Seller backed out at closing!

80 Replies

I was in the process of buying what I was led to believe (by seller and listing agent) was a triplex, the top 2 units were rented and the bottom one was vacant, so I was going to live in bottom and continue renting the top 2. Seller accepted my offer and I went through the inspection, mortgage, appraisal, EVERYTHING

(found out during the appraisal that the 3rd floor kitchen was never permitted so it could only be a 2 unit) so they had to remove the kitchen and tenant (tenant had not paid rent for past 2 months so he was trying to pawn her off on me, found that out during this as well)

I had asked multiple times (When I put the offer in, during the inspection, a few weeks later and again last week for proof of rents paid and security deposit, estoppel, ECT and was told repeatedly they'd give me that info asap and never got anything except a poorly filled out estopple)

and on the DAY OF CLOSING (today) we are all waiting on seller and his agent and after they were 15 mins late, we call the sellers agent and ask how much longer til they arrive and he says they're not coming the seller doesn't want to sell. 

I've already moved out of my rental and was staying with a friend for a few days til closing and now that's not happening. I am so upset, I've saved for years to do something like this, and now he just backs out because he didn't line up a place for himself to go and said he didn't know he had a second mortgage and wasn't going to be making as much money as he thought he would.

I am going to sue him for damages, has anyone else ever gone through something like This? I can't believe this is happening.

Updated 4 months ago

I am aware of the "red flags", I didn't find out most of these issues until after the appraisal was available to me and less than a week before closing, I had already came too far and I would of been responsible for backing out. I had just figured that the seller was a little weird but after the sale he didn't matter, and I could enjoy the house and fixing it up nice. I was even okay with it being a duplex instead, because it could of very easily been 2, two floor units, instead of 3, one floor units, the numbers would of still worked in my favor, although not as good, still good. It's just crazy to me that the seller can not show up to closing and my only options are to say, oh well, guess I just lost all the time and money I put into it or paying a lawyer to sue him and hopefully recoup some of my expenses. What is the point of a contract? It doesn't protect the buyer at all.

Hi, I'd be P.O.'d too. If you have a proper agreement in writing then speak with a real estate attorney or perhaps a commercial litigator. It sounds like the seller performed breach of contract and non-performance and you can sue him for that. 

Heck, if the seller is smart he'll sell to you when your attorney tells him what's going to happen. 

Keep us updated.

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Originally posted by @Account Closed :

So other than your feeling got hurt can you list your damages.

After  paying your Lawyers to force a sale you might be even more HURT.

Are you talking about a Million dollar west coast triplex or a idaho $45,000 plex.     Price matterS

 So, you just let people back out of contracts on you on a regular basis? Great way to do business. 

Bad answer 0/10.  

@Rachel Degennaro that's not a good seller. Take 24 hours to let your emotion cool down then get on the phone with your attorney. You have options in this situation. It will cause some headaches but remain calm and you will overcome it. Speak an attorney and know your rights. Good luck!

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I'd be super upset also. I mean, this is complete BS. Backing out last minute? who does that? There is a lot of risk there on the sellers part, specifically, the risk you will take action. Consult with a lawyer and quantify the time and money it will take to make you whole. Only then can you make the right decision. Personally, there seems to have been several red flags at work that would have turned me off the property so it could be argued you accepted the risk. just my two cents. best of luck to you! 

Originally posted by @Account Closed :

So other than your feeling got hurt can you list your damages.

After  paying your Lawyers to force a sale you might be even more HURT.

Are you talking about a Million dollar west coast triplex or a idaho $45,000 plex.     Price matterS

I don't want to force a sale at this point I don't trust the seller, after misleading me about the number of permitted units, (I was disappointed but still willing to buy because it was still a good deal to me although it did need some work, which it was happy to do, I was looking for a project.)

Also, never receiving the papers I asked for, which in this kind of a sale I don't feel like I was asking for anything out of the ordinary. 

Also, he lied about 3rd floor tenant, said he had taken care of it but was trying to sneak her around the appraiser, eventually he did remove her and it was fine.

I should have ran but I didn't because I was trying to make my first investment go through, and as weird as he was I just thought as soon as this sale is over I don't have to deal with his crap anymore and can fix the place UP and enjoy it.

So money wise it's not a million dollar property, but it was to me, I don't make a lot of money and have lived way below my means for years, kept debt to a zero and saved and suffered for years to be able to put a proper downpayment on something like this.

But I did pay for an inspection, paid my realitor fees, my bank fees, got an appraisal, title search, put notice on the place I was renting and moved out, all my belongings are in storage and now I have no place to live.

I have to start all over, when I should be enjoying my new house. So yes, my ****ing feelings are hurt.

Your remedies for default will be clearly spelled in your contract since you used a state realtor contract.....read that.

@Rachel Degennaro

What was the Realtor fee for?  Shouldn't your agent have been paid by the seller?

Did you have a buyers agent that you guaranteed a commission?

Yes, it's all in the contract, he is at fault, it just most of the people I have contacted about this normally go through this because the buyer backs out not the seller, so I was more or less wondering if anyone has gone through the horrible experience of the seller backing out.

I am planning to sue for damages, and maybe it doesn't amount to much but it makes me sick that after everything I went through to get this place he just doesn't show up to closing and I'm out all the money and time I've spent on it and out a place to live and nothing happens unless I sue him?  

@dave toelkes it was I believe 400$ for him to work with me, I think they labelled it a processing fee or something like that, I needed a realtor to show me the house and I put the offer the next day. It wasn't a commission, I just can't remember what the fee was named.

@Rachel Degennaro

Sounds like you hired a flat fee listing agent. Is that what happened? If so, these agents are typically hired by sellers who want to sell their property without a real estate agent. They just pay a flat fee to have their property listed in the MLS.

If an agent brings a buyer to the settlement table, then the seller typically agrees to pay the buyer's agent a 3% commission.

Originally posted by @Dave Toelkes :

@Rachel Degennaro

Sounds like you hired a flat fee listing agent. Is that what happened? If so, these agents are typically hired by sellers who want to sell their property without a real estate agent. They just pay a flat fee to have their property listed in the MLS.

If an agent brings a buyer to the settlement table, then the seller typically agrees to pay the buyer's agent a 3% commission.

No, sorry, I don't think I'm explaining it right, I had/have a buyers agent, it was the Real Estate company's fee, I paid it 2 months ago I just can't remember what it was for, like a filing fee or something like that. Either way, thus house is the reason I contacted an agent in the first place, thats why I threw that in there. 

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@Rachel Degennaro

You may want to check your agreement with the agent.  This buyers agent processing fee is new to me.  I am wondering if your buyers agent agreement has you forfeit the "fee" if you back out of an accepted deal.  Since the seller backed out, I think your agent and the seller's agent should be paid by the seller.

Originally posted by @Karl B.:

Hi, I'd be P.O.'d too. If you have a proper agreement in writing then speak with a real estate attorney or perhaps a commercial litigator. It sounds like the seller performed breach of contract and non-performance and you can sue him for that. 

Heck, if the seller is smart he'll sell to you when your attorney tells him what's going to happen. 

Keep us updated.

I had no idea what to do, I didn't think you could just do that last second, but it happened. Most people I spoke with today, my agent, his agents broker, title company, my mortage company, friends, everyone just keeps saying sue him (but what do they know about it, it's any easy thing to say, not an easy thing to do), so I contacted a few lawyers and was able to briefly explain, all agree I have a case, but I wasn't able to get into the nitty gritty about it yet, being Friday afternoon/going on evening and all.

Not sure if that’s normal in PA but typically buyer doesn’t pay a “realtor fee”. I hope you will continue looking at some point and will get back at it, if a realtor request a “realtor fee” again and you’re a buyer I would question it or look elsewhere. As a buyer I give bonuses to my buyer agent if I believe my agent went above and beyond but it’s completely optional and I decide how much..

I know at this time seems really bad but it might be a blessing in disguise.
It’s sounds like you’re new and you would have to evict a tenant after purchase. At some point all investors will have to go thru an eviction but doing it on your first deal is not ideal..
Definitely once your emotions cool down talk to a lawyer and see what options you might have..
If for whatever reason seller changes their mind after you speak to a lawyer I agree w you it’s not worth it. Seller has no integrity and chances are there will be other surprises you will find if you purchase home

Originally posted by @Dave Toelkes :

@Rachel Degennaro

You may want to check your agreement with the agent.  This buyers agent processing fee is new to me.  I am wondering if your buyers agent agreement has you forfeit the "fee" if you back out of an accepted deal.  Since the seller backed out, I think your agent and the seller's agent should be paid by the seller.

You got me curious about it, I just went through my emails to find what it was, it's labelled a Administrative Support Commission, (Keller williams) it says that they put in time, effort, support to comply with regulations and  PA requires them to keep copies for 3 years, so this is a separate fee. It says nothing else about it. 

Originally posted by @Raul R. :

Not sure if that’s normal in PA but typically buyer doesn’t pay a “realtor fee”. I hope you will continue looking at some point and will get back at it, if a realtor request a “realtor fee” again and you’re a buyer I would question it or look elsewhere. As a buyer I give bonuses to my buyer agent if I believe my agent went above and beyond but it’s completely optional and I decide how much..

I know at this time seems really bad but it might be a blessing in disguise.
It’s sounds like you’re new and you would have to evict a tenant after purchase. At some point all investors will have to go thru an eviction but doing it on your first deal is not ideal..
Definitely once your emotions cool down talk to a lawyer and see what options you might have..
If for whatever reason seller changes their mind after you speak to a lawyer I agree w you it’s not worth it. Seller has no integrity and chances are there will be other surprises you will find if you purchase home

I agree that it may be a blessing in disguise, but right now it just sucks, I had put a lot of side work into it as well, coming up with my own lease and having a lawyer review it for me, ordered and paid for new locks, and just overall dreaming of little things to do to it, especially in my unit, as I was planning to live there for a few years.

I mean I am upset, but it also comes through harsher in text because I'm trying to relay my situation to a screen.

He had evicted her 2 weeks ago, so I wouldn't of had to deal with it.

I liked the potential that was there, I just figured as soon as it was transferred to me, the seller didn't matter anymore, so I tried to ignore what was probably god warning me haha a 

Like Mike Tyson said, "Everyone has a plan until they get punched in the mouth!"

If I were you, I would NOT put up with that BC! I'd go for the jugular and take their @$$ to Small Claims Court in a freakin second and have a Sherriff's Dept. serve them at their work asap! 

I believe in PA its up to 12k that you can sue for and sounds like you have a very strong case.

As long as you have your paperwork, receipts, etc., documenting all your losses, its likely you will win as you get Justice in Small Claims Court.  

See, the seller is thinking, the heck with you, you likely will just complain a bit, lick your wounds and walk away and won't do anything...until they get served by a Sherriff's Deputy. 

And if the Sherriff's Dept. can't locate them, hire a Private Server to track their @$$ down like a Bloodhound (and they will) to serve them and then tack that cost on to the law suit too!

If the average person knew how easy it actually is to sue in small claims and win (IF you have your documentation together), the courthouse would have a line wrapped around the building of people trying to file for damages.

Don't be intimidated as its basically "Night Court."  At the summons hearing and hearings thereafter, always wear a suit and tie, get a haircut, shave, don't wear stupid jewelry, speak ONLY when spoken to, DO NOT interrupt the judge, always say "Your honor" and "Yes Ma'am, No Ma'am" or Sir when the judge asks you questions, then Shut Your Mouth!

Very important that you do not interrupt the judge or the defendant and/or try to argue your case at the initial hearing as it's not the time for that.  Let the defendant talk out of line and make a fool of himself (which he likely will). Don't even look at him or engage him in any way. The defendant will likely say stupid stuff and lie, but just stay cool and focused as you tighten the screws!

Every investor should experience Small Claims Court at least once to see how relatively easy it is to have Justice Served!

Won't help in this case (perhaps consider yourself lucky) but both parties can include reasonable damages provisions in the PSA.

Nobody wants to deal with an action for specific performance. So what I've done is to have reciprocal default provisions... like so:

If buyer defaults, seller can forfeit the $5000 deposit. If seller defaults, seller owes buyer $5000 in liquidated damages. This way everybody knows up front what happens. Good luck.

@Rachel Degennaro , I agree that lawyer up might be a good thing but I would want to see you chase bad money.  There were a few red flags in there that would indicate you might have got out of a bad deal.  Also when you find out one of the tenants is getting kicked out because its an illegal triplex. THAT is a good time to renegotiate because your numbers just got thrown off.  

Also a great reason to set a hard date for estopple, rent roll and 2 years of tax info to figure out where the property is by the numbers.  If they can't to that pull out, it isn't worth your time to get the inspection, appraisal, and anything else that will cost you money.  Not being forthright with finances would make me run for the hills, because I wouldn't know if I am buying it right.  Which is where you should be making your money.

Sorry if this sounded harsh.  It isn't meant to be. You sincerely have my deepest sympathy.  This is actually my nightmare scenario, as I am househacking currently and looking to make a deal with limited funds.

Shooting from the hip what you should do legally is either: A. let it go, probably the cheapest route, or B. See if you can get a third position lean? From what you have told us that would be hard to get him to pay. After that sell the debt, or start reporting to credit bureaus to try and destroy his credit rating.  That sounds fun. 

P.S. Estopple is a legal binding agreement as I recall. If that thing is inaccurate you can get him for several breaches of contract. Which might turn your case into something better.

@Rachel Degennaro I am with Keller Williams, and I can tell you that me/my office doesn't see a cent until the closing table. More likely it is that specific broker within KW, probably not the direct agent with whom you worked (but I can't be sure). Either way, their explantation that they have costs .... that is why they get 30% of an agent's commission without doing any of the selling directly.

Originally posted by @John Peine :

@Rachel Degennaro , I agree that lawyer up might be a good thing but I would want to see you chase bad money.  There were a few red flags in there that would indicate you might have got out of a bad deal.  Also when you find out one of the tenants is getting kicked out because its an illegal triplex. THAT is a good time to renegotiate because your numbers just got thrown off.  

Also a great reason to set a hard date for estopple, rent roll and 2 years of tax info to figure out where the property is by the numbers.  If they can't to that pull out, it isn't worth your time to get the inspection, appraisal, and anything else that will cost you money.  Not being forthright with finances would make me run for the hills, because I wouldn't know if I am buying it right.  Which is where you should be making your money.

Sorry if this sounded harsh.  It isn't meant to be. You sincerely have my deepest sympathy.  This is actually my nightmare scenario, as I am househacking currently and looking to make a deal with limited funds.

Shooting from the hip what you should do legally is either: A. let it go, probably the cheapest route, or B. See if you can get a third position lean? From what you have told us that would be hard to get him to pay. After that sell the debt, or start reporting to credit bureaus to try and destroy his credit rating.  That sounds fun. 

P.S. Estopple is a legal binding agreement as I recall. If that thing is inaccurate you can get him for several breaches of contract. Which might turn your case into something better.

Estoppel certificates are promises made by the tenant to the prospective buyer conerning the status and terms of the lease, deposit, etc. Based on OP's facts this deal should not have gotten this far.

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