Wholesaler is a broker and has re-assigned the contract

7 Replies

Here’s the basic info: I put a house under contract by paying the wholesaler, who is a FL real estate broker, the assignment fee. In working to get insurance, I found out the home was not insurable and I wouldn’t be able to complete the repairs in under 30 days to get it insured because it is currently tenant occupied until the end of the lease.

I notified the wholesaler that there are some issues here and I would either need to buy it with cash (as intended) and leave it uninsured while hustling to do the roof, AC, and electric panel in under 30 days (a little tough to do with the permitting of a roof in Brevard county, FL right now).

He said he’d check to see if any other buyers were interested and would “consider” refunding the assignment fee. I understood that if he couldn’t move it, it would not just be on him to lose the deposit, so I could understand keeping it in that case. 

The wholesaler has found a buyer and is now refusing to return any portion of the assignment fee. The fee was $5,000. What would you do?

@Luke Grogan What does the PSA you signed say about this situation? Are you still within the DD time frame? Does the PSA have a carve out for if walk and he finds another buyer?

Why did you pay the assignment fee before closing?

This situation is not covered in the PSA. It uses the term “non-refundable downpayment” and the broker required down payment paid prior to “putting it under contract.”

The PSA states that I cannot assign the contract to someone else and that if I don’t meet the obligations of the contract, the downpayment will be released to the assignor. 

So, can you close or not?

If so, the contract has already been assigned to you and he can’t legally just assign it to someone else. 

You could record a “memorandum of contract” to put a stick in his spokes” unless you have signed something revoking the assignment. 

That’s what I don’t get. While I was fine with him looking for another buyer with a verbal agreement to get the deposit back if so, I haven’t signed anything disolving the contract. And yes, I can close. I’d rather get the deposit back since I’ll have some issues with insurance, but will look into the memo of contract. 

Edit - it is supposed to close tomorrow, so I may be late on filing a memo of contract. 

Originally posted by @Luke Grogan :

That’s what I don’t get. While I was fine with him looking for another buyer with a verbal agreement to get the deposit back if so, I haven’t signed anything disolving the contract. And yes, I can close. I’d rather get the deposit back since I’ll have some issues with insurance, but will look into the memo of contract. 

Edit - it is supposed to close tomorrow, so I may be late on filing a memo of contract. 

If your assignment is still valid—that is, you did not void it, and wholesaler is bound by it—go to the closing and stop it with your valid assignment.

That was my only thought is to call the closing agent and see if I can get them on my side. not sure what other recourse, but definitely skeptical of a non refundable down payment.