Closed flip and seller still has not handed keys over ? HELP !!!

Closed flip and seller still has not handed keys over ? HELP !!!

Miami, FL · Member since 2016 · 33 posts · 14 votes

Hello BP !!! this might be a bit long but please read along and help out a fellow newbie investor. I am in the process of obtaining my first flip deal. The seller's realtor has been in the business for 20+ years, therefore he has taken advantage of the situation to screw us in a few things along the way like making us lose 10k over a discrepancy on the contract after we had verbally agreed on numbers in the beginning. This is clearly due to my partner who's also a realtor and i being fairly new to the business, rookie mistakes. Well we closed on the property yesterday and they still have not vacated the property after they said they would be out by noon today after contributing $100. We showed up by noon and they were still not done, they asked us to give them until the end of the day. (Keep in mind we are giving them a chance and helping them when they never contributed in any aspect of the deal and screwed us over from every angle you could think of, but that's a story for another day). After calling them all afternoon and not picking up the phone, we showed up at the property and no one would open the door. There was trash outside and clearly still furniture inside as we peeked through the window. We waited one hour and tried reaching them and nothing. We then sent him the following email,

"Good evening to all! At this point I'm am beyond livid and very disappointed, as buyers we have complied with the terms of the contract, we have been very patient and respectful with the seller but at this point we are out of our money and no house, seller has breached the contract and continues to do so. We are at the property now and clearly there are people inside and won't open the door, this is another act of disrespect and you need to comply with your end of the bargain. We will give you until tomorrow noon time to vacate the property otherwise you leave us no other choice than to call the police. As soon as the house is vacant and trash is removed from the premise we will instruct the title company that property is vacant and they will wire sellers proceeds tomorrow otherwise seller will not get his money."

He then called us and said they would touch basis with us tomorrow by noon and hopefully vacate for another $100. Then he went ahead and texted us the following, his own words, and i quote,

"Oh and btw the police will tell you to file an eviction with the court as they can't do anything without it. Another lesson in real estate for you."

If that cannot express the type of person i am dealing with i do not know what will. My partner and i are 21 and 22 year olds trying to move ahead in life and this guys just laughs at us. By the way, seller has weed inside the property which we saw with our own eyes and it is illegal in Florida. I have nothing against weed but anything that gives us leverage we are willing to take.

If you read to this point thank you so much for your time. Question is, what can we do at this point ? what can i use as leverage when i show up tomorrow to make them leave ? is there any way we can back out of the contract after these incidents ? also what can we do to prevent this next time, our title company closer said next time we should do an escrow agreement, is there anything else i can do to avoid this in the future ?

Again thank you all for reading and for your very much appreciated help !!!

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

Im going to give you a bit of advice that may seem a little harsh to whoever is the agent, you or your friend...

Hire someone the next time that knows what they are doing. In fact, hire someone now. You are flipping this property and are going to screw yourselves on the listing side too. Having a license doesnt mean you know what you are doing.

See this reply in the discussion

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  • Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    7y

    I would have never closed on a house that the seller didn't meet their obligations prior to closing. My guess is you will have to evict the seller at this point and I'm sure someone more in the know can tell you, but this can take weeks/months. Also are they asking you to pay them $100 to leave? You already paid $100, no? At this point won't they just keep staying and asking for more money to leave?

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    7y

    call a locksmith to go in and get the invoice

    call some clean out guys to do their thing and get the invoice

    deduct your costs from the seller's proceeds

    get to work

  • Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    7y

    definitely agree with Brian Pulaski on this. you don't have the keys to the house which you(or your partner) should've secured with the title in hand at the closing table. the funds aren't even wired to the seller. are you sure that you own the property? seems like you really didn't close on this thing. possibly its a sign you need to walk/run away from it now. I've heard of tenants being squatters of newly transferred titles but not the previous owners immediately turning to squatters. though stranger things have happened. make sure that you don't get screwed out of too much more money. yikes.

    kudos,

    Mary 

  • Marlo I.Pro Member
    Member since 2018 · 12 posts · 11 votes
    7y

    Sorry to hear your'e in this situation. I would contact the agent's broker and explain your situation. From my experience going directly to the agents broker usually gets some forward momentum. Also I would consult with your Realtor friend's broker/office manager and ask for their advice, if they've been in the business for a long time they should be able to provide with the best way to move forward.

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    The other realtor sounds like a real gem.  If you closed and were to take possession and they didn't vacate, doesn't that mean they haven't lived up to their end of the contract.  If you don't get a timely response from their realtor, can you talk to his/her boss?  

  • Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    For next time:

    Lesson learned, do not close on property unless you do a final walk through the day before closing and everything is as you want it at the walk through.

    Get the keys at settlement when you sign the paperwork and they get the money.

    If you do close on property with someone still there (generally a stupid idea) and have an agreement on when they are to leave, escrow about 20% of the purchase price and it stays in an escrow account until they are out and all is clean and well.  State in the escrow instructions that rent in $100 a day for each day they remain or that the property is not cleaned to standard.  State also that the money in escrow can be used by you without approval to clean the property to standard.

    For this time, if they do NOT have the money transferred then likely the deed is not registered and the property is not yours.  Call the title company or escrow company and verify that the funds were not paid and if the deed was recorded.  Get an experienced realtor or attorney to verify this and to cancel the agreement in writing NOW if they are not gone and left the place clean by noon.  And it won't be.  Walk away from the property.  They will be desperate to sell it again.  They likely need to money to pay for wherever they are going.  Go back and offer then $15k less than your current agreement and close in 7 days.  Then follow the lessons learned above.

    If the deed is recorded and you do own the property, then start the eviction process tomorrow at 12:01.  Do not say another word to them, evict the know people and "all occupants" on the eviction paperwork.  Use an attorney that specializes in eviction.  And do not release the escrow money until they are gone, the place is clean, you are reimbursed for your costs, including time and mileage, and you wait a few extra days so they learn what it is like to be on the other side.   

    And you really do need to confirm that they do not already have the escrowed money.  IF they do, you need to add that and your other expenses into the eviction lawsuit.

    There will always be another deal.  Walking away sometimes is better than being messed with.  

  • Miami, FL · Member since 2016 · 33 posts · 14 votes
    7y

    @Brian Pulaski now i know, believe me when i say i have learned from this deal what anyone would have learned in 3 deals while being a newbie.

    @Marlo I. we are dealing with my partners broker, he has helped us throughout the way but at this point if we don't close he will not make money, therefore he is only pushing to close, he is not helping us get out of this one.

    @Theresa Harris the realtor removed himself from the initial contract since the beginning, he is doing it to "help a friend" and guide him (the seller) through the process, he is not getting any commission and he also made my partner (also a realtor) to remove his commission as well.

  • Miami, FL · Member since 2016 · 33 posts · 14 votes
    7y

    @Mary B. @Lynnette E. The $100 per day are being charged to the seller by us, not the other way around, but we simply want them out. We closed on Thursday but the funds have not been wired yet, and the title officer have told us we cannot just barge into the property because technically the property is not ours yet. In this case even though we closed and complied with contract, but they did not hold their end of the bargain, are we able to cancel the agreement in writing and get out of the deal ? would we have the upper hand in case they take us to court ?

    @Lynnette E. thank you for the very thorough response and what too lookout for next time, i appreciate your valuable time and everyone's that is helping out. 

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    @Jose Trujillo I'm not familiar with the process in the US, but in Canada we have a closing date and a possession date and they are not the same and often differ by a day.  It is possible that your possession date is different than the closing date?

  • Investor · FL · Member since 2017 · 266 posts · 220 votes
    7y

    @Jose Trujillo

    Who is the seller’s agent? Id like to know the name.

    Contact his broker, contact an attorney, contact the DRE, find his yelp reviews. Enough giving them chances. Are these tenants living there or actual sellers? If its tenants did they assign lease?

  • Investor · FL · Member since 2017 · 266 posts · 220 votes
    7y

    @Jose Trujillo

    Hadnt read your additional comments.

    Im sure seller wants his money so they will leave. I would talk to an attorney. Dont skimp on this just to make sure there isnt any foul play prior to hard closing.

  • Miami, FL · Member since 2016 · 33 posts · 14 votes
    7y

    @Javier D. His name is John French, and he technically is not involved in the deal or contract, he has just been the "voice, eyes and ears" of the seller. Seller is living the property, not tenants. 

  • Investor · FL · Member since 2017 · 266 posts · 220 votes
    7y

    @Jose Trujillo

    Gotcha.

    Well im guessing seller wants his money so you wont have to deal with an eviction. I suppose if you’re getting 100 bucks a day just keep the pressure on.

    Do a walkthrough after they leave prior to releasing just in case.

    What was the 10,000 mistake? If you dont mind me asking?

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    Im going to give you a bit of advice that may seem a little harsh to whoever is the agent, you or your friend...

    Hire someone the next time that knows what they are doing. In fact, hire someone now. You are flipping this property and are going to screw yourselves on the listing side too. Having a license doesnt mean you know what you are doing.

  • Flipper/Rehabber · Chicago, IL · Member since 2013 · 319 posts · 153 votes
    7y

    @Jose Trujillo

    Hey, sorry to hear you have to go through this. Not sure if this was mentioned already, but here’s some advice from my experience. Whenever the seller needs possession “post-closing”, that’s fine, but we (my attorney) draft and addendum to the contract that states a portion of the sellers proceeds will be held by an escrow agent after the closing (make sure it’s a high enough amount to keep them motivated). We also will have a deadline date/time that they must vacate the property by, and after that date/time expires, they will be penalized on a per day basis. Example: I recently bought a property to rehab, and the sellers were purchasing a mobile home with the proceeds of the sale, so they needed a week after the close to finalize the mobile home purchase with the proceeds of the home sale. We held back $7k in a escrow account, and gave them 7 days to vacate. If they had not vacated the property by 5pm on the 7th day, then they would be penalized $500 per day until they left the property. Let’s just say after 3 days they were gone and left the property in broom swept condition.

    As an investor you will learn many lessons from a variety of different scenarios. Learn from the mistakes, and try to prevent from repeating those same mistakes. Hope you get everything figured out. Good luck and feel free to reach out if you need any advice in the future.

  • Investor · Punta Gorda, FL · Member since 2015 · 35 posts · 30 votes
    7y

    @Jose Trujillo

    I am way confused. You say you closed but then you say the money will be held back and that your partners own broker is simply pushing to close.

    Honestly, if at all possible stop this transaction. Stop it now. Way, way too many red flags.

    Do not be a desperate buyer.

  • Real Estate Agent · Indianapolis, IN · Member since 2018 · 41 posts · 23 votes
    7y

    @Jose Trujillo

    You recourse are the terms of your purchase agreement. If the possession is granted at closing there are daily penalties. Sometimes it's for valid reasons and then there times like this. As a realtor you need to have your realtor friend check with the local board of realtors for process of mediation and resolving disputes. Small claims court should ensure all the non possession fees are paid, and basically outside of that you'll just have to sit back and collect $100 a day, I mean unless you plan to live and are without a place to stay they are essentially screwing themselves, unless you don't have that possession clause in your purchase agreement, which should be the case if you're using NAR contracts.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Jose Trujillo:

    @Mary B. @Lynnette E. The $100 per day are being charged to the seller by us, not the other way around, but we simply want them out. We closed on Thursday but the funds have not been wired yet, and the title officer have told us we cannot just barge into the property because technically the property is not ours yet. In this case even though we closed and complied with contract, but they did not hold their end of the bargain, are we able to cancel the agreement in writing and get out of the deal ? would we have the upper hand in case they take us to court ?

    @Lynnette E. thank you for the very thorough response and what too lookout for next time, i appreciate your valuable time and everyone's that is helping out. 

    you did not CLOSE you just signed.. I sign my deals all the time 3 to 7 days in advance .. your closed when your deed records. 

    so if your deed has not recorded and you want to stall this.. just tell the Title company on Monday they are not to record and disperse. send it in writing.. now the seller will not have their proceeds and you just tell the agent you will allow it to record and dispurse when you have possession and can verify tenant is gone.. dont allow this to close until thats done..

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Chuck Mader:

    @Jose Trujillo

    I am way confused. You say you closed but then you say the money will be held back and that your partners own broker is simply pushing to close.

    Honestly, if at all possible stop this transaction. Stop it now. Way, way too many red flags.

    Do not be a desperate buyer.

     sounds like to me the OP is confusing closing with simply signing the closing docs..  I get the wet closing table states.. 

    but even there if your not recorded your not closed.. I have stopped transactions dead in their tracks  after everyone signed and money was in escrow.. seller not happy but until it records it still his property and not mine.

  • Investor · Punta Gorda, FL · Member since 2015 · 35 posts · 30 votes
    7y

    Thinking you are correct!  

  • Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Jose,

    I think you need to have an experienced real estate professional review your ratified contract.  Maybe they didn't turn over the property because it hasn't closed as Jay said. 

    In your own words

    "We closed on Thursday but the funds have not been wired yet, and the title officer have told us we cannot just barge into the property because technically the property is not ours yet."

    Has your bank not wired the funds into escrow? Or escrow has not wired the sellers funds?

    Possible the deed hasn't recorded or possession of the property is set at a different date.  Maybe in the contract, there is a specified time the seller will turn over the property back to you because they are doing a rent back.  Since you guys are rookies you didn't read that part. 

    Just giving you possible reasons for this issue.

  • Real Estate Agent · Tampa, FL · Member since 2016 · 131 posts · 47 votes
    7y

    You need an attorney.

    You might want to have them draft a letter demanding specific performance.

    If you used a FAR-BAR AS-IS contract there is a loser pays provision in the contract... make sure that is highlighted in your next contact with the seller, their agent, and the agent's broker.

    That should help expedite solving the problem you have.

  • Los Angeles, CA · Member since 2018 · 326 posts · 279 votes
    7y

    @Jose Trujillo typically there are a 1-3 days from signing the closing documents to the actual closing taking place.  

    Confirm with the title company first thing Monday morning what has actually been completed and you may have the opportunity to delay the funds being transferred.

    Also, go back to the contract to see what the dates and timelines are.  If everything is accurate in the contract then go to the listing broker and DRE and then start the eviction process.

  • Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Jose Trujillo

    Yikes, I’d get a lawyer. Good luck!

  • Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    7y

    Until money is in escrow with the title company, the deed won't be recorded.

    Just like @Jay Hinrichs said, stop the funds transfer to the seller: it will motivate him to move out.

    Make sure $100/day included in HUD-1.

    Tell them you'll let the funds transferred after walk through and getting the keys. 

    Otherwise, let the seller enjoy the $100/day rent

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