Hello fellow BP'ers, I am new to BP but am not new to REI. One thing that I've never experienced in the last 17 years of doing REI is a seller that refuses to go to the closing table. I've got a fully executed contract and the seller has many liens on the property and owes a ton to the government. He didn't realize this when he signed the contract and will essentially be breaking even or even going into the red at closing. So he has decided to just abandon the property and I assume let the government take it. I am attempting to get my earnest money back but he's not cooperating and has fled the state. I've already spent money to have an appraisal and some other various expenses and am wondering if there is a way I can keep him from selling to someone else or if a court could possibly force him to sell to me? Just wondering if anyone has any experience as I'm not sure how this works in Missouri. I'm wondering if I could write up a mutual release in order to get my earnest money back while keeping him from selling to anyone else if he attempts to. Thanks in advance.
Hello fellow BP'ers, I am new to BP but am not new to REI. One thing that I've never experienced in the last 17 years of doing REI is a seller that refuses to go to the closing table. I've got a fully executed contract and the seller has many liens on the property and owes a ton to the government. He didn't realize this when he signed the contract and will essentially be breaking even or even going into the red at closing. So he has decided to just abandon the property and I assume let the government take it. I am attempting to get my earnest money back but he's not cooperating and has fled the state. I've already spent money to have an appraisal and some other various expenses and am wondering if there is a way I can keep him from selling to someone else or if a court could possibly force him to sell to me? Just wondering if anyone has any experience as I'm not sure how this works in Missouri. I'm wondering if I could write up a mutual release in order to get my earnest money back while keeping him from selling to anyone else if he attempts to. Thanks in advance.
I experienced problems with a seller once, including the threat of seller to another buyer. Is the contract recorded? My attorney advised to prevent that, I should record the P&S contract in the public records, if no other sales contract are on file. Recorded contracts takes precedence over non recorded ones, and in cases of more than one recorded, the first one recorded prevails. This would prevent him from selling to others, but not 100% foolproof.
As to earnest money, who holds it? If held in escrow, you'll have to get after the escrow agent. How much is it, as if it's a small amount, might not be worth to pursue it.
I'm not sure what you mean by a recorded contract but there is a title company involved if that's what you mean and they are holding my $2,000 escrow and say they cannot release it to me without his signature.
Theresa,
He didn't think he owed that much and in the past, the government took a few of his properties so he thinks they have it out for him. His agent said he was told he could fight it but I think in the end he has just given up so that's why he fled to another state.
I doubt he will try to sell to anyone else, he's a bit mentally unstable but at the same time, I would like to protect my interest in the property if possible, or at a minimum be able to recover my earnest money.
I'm not sure what you mean by a recorded contract but there is a title company involved if that's what you mean and they are holding my $2,000 escrow and say they cannot release it to me without his signature.
Theresa,
He didn't think he owed that much and in the past, the government took a few of his properties so he thinks they have it out for him. His agent said he was told he could fight it but I think in the end he has just given up so that's why he fled to another state.
I doubt he will try to sell to anyone else, he's a bit mentally unstable but at the same time, I would like to protect my interest in the property if possible, or at a minimum be able to recover my earnest money.
Hai, the way my attorney explained it, there's no law that restricts a seller for signing more than one contract to sell a property. He could sign 10 of them and still not violate the law.
The Purchase and Sales contract can be recorded in the county clerks office, and the first recorded one is the valid one, so if yours is the 1st recorded one, it takes precedence over the other 9 if there's 10 of them out there. But if you signed a contract with the seller, someone signs one a day later, records it, his goes first.
Don't know where you are, I'm from NY, and the procedure from NY: Recording contracts
As to money in escrow, what you're told is correct. I sold a flip property once, buyer got his mortgage, scheduled to go to closing a week later, changed his mind, cancelled everything, and demanded his deposit in escrow back. It was $12,900. My attorney held the escrow, and the buyer attorney demanded the money back from my attorney, and was told he needed my signature and agreement. I ask what happens if I refused to sign. Says within 90 days, he'll have to turn the escrow over to the court and be done with it. The seller attorney got very nasty, threaten to sue me, and says I'll never see the money. I replied "I don't care, it'll be turned over to the courts and your client will never see it, which is fine with me, as it's not my money". If the seller couldn't be found, should be a different procedure. In my case, I stood firm, the seller attorney finally gave in, practically begged if his client could get half his money back after talking tough and nasty over three calls, and I hung up on him. Felt so good, did the guy a favor giving half his money back.
Hello fellow BP'ers, I am new to BP but am not new to REI. One thing that I've never experienced in the last 17 years of doing REI is a seller that refuses to go to the closing table. I've got a fully executed contract and the seller has many liens on the property and owes a ton to the government. He didn't realize this when he signed the contract and will essentially be breaking even or even going into the red at closing. So he has decided to just abandon the property and I assume let the government take it. I am attempting to get my earnest money back but he's not cooperating and has fled the state. I've already spent money to have an appraisal and some other various expenses and am wondering if there is a way I can keep him from selling to someone else or if a court could possibly force him to sell to me? Just wondering if anyone has any experience as I'm not sure how this works in Missouri. I'm wondering if I could write up a mutual release in order to get my earnest money back while keeping him from selling to anyone else if he attempts to. Thanks in advance.
If you have a purchase and sale agreement that's duly executed, I think you could sue for specific performance to complete the transaction. When you file the suit, you can file a court lien against the property notifying subsequent purchasers that it is currently bogged down in litigation. This probably protects you from a future purchaser coming in and buying it out from under you.
Specific performance is how the court forces the sale, and courts will do this in real estate transactions.
A mutual release actually nullifies your purchase agreement, because it's a mutual release of contract and waiver. That would get your EMD back, but it won't stop the seller from selling it out to someone else.
You're at the point where you need to hire a lawyer for your next steps. I would call around in your jurisdiction because it will get hairy from this point on.
Glad things worked out for you, a contract is a contract and sure circumstances happen, but when you get nasty how can you expect anyone to even give give you part of your earnest money back?
Justin,
Thanks, that's what I was leaning towards. Hate to do that but I guess the seller has left me no other options.
Thanks for everyone's advice and have a great week all!