Closing issues from buyer. 5 months delay. CRE financing

8 Replies

Good afternoon,

I received an offer on 4 units in March. Buyer already purchased 100 units in the same complex 2 years ago. He really wanted my units because he wanted all the complex under his management so I decided to accept his offer.

He promised me an easy closing (1 month) thas was in April. On the contract it stated "Conventional Loan" with the lenders details.

When closing was supposed to take place the buyer informs me that he is taking out a CRE financing (Refinancing I suppose ?)

We are now in September and I still get different reasons why it is not closing (CRE lender not replying, Environment survey...)

I believe the buyer is trying to gain time regarding the refinancing. Is this possible ? 

Does anybody have an idea of what is happening here ?

I appreciate anybodys help on this.

Thank you


Hello Adrien - I've been poking around here trying to learn what I don't know about rental homes. But I've been in commercial RE for years, just not residential. In commercial it's actually pretty straight forward. The contract to purchase your units would come with a deposit that is applied to the purchase price when the property closes. If it doesn't close, the deposit is yours. If buyer wants more time, they put in more hard money in escrow that is forfeited to you automatically if buyer doesn't close on time. This is usually all stipulated in the contract. 

I would simply tell the buyer you will happily give him more time, but you need a new contract. This contract requires a deposit to be escrowed with the closing company that is non-refundable if he doesn't close. For every additional 30 or 60 days of due diligence he needs, he puts in extension money that is non-refundable. All money can be applied to the purchase price. 

This will create some urgency and/or at least get you some cash for screwing around with this guy. And put an end date to his goofyness. 

Good luck.

Do you own some condo units (residential or industrial) or something else?  As if you do own the last few condo units in a complex, I could see a case where the buyer is looking to convert it into an apartment building by buying all of the separate units (though this seems like a very expensive way to go about it, as most "MF housing in my area is priced on a per door basis cheaper than comparable condos) and roll the purchase of your units into the new loan.  

However, what did the purchase agreement mention about timeline, as you are well pass the initial close.  Did you offer extensions (And if so, did you get concessions)?

Thanks for your answers. It is not a condo but I am one of the last to own the remaining units before he owns the entire complex.

One of the property left vacant for so long got damaged by a small fire last week ( Only smoke and cosmetic damage) 

He now states that the damaged unit estimate is 88 000 $. Just for information the unit was purchased at 32 000 $. (My insurance was finished last month...) and it is an estimate for a full remodel. Just to scate me off I presume if i back out.

I told him i wanted a late fee and he refuses. 

I got my self in a right mess here.

Originally posted by @Adrien Gael :

Thanks for your answers. It is not a condo but I am one of the last to own the remaining units before he owns the entire complex.

One of the property left vacant for so long got damaged by a small fire last week ( Only smoke and cosmetic damage) 

He now states that the damaged unit estimate is 88 000 $. Just for information the unit was purchased at 32 000 $. (My insurance was finished last month...) and it is an estimate for a full remodel. Just to scate me off I presume if i back out.

I told him i wanted a late fee and he refuses. 

I got my self in a right mess here.

If he hasn't closed on the deadline, the contract is done. Talk to your realtor, but you should keep the deposit as it was his fault the closing didn't happen on time. Either put them back on the market or get them rented.

 

You need a real estate attorney to review what you signed and supporting documents to see what your options are. If the buyer owns 100 units likely they have an attorney on retainer.

The kind of help you need is not on these forums.

It can be true to try and increase non-refundable deposit every time they want to extend. When money is on the table you tend to get the full story as to where they are at in the process. If the buyer doesn't want to commit money to lock it up then an option is to put in a (right to continued marketing clause) in the purchase and sale contract. This way you have the buyer working to buy it and if someone else better comes along the current buyer has to match their terms or they could lose out on the property.

No legal advice given.  

Agree with Joel that you need someone to help you understand your rights. I would also look at the HOA docs to see if a 100% vote is required to convert the property to apartments or force a sale of the complex, that sort of thing. If so, you hold all of the cards. If the contract at this point has lapsed then raise the price substantially and tell the buyer he can take it or leave it. He needs your units more than you need to sell them, and they are worth more to him than they would be to anyone else.

Thanks a lot for your time all of you.

I believe the buyer is not really the one purchasing the units. I checked is BIO and it states he recently started an Real estate Investment fund.

Maybe the LLc is still waiting for investors so they have enough cash to purchase my units. Is that even possible ? A open closing date !

Have a nice week end and thanks again !