Likelihood of forcing a seller to perform?

12 Replies

Hey everyone,

So about a month ago, I went under contract to purchase a fixer property. The property was occupied by the seller's 92year old mother and also had A LOT of junk in it. My plan was to buy it, have all the junk removed and immediately sell it to a flipper. The seller told me that she would have her mother moved out before closing...ok no problem.

A week before closing, the seller calls me with a sob story about how her mom has no where to go and that this house was her only asset left, etc and wants to cancel the contract. I feel bad and say ok let's cancel and instruct escrow to cancel....Now I find out that she's actually selling it to the lender for 5k more than what I offered...so I got played.

My question is, for future reference, what are the chances of being able to legally force a seller to perform on the contract? Or should I place a clause in the contract for a "back out fee"? I was going to make a large profit on this deal and don't want this happening again. 

Thanks in advance for the advise :]

well you can sue for performance.. and most people would probably back down and it would cost them for them 5k

although you would open yourself up to scrutiny ..  IE was it a fair price was .. they could counter with unconscionable profit claim.. 

just because you have a contract and modest EM is fairly week and would really depend on judge.

however I have did last year do my first specific performance action and I prevailed.. 

but different circumstances.. 1. I put up 40k in back tax's she was going to lose the home in a matter of days and in Oregon there is no overages you simply lose the house.. I think its the only state that does that.

but then she went dark .. so after about 6 months of trying to get her to come to closing IE we were paying cash of course not assignment funny business or double close BS.. 

I finally got an attorney and filed the action.. as I had 40k large at stake and this was a hoarder house extreme. you could not even see the house berries had grown all the way over it.. and there was over 60k in code violations.

long story short 2 years later 20k in legal fees judge orders her to sell to us and she still wont sign.. title company makes me amend our order that takes another 2 months then we closed.

Also I had to put up the entire amount of the purchase price in CASH into escrow on the date we were suppose to close it sat there for over 2 years and we are talking low 6 figures.. 

It was the first time in my 40 some years that I bought a property without a deed.. the title company gave me a title policy based on the judges order she simply would not sign.. then I had to evict her that took another 6 months.

it would have been better not to have that dough tied up that long but I was able to make 3 lots out of it once I demo'd the house.. and we sold it for a nice profit at the end of the day.. 

at least in our state that is how you have to sue for performance.. if you offered cash you have to put cash up on the closing date and let it sit there until it winds through the court.  and she never defended but the judge would not give us a summary judgement they don't like us investors buying homes from folks without those folks having their day In court.. she never showed.. Now I bet if she lawyered up it would have been something quite different.

I've done it in Memphis. Bought a packet from an owner who was an attorney who tried to back out. Once the court cases started she realised she would lose and caved in.  So you can and you'd probably win.

Originally posted by @Dean Letfus :

I've done it in Memphis. Bought a packet from an owner who was an attorney who tried to back out. Once the court cases started she realised she would lose and caved in.  So you can and you'd probably win.

 This is similar to what I could see doing. If the seller actually wants to sell to someone else you could prevent that by tying the property up in a law suit for a while. They may decide they are better off just selling to you.

@Jay Hinrichs @Dean Letfus @Eric James

Thank you for your responses!

Yes this property was an extreme fixer. Built in 1920 and needed everything from a new sewer system to roof.

I definitely don't want to spend a couple years + court fees chasing a deal. I also don't have enough cash where I can just have it sit in escrow. 

I think I may just have an attorney "start" the process and hopefully that's enough to make the seller perform in the future. 

Originally posted by @Pratik P. :

@Jay Hinrichs @Dean Letfus @Eric James

Thank you for your responses!

Yes this property was an extreme fixer. Built in 1920 and needed everything from a new sewer system to roof.

I definitely don't want to spend a couple years + court fees chasing a deal. I also don't have enough cash where I can just have it sit in escrow. 

I think I may just have an attorney "start" the process and hopefully that's enough to make the seller perform in the future. 

its called a sabour rattler letter  send that off and they may respond but by the time that happens it may have already closed at a different title company. 

@Jay Hinrichs

Got it, thanks. I won't do it for this one but will use it in the future if needed. I found out that the daughter is basically kicking her mom out when she has no where to go. I don't need that on my conscience.  

Next time, perhaps record a 'notice of interest' or whatever you state deems proper as soon as you have valid contract, to constructively notify the public that there is something happening with the property that must be addressed before title will be clear to close.

Other than that, and/or threats of suit to the seller, I just can't conceive of ANY court that would force specific performance upon a 92 year old owner living in their own home.  Much easier to record a document and let the owner come to you and buy out your interest.

Good luck.

Originally posted by @Marc Winter :

Next time, perhaps record a 'notice of interest' or whatever you state deems proper as soon as you have valid contract, to constructively notify the public that there is something happening with the property that must be addressed before title will be clear to close.

Other than that, and/or threats of suit to the seller, I just can't conceive of ANY court that would force specific performance upon a 92 year old owner living in their own home.  Much easier to record a document and let the owner come to you and buy out your interest.

Good luck.

 out our way recorders wont record a lot of these hey I have an interest in this property without the sellers written permission.. I know some guys do it in other states.. I am in the process of selling a 5 acre tract to our parks department for 500k and they want to record our contract but they need my permission to do so.. right now I am balking because I don't want them clouding my title. 

@Jay Hinrichs , understood.   As a 'flipper', I would recommend he have that doc as an addendum to his contract and have it signed before a notary.  

@Marc Winter @Jay Hinrichs

Yeah I believe I would need some kind of written permission, maybe within the original contract. That wouldn't be a problem. ...I'm just wondering if the county will actually record it and if it would really prevent a title company from insuring the sale with another buyer. 

@Pratik P. , if you use a proper form that is properly signed and notarized, pay the proper fee to record, the document WILL be recorded by county recorder (or whatever they are called in your state).

The proper form will 'cloud' title, so no title company would want to close title (or insure it) without the 'cloud' being addressed and erased.  Otherwise, you will have a claim against the new owner/title company that closed the deal.  

That's why recording proper documents is so critical in real estate transactions.  Check with your local title company and/or attorney.

@Marc Winter Thanks Marc, this seems to be a solid strategy to protect my interest in a property. Even if it might cost me money and time for a notary/fees, it's worth it.