangsters.com. I don't know what they imply as to the water bill. Since it was auction.com, the title co. won't be the foreclosing attorney firm, as far as serving B of A goes. I have a client that got one from auction.com last week. We verified utility bills, and HOA fees prior to the auction.
What does the contract actually say about this water bill? You telling the agents involved you're not going to pay it frankly doesn't mean anything at all. If the contract is specific about it, that will govern. If the contract is not, I would think this would be covered by the "clear title" requirement. But if the contract says the seller won't pay the water bill and you refuse then I don't think you're going to prevail in getting your EM back.
Is the property still worth it if you had to pay the water bill? Also, might there be an opportunity to split the bill with the lender? The time and money saved on a legal fight may prove to be well worth it, particularly on smaller issues like this one.
I post the section of the contract below. The purchase agreement is attached.
The issue is that, in NM, the Bank is supposed to take care of the water bill at the foreclosure. The paragraph they reference for their argument is in an occupied property adendum about charges incurred by previous owner if they illegally occupy the property AFTER foreclosure.
I am being asked to pay for things that should have been resolved by the bank in the foreclosure process not costs related to the risks of purchasing an occupied home. The water bill was incurred prior to foreclosure.
I agree that this is an ambiguous point. If I sue them for my deposit, its going to be based on violations of other aspects of the agreement.
However, I don't believe that the bank should summarily cancel the agreement at closing because I raise this issue. I asked for time to discuss this further with the title company and lawyer. I haven't gotten a response.
(c) BUYER'S EXPENSES. Notwithstanding state or local custom ALL COSTS, TRANSACTION MANAGEMENT, TRANSFER, DOCUMENTATION AND OTHER FEES, EXPENSES, TAXES, CHARGES, ASSESSMENTS, DUES, AND ALL OTHER FINANCIAL PAYMENT TO BE MADE IN CONNECTION WITH THE PURCHASE AND SALE OF THE PROPERTY AS CONTEMPLATED BY THIS AGREEMENT, WHETHER PAST DUE, CURRENTLY DUE OR DELINQUENT, INCLUDING ANY INTEREST OR PENALTIES THAT MAY ACCRUE WITH RESPECT TO THE FOREGOING, SHALL, IN ADDITION TO THE TOTAL PURCHASE PRICE BE BORNE AND PAID BY THE BUYER, AND BUYER AGREES TO DEPOSIT ALL SUCH AMOUNTS WITH CLOSING AGENT SUFFICIENTLY IN ADVANCE OF CLOSING TO ALLOW CLOSING AGENT TO MAKE SUCH PAYMENTS ON BUYER’S BEHALF FROM FUNDS DEPOSITED BY BUYER; these items shall include, but are not limited to, transaction management fees, all current, past due and delinquent property taxes, costs of credit reports, appraisals, loan fees, loan points, other leverage costs, title insurance, title insurance charges, Closing fees, tax service fees, recordation fees for the deed, and any mortgage or deed of trust, any documentary transfer tax, real property transfer taxes or deed tax that may be imposed by the State, County and/or City in which the Property is located, common interest community/unit owner’s/condominium/homeowner's association maintenance or membership fees and/or assessments, if any, Closing costs, and all other costs and expenses, including any cost, expense or tax imposed by any state or local entity not otherwise addressed herein. Further, if desired by Buyer or required by Buyer’s lender, the cost of any and all termite clearances and reports and any inspections required by any lender, and/or repairs recommended or required by any termite and/or property inspection report including, but not limited to, any roof certifications shall all be at the sole cost and expense of Buyer. Buyer authorizes Closing Agent to debit the Buyer's account in the amount of Twenty Dollar ($20.00) fee at Closing in the event Buyer fails to deposit with Closing Agent a change of ownership statement, if required.
That is where I made a mistake ... I did not get the contract revised on this point. I just told them how I read the contract. That is a good point.
I posted the query if the bill was over or under a grand.
Pay it or don't pay it. Buy it or don't. Sounds like you just need to vent about your EMD. Perfectly understandable.
The bigger lesson is the education that you're getting from the experience and whether (or not) you really want to get into solution mode.
Personally, I don't think you are a victim of B of A's bureaucracy. You're an investor and you know bidding on auction.com that right, wrong or indifferent, they've got a system that works for them and the great majority of transactions.
It may not be possible to bid with unilateral conditions, which is what I think you were attempting to do.
Btw, in my state, CA, utility bills are the responsibility of the account customer. So, if I buy a property with a tenant who did not pay the bill, I squawk the utility company and quote the Cal Public Utility Code that defines who is responsible. It may take a few back and forth tries but I prevail in the end.
You're still going make money. Buy the property, take the hit, then a bobo clown doll and punch it once or twice.
Did you ask a lawyer to look at the Purchase agreement?
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