Seller mistake lead to cancelling the contract

15 Replies

Hello all,

I am buyer from California and under a contract to buy a house in Texas. It was supposed to close in next 48 hours. My agent just noticed me that the deal will be cancelled because the title company has found out that the seller has a big lean which is more than the money he would receive if this deal closed; therefore, I won't let this deal continue. The seller agent did not know about that or did not mention in the beginning. We don't know. My agent told me to send him all the receipts of the all expenses including deposit, appraisal and inspection fee, plane tickets, the salary which I would make on the day I was off to look for this house. I am going to send him all the receipts. What else do I need to do? This problem wasted my time. 

Thank you all.

Updated 9 months ago

The lien comes for the seller business suing.

If the seller did not agree to reimburse you then you may want to speak with an attorney. When sellers default there may be an option to sue for specific performance (you get the house, the seller would have to settle the lien on his/her own since he/she accepted the contract). At the very least an attorney can help write a strong demand letter that will give the receipts more authority. Attorney fees can be added to the compensation your demanding. 

"because the title company has found out that the seller has a big lean which is more than the money he would receive if this deal closed; therefore, I won't let this deal continue"

He wouldn't be the first seller in history to have to bring a check to closing. If you cancel the contract watch your EMD.

usually you get the preliminary title report with in 3 days of opening escrow,why was the liens not discovered then ,but so late into escrow?

Pending litigation could have been decided with final judgment entered; perhaps litigation initiated involving the property, lis pendens recorded; federal tax lien could have been recorded... lots of things can happen before settlement.

Originally posted by @Steven Picker :
usually you get the preliminary title report with in 3 days of opening escrow,why was the liens not discovered then ,but so late into escrow?

 Because as I known, the seller has just got the lien recently. 

I've been on both sides of this issue.  They were likely aware of the lien, but did not anticipate how large the late fees or legal fees had accrued.  This can happen with unpaid real estate taxes or mortgages left in default.  The seller can end up with tens of thousands of dollars quickly accruing that they did not anticipate.  

Perhaps have your agent ask how much the seller would need to bring to closing.  As far as asking for damages, you would need to review your contract and any attorney modification letters.  Sometimes damages are limited to the earnest money on deposit.  If not, you can seek damages, but if they are losing money on the property..... the seller has to actually have money for you to collect on your judgment.  The courts also shy away from awarding specific performance in the instance of real estate disputes.  

I don’t know your TREC contract, but many have language to the effect that if the seller can’t deliver clear title, with a small delay to do so, then the contract gets cancelled with simply the return of EM. Read your contract.

It isnt over till the fat lady sings . There is lots of good advice above .

Heres another thought .You said the lien is recent , I would question what the lien is for and who it is from . Heres a possible reason .  The guy got a much better offer , now how do you tank the previous offer ................Have someone place a lien on the property so high it makes it difficult to close .....................   

@Francis Dinh   I pulled up the TREC out of curiosity, and thinking your agent was blowing smoke about reimbursing your damages:


Within 20 days after the Title Company receives a copy of this contract,

Seller shall furnish to Buyer a commitment for title insurance (Commitment) and, at Buyer's

expense, legible copies of restrictive covenants and documents

evidencing exceptions in the

Commitment (Exception Documents) other than the standard printed exceptions. Seller

authorizes the Title Company to deliver the Commitment and Exception Documents to Buyer

at Buyer's address shown in Paragraph 21. If

the Commitment and Exception Documents are

not delivered to Buyer within the specified time

, the time for delivery will be automatically

extended up to 15 days or 3 days before the

Closing Date, whichever is earlier. If, due to

factors beyond Seller’s control, the Commitment and Exception Documents are not delivered

within the time required, Buyer may terminate

this contract and the earnest money will be

refunded to Buyer.

The two Bold sections seem to let the seller off, you simply get your EM back, nothing else.

I admittedly did not read the rest of the contract.

D. OBJECTIONS: Buyer may object in writing to de

fects, exceptions, or encumbrances to title:

disclosed on the survey othe

r than items 6A(1) through (7

) above; disclosed in the

Commitment other than items 6A(1) through (8)

above; or which prohibit the following use or activity:


Buyer must object the earlier of

(i) the Closing Date or (ii)

days after Buyer receives

the Commitment, Exception Documents, and the

survey. Buyer’s failure

to object within the time allowed will constitute a waiver of Buyer’s right to object; except that the requirements

in Schedule C of the Commitment are not waived by Buyer. Provided Seller is not obligated

to incur any expense, Seller shall cure the timely objections of Buyer or any third party lender

within 15 days after Seller receives the objections and the Closing Date will be extended as

necessary. If objections are not cured within such 15 day period, this contract will terminate

and the earnest money will be refunded to Buyer unless Buyer waives the objections.

I had a sale close late once due to an undisclosed lien. Took us forever to get it released because the bank wasn't getting anything for their work (business loan with residential property used as collateral). They knew they had the lien, but thought they could get it removed in the event they actually got an offer. When I tried to back out, my realtor said there was nothing I could do as long as they were making a "reasonable effort" according to the VA contract.

The bold print didn’t show.....the last two sentences of each contract section/post.

@Francis Dinh it is possible the lien holder will negotiate. Hey the lien holder will get nothing if the property doesn't sell.

@Francis Dinh

@Wayne Brooks hit the nail on the head. If you used the TREC or TAR contract but did not insert specific language that provides Seller will reimburse you for out of pocket expenses in the event seller is unable to close due to title or survey matters, you're out of luck. 6(A) is what the Seller is required to deliver and 6(D) is what you're allowed to do once Sch. B docs, commitment and survey are delivered. 

@Francis Dinh the entire point of using a title company is to do a title search and find issues like this. You don't get reimbursed for your expenses. You are wasting more time even trying to get the money. Do you really think he will send you a dime? If he had money, he would be paying off the lien so he can sell his property, not reimbursing a California investor. 

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