Seller Raising Price After Signing Purchase Agreement

Tax, SDIRAs & Cost Segregation
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Seller Raising Price After Signing Purchase Agreement

Mark Payne
Germantown, TN · Member since 2016 · 25 posts · 5 votes
Agreed to buy two properties from a Turn-Key / property management company. Signed purchase agreement knowing that they intended to double close with another investor who was liquidating their portfolio. At the first closing back taxes were discovered and the original seller did not want to bring money to the table. The company I'm buying from agreed to a higher price at the first closing to cover the taxes and subsequently closed. Then they email me, tell me about the tax issue and raise the price by 5k on each property. I have the original purchase agreements with no contingencies on either side. Do I have any legal recourse here? We've passed the original closing date and have not signed another agreement. State is TN, cash deal. Thanks!
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y

Send them a copy of your contract with the price highlighted and cc the title company on it.

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  • Erin K.
    Professional · Loudonville, OH · Member since 2015 · 125 posts · 37 votes
    8y

    Sounds like you may have possible recourse, but make sure you have done/are doing everything on your end to get to closing.  If there was a closing deadline and it passed, they may say you didn't close by the deadline in the contract so the contract is null.  Did they tell you they were raising the price before or after the original closing date?  

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    Send them a copy of your contract with the price highlighted and cc the title company on it.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    1Reply
  • James W.
    Minneapolis, MN · Member since 2017 · 353 posts · 223 votes
    8y
    Not closing on time or having another agreement in place ahead may impact things as that was the agreement. I'm not an attorney, but I believe you both have the option to pull out if the date passes unless you might be able to demonstrate that it was at the fault of the seller. If the other person needs your money to close his deal or if it is a part of a 1031 exchange you may have a little more leverage.
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  • Mark Payne
    OP
    Germantown, TN · Member since 2016 · 25 posts · 5 votes
    8y
    I was informed of the price change today, 14 days after the original closing date. I re-read the email just now. They are closing with the original seller on DEC 1, I misread a "will" as a "have" (closed). Sorry for the confusion. They also have my earnest money. I was ready to close on the original date.
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  • Jacob Rhein
    Lawyer/Investor · Atlanta, GA · Member since 2017 · 33 posts · 34 votes
    8y

    Get a free case evaluation from a TN lawyer who specializes in RE litigation as soon as possible. If you were ready, willing, and able to close under the original deal, it sounds like you may have claims for breach of contract, anticipatory repudiation, unjust enrichment, promissory estoppel, and specific performance. Seller might try to defend on the grounds of mutual mistake if neither of you were aware of the tax problems. 

    If you want to prevent them from selling to someone else, you could file a lawsuit in the county where the property is located and immediately record a notice of pending litigation (lis pendens) with the county clerk. This would muck up title for everyone, including for yourself, until the lis pendens was removed. In an emergency, you could even consider filing a lawsuit pro se and then hiring a lawyer to amend the complaint and represent you going forward. 

    Regarding waiver from the first closing, check whether "time [was] of the essence" under your contract. If not, or if no one has been insisting on the original closing date, a delay of 14 days might not be material (i.e., not matter) and the parties may still have a duty to close in good faith. My impression from the above is that you probably still have an enforceable contract. At the very least, you should get your earnest money back and be put in as good a position as you were in before the deal started. 

    This isn't legal advice, just first impressions and general information. I'm not licensed in TN, so I strongly recommend that you talk to a TN lawyer about this. 

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  • Mark Payne
    OP
    Germantown, TN · Member since 2016 · 25 posts · 5 votes
    8y

    Jacob,  very helpful reply.  Thank you!

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    What does YOUR contract say about purchase price, settlement date, modifications, default? 

    Be prepared to take action to enforce the terms or walk.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    This is a issue that should have been addressed by your lawyer, it should have gone through him ahead of you, not something you need advice on from a forum.

    If your lawyer has not spoken to you in regards to this matter there is something wrong with the process. Call him immediately.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    @Thomas S. OP has an attorney and rather than picking up the phone he posts the scenario in an internet forum... huh? Not likely. 

    And no free consultation with an attorney is going to result in a solution but rather a decision on the amount of retainer required.

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