Need to back out of a deal after down payment has been paid - help!

Buying & Selling Real Estate
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Need to back out of a deal after down payment has been paid - help!

Kristina Mancaruso
Wappingers Falls, NY · Member since 2015 · 2 posts · 0 votes

Dad bought fixer-upper for $210,000 and already made down payment of $20k. Before closing someone broke into the house and stole all the copper from the plumbing.  Now, our family doesn't feeling comfortable moving into the house. The contract states we have 10 days to back out of the deal without any penalty. But when we tried to back out today the seller refused saying that he'll sue for the time lost. The only way we would keep it is to fix and flip (dad is a contractor) but according to the calculator, we would probably lose money on the deal. Is the seller being truthful or just using scare tactics. Our lawyer isn't very competent, if its just scare tactics and we need a better lawyer - how do we find a good one who can get us out penalty free? 

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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
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Are you sure the 10 day period you are referring to is not the due diligence period from the time the contract was signed by your dad?  I have never heard of a seller willing to buy a home back within 10 days after selling it, just the cost alone would not be good. 

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
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    Are you sure the 10 day period you are referring to is not the due diligence period from the time the contract was signed by your dad?  I have never heard of a seller willing to buy a home back within 10 days after selling it, just the cost alone would not be good. 

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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    By a "down payment" of $20k, I assume you mean an Ernest Money deposit, not a down payment and financing at the actual closing.  What exactly are all the timelines in your contract?  If so, your contract should state the owner must maintain, and deliver, the house in the same condition it was when the contract was executed. If not, you have a bad contract, but state laws May help you with this.  Find a real estate attorney NOW if you have no confidence in yours.  Are you still within the 10 day inspection period?  If so, give Written Notice now, the seller is just bluffing and has no legal recourse.

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  • Fred Heller
    Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
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    Not giving legal advice, and not sure how they do things in NY. But if you paid an option fee with the sales contract, that means you have the right to back out of the deal for any reason during the option period.

    Also not sure why your dad would have paid a $20K down payment. That is usually paid at closing.

    Sounds like you need an attorney :(

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  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
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    Renegotiate the sale price lower to account for the added cost. Seller did not perform his responsibility of securing the property. He is trying to sell you something you didn't agree to buy. If he won't lower the price accordingly, then walk.

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
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    I cant tell from your original post if you already have purchased the home yet or not. 

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  • Richard C.
    Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
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    We need to know where exactly you are in the process, and a step-by-step of how you got there, in order to help.

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  • Brie SchmidtBusiness Member
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    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
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    @Kristina Mancaruso We are going to need more information from you.  Is this house under contract or you have already bought it?

    The $20k - is that a down payment or earnest money deposit - there is a big difference.  Look at the contract and see what it is described as

    The contract will also give the specifics to the 10 day period, so we will need to know what it specifically says.

    Most contracts will say that the house is to be purchased in the condition it was during the offer, which is why buyers do final walkthroughs.  If anything, they seller will be required to replace the copper and bring the property to the condition when you made the offer

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  • Veena J.
    Investor · Frisco, TX · Member since 2015 · 104 posts · 27 votes
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    You've already heard this above, but I can't tell why you have paid DP without having closed... My guess is you meant earnest money. You agreed to buy the house in the condition it was in on the executed date unless otherwise specified. Therefore, your seller will be in breech of contract because they are unable to deliver you what you agreed to purchase. 1. Get an atty now. 2. Give written notice to your seller that you will not be closing currently. 3. Either lower the sales price, or walk. You will lose whatever option money you have put down. Read that option paragraph in your contract carefully. Hopefully you only put >a couple hundred max there. We usually put $20-100 depending for our options. $20k seems astronomical for option on this deal. Good luck!
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