What would you do... Estate sale gone wrong

9 Replies

I had an estate sale under contract back in July 2014 in Raleigh NC and proceeded to close. One of the heirs after signing the contract decided they didn't want to sell and would not sign the deed. We waited and waited and contacted attorneys and waited and after a while found out that the problem heir had contacted another closing attorney about buy the property herself.

During this time I still had a contract on the house. (I guess I still have it under contract now, the legal owner has changed though so it is pretty much useless.)

We found out who the attorney was talked with him, he cancelled the closing and again informed the heir that she was in breach and could be sued.

A couple days later the property was deeded over to the problem heir by the other heirs and we have been trying to reach her again to let her know the things she has done are not within the law.

Question: would you sue the problem heir? All the heirs (roughly 6-7) or just let it go and eat the sunk costs.

Anybody successfully won in this situation? Any lawyers you can suggest? Would love a lawyer that would handle the upfront costs to split any winnings we are awarded.

25-30k net profit on the deal and roughly 2k in sunk costs so far. 87k purchase 63k rehab.

Medium theinspiringinvestmentlogoUriah D., The Inspiring Investment | [email protected] | 919‑757‑9447 | http://www.theinspiringinvestment.com | NC Agent # 277089

Here are my thoughts (and I say this as a lawyer).  First, I think with $2k in sunk costs, it's worth at least speaking to a lawyer.  You'd be surprised what even a threatening lawyer will accomplish.  And just because a lawsuit is threatened, it doesn't mean you have to file it.   Second, the lawyer will let you know your chances of success and potential damages.  For example, he or she can advise you about whether you can sue for specific performance or just damages, how those damages are measured, whether attorney's fees are recoverable,  etc.  (Here in TX we can get specific performance.)  Third, I think you will have a very difficult time finding a lawyer to take it on contingency.  It just doesn't seem like there is enough at stake to get an attorney interested in that type of arrangement.  Plus, with individual defendants (as opposed to insurance companies or large corporations), there is always the issue of whether you can actually collect on any judgment.  

There are many other fish in the sea.

I would definitely pursue seeking out an attorney. I have never been in that situation. But my guess is when someone fails to deliver on selling a home like this, you're going to be entitled to getting all your expenses back at the very least - along with any attorney fees to do it.

But I would first contact the one heir and ask them for the money. Tell them that they, in fact, backed out of a legally binding contract and that you will either sue for your expenses and/or sue for the judge to force the sale to go through. 

That is something you have the right to pursue legally and a judge can grant it.  A judge can force a sale to go through if he chooses. So it might be worth trying to at least see if they give you your expenses back.

If not, take them to court. You should, at the very least, be entitled to reasonable expenses. I'm guessing things like home inspections, attorney fees, etc.

It really is the principle of the thing. they signed the contract and then backed out. There are simple contract laws that should be enforceable. If you'd have backed out, they would have been entitled to your earnest money.  So I don't see why you wouldn't be entitled to at least getting your expenses back. And maybe even something in damages (i.e. possibly a portion of the profit if you can demonstrate there would have been one).

Before you decide to file litigation, speak to at least two people who have actually been through a protracted lawsuit. It can and usually does taking a far greater toll on you and your family than you can imagine.  There is theory and there is reality, and seldom do the two meet.  Think long and hard and get a litigant's view before proceeding...it may just enlighten you greatly. 

Yes, you were likely wronged but the question is how much do you want to spend financially and emotionally to right the wrong. 

Your circumstance is not unusual, which is why i prefer to file a Notice of Option (my contracts are typically option contracts) in the public records which gives constructive notice to the world that I have the property under contract, which means it can't be sold without dealing with me first. 

Guy Gimenez, Buying Texas Today | [email protected] | (512) 270‑7279 | http://www.BuyingTexasToday.com

I would do as @John Chapman  suggests and see about getting a lawyer to send a letter. My guess is that you may be able to get your money back (your costs) from the estate; especially if there is still an executor (and as long as that executor is not the "problem heir"). After that, I think any idea of getting more money, or getting the heir to relinquish the property to you, is probably not realistic. Also keep in mind the time/energy/money that will be sunk into this if you proceed. Sometimes it's better for your mental and financial health to just suck it up and move on.

Medium team zen logo vJean Bolger, 33 Zen Lane | http://www.solidrealestateadvice.com

I think I have to agree with @Guy Gimenez  . I understand you were wronged in this, but do you want to spend time and money, and can you then even collect. The emotional toll a lawsuit can take, should not be underestimated. Also what if the heir countersues and request a jury trial. I am only saying this could get messy in a hurry, any of us at this for a while has lost some money on a deal that didn't come through. The heir may also say she was under duress when signing the original contract. I am not a lawyer, and maybe sending a letter is ok, but I advise against filling suit. It also could really damage your local reputation as prying on heirs. Just my thoughts, no legal or accounting advice.

@Guy Gimenez  @Jeremy Tillotson  @Jean Bolger  @Mike H.  @John Chapman  

I am definitely not a sue happy kind of guy, and dont want that stigma in town, mainly just want to get back sunk costs.  I am guessing a letter is the way to go.  At this point even if I did sue and won, we all know that house is burning to the ground by a pissed off heir.  I don't think I want the house and issues it will bring me, it just stinks to let go of the profits when you only have a few flips under your belt.  

Medium theinspiringinvestmentlogoUriah D., The Inspiring Investment | [email protected]l.com | 919‑757‑9447 | http://www.theinspiringinvestment.com | NC Agent # 277089

What, you live in a one house town? $2K? Lesson learned. Walk away.

It happens.the greater question to seek advice on: is it worth it(emotionally & financially)?

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