I almost had this happen last week. The guy owned the building for 34 years and It had some sentimental value to him. The night before the closing he changed his mind. He had no legal recourse to do so and we served a TOE letter that night and reminded him that he would be liable for any damages I incurred. I also offered to let him out of the contract right there for a $50,000 break up fee. In the end he realized he didn’t want a lawsuit that he would 100% lose and we closed the next day. I feel like there’s a good chance your deal will close like this too.

My company does have a $299 transaction fee for either buyer agreement or seller listing agreement, in addition to and regardless of the commission structure.  It's basically an admin fee used to offset costs of signs & placement/removal, printing/scanning, driving, gas, office space, etc.  We can choose to have our client (buyer or seller) pay this fee at closing or we (agent) can pay it from our commission if we want to give the client a "break" on fees.  If I'm getting a healthy commission from a seller client, I probably won't charge the $299, I'll either eat it or deduct it from the cooperating broker's fee. I just make sure everyone knows there is this admin fee and who will be paying it. 

My thought on this situation is if you paid an earnest money deposit you should get that back from the title company.  Write down your costs associated with this learning experience and decide if it's worth it to retain an attorney ($5,000+) and pay their hourly fee ($150+) to go after someone who seems like a deadbeat anyway. Are you expecting a court to force the sale to go through? Do you want to be paid back the money you are out? You need to figure out what remedy you want. Getting a judgment from a court does not mean you get paid anything from the deadbeat. Maybe you can get a lien on the property so that if and when it does sell in the future you can get your money back as any liens will come up in the title search.

I can imagine how excited and hopeful you were to become an investor and even get to live in the unit too. Next time the inspection or appraisal comes back wrong don't be afraid to back out of the deal. I'm not sure about your state but in Florida as the buyer you have that right, during either the inspection period or financing/appraisal period. It seems like there were plenty of red flags and you should have been asking these questions long before getting to the closing table. Unfortunately, this is an expensive learning experience, but you did learn something. Do not make offers until you get all the paperwork you need to make sure the investment is sound and you can verify what the seller and his agent are telling you. A building you think is a 3-unit suddenly becomes a 2-unit - you're already losing money on this deal. If they were not cooperating on providing documents and records, etc., then you should never have made an offer - you should learn to listen to your women's intuition. Also, not sure why your agent didn't advise you better. IMO.

In Florida, the counties change the interest rate on judgments I believe yearly.

So what if you win in Small Claims Court in PA, and the defendant does not pay?

File whatever form PA has at the courthouse to record the certified judgment on county record for it to show up on the defendant's credit report

Also, the judgment will grow at the rate that the county has set for 2018.  If its 10%, then it goes at that rate, which is better than a lot of mutual funds ! ha

If he doesn't pay and the 7 yr mark is coming up, consider recording it again (est. cost to record $15.00)  and let it ride for another 7yrs @ 10% interest. 

As a Mortgage Broker, I deal with helping borrowers satisfy judgments and when I a $10,000 judgment on credit, I look at the date it was recorded and calculate the actual TRUE amount owed to get a range and it's usually not pretty when its over 10 yrs old!      

Hello Rachel, 

First of all I think you attorney dropped the ball. Although inexperience might have played a role here your attorney should have protected you . Your attorney should have sent a Time of the Essence Letter to the seller and his attorney . Here in NJ we give a max of 14 days. At the end of the 14 days if the seller doesn't close you get your deposit. I understand you would like the place but the seller breached the contract and you are entitled by the laws to find a way to close 

So lots of answers here that lack awareness of some PA state specific laws; I am not an attorney but I can state some facts that might be beneficial to @Rachel Degennaro

For residential 1 to 4 unit properties, PA law requires that the seller provides the prospective buyer with a seller's disclosure document that complies with the PA Seller's Disclosure Law, BEFORE the buyer and seller "execute" (sign) an agreement of sale. Link below is what is to be included in the seller's disclosure statement in PA at a minimum.

https://www.pacode.com/secure/data/049/chapter35/s...

There are two items that have been posted here on this thread that maybe should have been disclosed under that law, but seem to not be accurately represented based upon what Rachel posted; those would be the number of legal units and the encumbrances. That unit where the tenant had to be removed - that seems to be an item in the seller's disclosure that was misrepresented because IMO it is a material defect that should have been disclosed under part 17 sub-part vi. That the borrower had a second mortgage - this also should be disclosed (indirectly) under part 17 sub-part iv. So pursuing this under the Seller's Disclosure Law might be worth considering.

That was just my $0.02 worth. Summoning @Chris K. and @John M. Erdek who are both attorneys in PA who might have some other opinions on this matter.

@Rachel Degennaro

At this point, you should probably talk to a lawyer that can really spend the time to review your facts to see what options are available. One of the biggest decisions you have to make is whether you want to sue for specific performance. Based on the facts you wrote, it sounds like you may have a good basis to demand specific performance. Whether it is worth your money and time is a different matter.

You can also sue for monetary damages. But it’s one thing to get a judgment --- it’s another to collect on it. So you would need to do some research on that end as well.

If you decide to pursue legal action, you would obviously bring the kitchen sink to the buyer. This includes the RESDL claim that @Steve Babiak  mentioned. Whether it's going to stick is another matter but there is nothing inherently inconsistent about seeking both specific performance and a RESDL claim. 

In terms of magistrate versus Court of Common Pleas, nothing that happens at the magistrate court level really matters if the defendant will appeal the judgment to the Court of Common Pleas. Given that this seller has a lawyer, just note that getting a judgment at the magistrate level may mean little. 

This has happened to me many times; both as an investor and as a lawyer. It's obviously infuriating at an emotional level. But you also can't have your emotions cloud your judgment. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.