Seller backed out at closing!

80 Replies

Originally posted by @Luiz Souza :

Record the PA and cloud title. Sooner or later he’ll try to sale the property again and when he does title won’t be good than he’ll have no choice but to contact you for the release and when he does charge him a nice little fee for your headache!

 Thank is for this advice! I had never heard of it, (an obvious newbie here) I am looking into it now. It's just crazy to me someone can put you through the motions and not show up at closing (I did my final walkthrough the night before and he said he'd see me tomorrow) I just want some form of justice, however small it is, this is just so wrong.

BTW. That’s what I would’ve done if this situation was with me and here in my neck of the woods. Seek legal advise as laws change from state to state and the above is nothing more than my opinion. Good luck!

Originally posted by @Rachel Degennaro :
Originally posted by @Lance Kawakami:

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.

I applaud your determination in trying to secure your first deal in the face of those red flags.  A number of experience investor will tell you that your first deal is the hardest and you can analyze forever without pulling the trigger.  Next, in my view, you did engage in further due diligence by analyzing the deal with these misrepresentations with the numbers still working.  I just want to encourage you to make something happen even if you just break even.  The key to your problem will be the contract.  Look at what your contract actually say if either party fails to perform.


You could consider yourself very lucky! You may be thinking WTF!? But despite this being a big blow to you emotionally, the seller pulling out at the last minute could have been saving you from a world of heartache in the future. If it was meant to happen, it would have happened (by belief anyways). I have had contractors, wholesalers, realtors and many others "screw me over" and my initial reaction was of complete anger and revenge. But, for what I could have gotten in damages just to stick it to them (maybe a few grand at best) would definitely not been worth my time, effort and sanity. I had to let it go and chalk it up to a lesson learned --I made mistakes too, missed red flags, etc. You said you "should" have seen the red flags. Well, tomorrow or when you cool down some, grab a pen and paper and write down all the mistakes you made and red flags you missed. At the top, write "NEVER AGAIN" and place it in your office/work area. If it's painful that's good, because you won't make those mistakes again because when you see that red flag and think "well, maybe I could..." or "yeah but this is different" you'll remember that paper and go oh yeah, not doing that again. 

I also say you're lucky because how much did all of this cost you? I don't know how much all the due diligence costs, but it shouldn't have been more than a few hundred dollars for inspections and appraisals. So, you got a very expensive lesson for very little money. Does it sting? Yep! Does it really piss you off? Yep! Is it fair? Nope! But you're going to face these situations at least a few times in your real estate investment career. And you're lucky because you learned this cheaply on your first deal on what is a cheap property compared to what you will be working on in the future if you stick with it (million dollar properties). I went through similar experiences so I know exactly how it feels (writing a forum post about it soon). Better to toughen you up now so can built up some calluses on your hands now and take what success is coming your way soon! DO NOT quit now, keep going. You didn't walk the first time you tried, you fell again and again and learned from each time you fell. And now (I assume) you walk without thinking about it. So, dust yourself off, write down the lessons you learned and get back out there! 

Lastly, as for whether or not to pursue suing for damages, that's a conversation to have with your real estate attorney. But make sure you do it when you're calm and level headed. I would even recommend bringing someone with you who is not emotionally involved with this (i.e. not your protective parents) but can be there to support you and knows if you're making an emotional decision versus a logical one. Good luck and I hope to keep seeing you on BP!

-Jason Pinkerton

I am just chiming in about the realtor fee. Although the sellers pay the commission, the fee is mandatory and is charged by the brokerage not the agents per say. Many brokerages are doing this now and the fees are minimal, typically in the $199-$350 range. A good buyers agent is worth every bit of that fee in my opinion. In NJ almost all the brokerages are doing this. Hope your situation works itself out. As I always say, "everything happens for a reason". Good Luck!

When deciding to move forward with litigations, please take your own personal time into consideration and if filing will be advantageous to the end result that you hope to achieve. Pride and ego are a hell of a deterrent, and while I think that we can all agree here the seller is at fault make sure that you are pursuing legal advice for the right reasons and not just to get back at another human for making a mistake. 

Cheers, good luck and best wishes!

@Jay Hinrichs

Mostly echoing Jay here.

I’ve only bought about a dozen properties so I’m not as experienced as a realtor,  but I’ve never met a seller at any closing in Vegas or in MN. 

I’ve also had about 6 of those properties where the person I was going to use to place my offer (sometimes the listing agent, sometimes a preferred contact.) had some $300-$350 bs paperwork fee and the second I said no thanks, they, “took care of it”.

Try not to let it keep you down. Hopefully you’ll find a better place or a better solution. Good luck. 

While it is possible that you might have avoided a bad purchase, I would be furious too. I can understand your pain.
Part of the buying process is the dreaming about the possibilities of your future home. While many will choose to just move on from a similar situation. There are those who will sue. This will take time and money. You will need to decide if it will be worth it.
I see you have received some great advice here. I do agree with those saying to take a break and let your anger subside. Then decide if it really is worth the effort to sue.

Originally posted by @Roy N. :
Originally posted by @Tom Gimer:


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.

Estoppels are not promises, they are attestations - that is why they are signed and witnessed.  

The word estoppel itself comes from the French word estopail (a 'bung').  In modern common law it is a device used to prevent, or "estop", a person from making assertions or from going back on his/her word.   When you are performing your diligence, you would create an estoppel for each tenant or service provider based upon the leases, contracts, and other information provided by the Vendor and then have the tenant review it and either agree (swear) it is correct, or amend the estoppel and sign/swear the amended estoppel.   This is how you discover things like "Unit 1's rent is $800/mth, but the Vendor is only collecting $600 because the tenant vacuums the stairwells and shovels the walkways.

When the Vendors story and the tenant's story to not align then "Luuucccy ... you got some 'splaining to do"

Thanks for the language lesson but my point was that it is the tenant, not the seller, making the statements in the estoppel letter. 

Like I wrote earlier, I'd go for the seller's jugular!  Don't let that Mike Foxtrot get away with it, at least take him to Small Claims Court! 

Contracts are written for a reason, to ensure both parties do as agreed, and if one defaults, then the other need to be compensated for damages, etc.

I'd pull back for a few weeks while you prepare, letting him that  think you're just going to walk away, like a beat dog with it's tail between it's legs, same as all the others he's likely done wrong in the past.

Then, when his guard is down, step back in the ring and hit him with a law suit!  He won't be expecting it, a clean shot out of the blue that will ruin his day to say the least! 

And when he sees you mean business, ready to fight and go the distance, there's always a good chance he'll simply settle at the first hearing when the court assigns a moderator to get the parties to negotiate a settlement.  

He'll likely have his check book ready and will pay you for damages you can prove as well as for court costs you've incurred to that point.

I'll bet if you run some searches on him in advance, you'll find a history of him doing people wrong, walking away from contractual obligations and failure to pay.

This post has been removed.

Am I reading this correctly? You still wanted to buy this property after being presented with multiple red flags? I can't believe the mortgage company was willing to lend on this! Sounds like 2004 to me... Don't you realize you just dodged a huge bullet? With that being said, you should be able to recoup your expenses.

@Luiz Souza ......BINGO!!   I was thinking the same exact thing of Clouding Title!   Go to the county courthouse, pay $14.50 and record something?

I had an attorney tell me once he's seen someone file a "Claim of Entitlement" just to block a title company from issuing clean title.

But what you write could be an option.  

This post has been removed.

This post has been removed.

This post has been removed.

@Rachel Degennaro It's a hard pill to swallow. No landlord wants to keep a building that is vacant so there's a good chance someone else offered him more money.

I suggest you just move on. Just 3 weeks ago I lost a 30K profit deal because the seller backed out and he went behind my back to sell the deal to someone else who offered him more money. It's a waste of time to deal with these kind of people, just focus on finding another deal.

This is a worst case scenario if I've ever seen one. I feel for you and I hope you're able to move forward without much delay and obtain a triplex property that is EXACTLY what the seller advertises.

Wishing you the best of luck. I would definitely speak to an attorney to see what can be done.

I agree with asking an attorney to send a demand letter...if your contract does not let the seller back out (realtor should have made sure the contract was enforceable). If the seller still doesnt perform and the lawyer wont agree to sue contingent on getting paid by the defaulting seller if he wins (not sure they work that way). At the very least small claims court. You are out a lot with inspection, appraisal, missed work to go to closing and rendering yourself homeless. Give your realtor a chance to help you, but if it comes to you filing in small claims I would ask the realtor for my fee back, then sue him too in small claims if he doesn’t refund. He has no papers to store as he did not help you successfully buy. ..he works on commission by his own choice. You should probably take everyones advice and not sue the seller for performance if the letter doesnt scare him into will cost way too much. There will be another deal and you will be more experienced when it arrives. But you were harmed and small claims court is inexpensive and a good education. Good luck.

I'm sure you're disappointed and under a lot of stress, given your housing situation, but it's important to keep a cool head.  Sorry you have to go through it your first time out of the gate.

If you were my client, I would advise you, that if you wish to look for any recourse, that you seek competent legal advice from attorney in your jurisdiction before taking further action.  You've gotten advice from many well meaning folks here, but most are not attorneys, myself included, haven't read your contract and don't know Pennsylvania law.

Clouding title is generally not a good idea without an attorney's input. For example, I always put a rider in P&S, when selling properties I own or have the attorney's I have representing my clients include, that allow the seller at their option to declare the seller's obligations to be null and void and may deem the buyer to be in default if the buyer makes an assignment or records the agreement with registry of deeds. Depending on the circumstances, it could also possibly create some legal liability for you.

Best of luck in your resolution of this, however it turns out.

This same scenario happened to me on my first deal! Closing attorney took his time and buyer/seller agreement expired. The next day at closing, the seller decides to back out free and clear. I had to eat all of the cost! I let that hold me back 2 years before I attempted to purchase anything again, don’t make my same mistake! You live and you learn. Find another property.

Originally posted by @Account Closed :

@Luiz Souza ......BINGO!!   I was thinking the same exact thing of Clouding Title!   Go to the county courthouse, pay $14.50 and record something?

I had an attorney tell me once he's seen someone file a "Claim of Entitlement" just to block a title company from issuing clean title.

But what you write could be an option.  

FL MORTGAGE BROKER: he not only gives bad advice regarding real estate agents and title insurers, but also how to handle disputes. 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here