Seller running into problems with investor

72 Replies

Not sure where to start.. I guess I’ll start by staying this happened in Texas, and my family lives in Colorado. 

 I was transferred to Texas for work on a two year contract leaving behind my family to persue my career with just my wife and my two dogs. We bought a house and I started work, around mid contract I lost my grandmother and a few months later my grandfather and wow, was that tough being so far from home. It wasn’t until my father got sick did I really just want to drop it all to get home. But around the end of my contract I got a contacted via LinkedIn from one of my former bosses asking if I’d like to come back to Colorado he may have a job for me. Over the course of a few months things intensified and things got promising even had an interview and the messages that followed sounded like I was moving back!! 

 I had to sell the house quickly so I could be ready to go should the offer come through so I called an investor. I just wanted what I owed around 15% less than market and he made the offer. We signed a contract with the following contingentcy, “this contract is contingent on confirmed or written notice of sellers job transfer and move to Denver Colorado, if job transfer and move to Denver Colorado is declined seller has the option to terminate contract free of penalty “. We signed the contract January 9th 2018 and we started packing. Well, to say I was let down when I got the news I didn’t get the job would be a HUGE understatement. So feeling defeated I called the investor and apologized and told him the news and he said it’s fine it happens all the time and not to worry he would handle the house part. This was In February 2018. 

 I flew my father to Texas and he did what most dads do, picked me up and showed me what I was doing this for and said work hard and go places! So I bucked down for the next year I worked hard, lots of overtime and just plain busted my butt got a promotion and im set for another this April things are looking really good for me. I love the company I work for and.. Texas has grown on me too! I love it here and as long as I can get home at least once a year I’m doing great. 

 So with the new promotion and the next one right around the corner I decided it’s time to upgrade my home! I listed it and within 2 days got an offer for 2 grand more than asking price!! I was so excited, spent hours looking for my next home and thinking about how much my life would improve, even found a house with a mother n law suite for dad haha!! It was perfect!!!! 

 Then the news from the title company came. I had a cloud on my title.. I asked what needed to be done to move forward and they said not to worry just call the investor he probably just forgot to remove it. I called the title company that opened the title and they said it was still open however no money had ever made it, no escrow either, but escrow wasn’t even in the contract. 

 So I called the investor, I said hey buddy long time, how have you been. He seemed nervous and I was confused as to why. I said hey remember the deal we made? I think you forgot to close something I’m having a hard time with my title now. He said, are you selling it? I said, YES!! got an amazing deal going to look at new houses tonight with my agent. He said, I’m still willing to buy it, I said, well it just went under contract a few days ago just need you to sign some kind of release. He said.. I’m not signing anything you have to sell to me.. or sue me and hung up. I texted him later that evening and asked if he would please just sign the memo or I’d be forced to get an attorney. He replied,  I will release the title when he’s paid $3462.40.. 

 I started looking through all my contracts and got a copy of the thing that was messing with my title and here’s what I noticed. 

 He, is unlicensed, his wife is licensed. They own an llc and run their deals through it. He sets them up she signs the contracts leaving him completely off of them. But the notarized memorandum of contract is signed by him and is notarized by her.. on the contract it says “principal of buyer is a licensed real estate agent “. 

Is this notary fraud? Also, why would he choose to not close the contract after being told I didn’t get the job and wasn’t relocating? Wouldn’t my contingency kick it? Why do I feel this is a fraudulent deal? 

Yep, you've definitely got some fraud going on.  Here is what a quick search says:

A notary public who has a direct or indirect financial (or other beneficial) interest in a document may not notarize such a document. The better practice is not to notarizefor a spouse or family member in order to preserve the integrity of the notarization and to prevent a challenge to the notarization.

Get a lawyer to write a letter.  It'll cost you a couple of hundred dollars, but i'm guessing this guy will cave pretty quick.  

If the letter doesn't work, file suit in small claims court and sue for the cost of your attorney's fees and as part of your request, ask for specific performance to release the Lis Pendens.  If the investor won't do it, the courts can do it as part of the case.  You'll have to fly back to Texas for court, but this is a slam dunk.

While you're at it, file a complaint on the wife's license too.





I’ve never left Texas, I still live in the home and work at the same company I did when we went under contract. I’m just looking to upgrade my life with a house that’s in a better neighborhood and has a mother n law suite for my dad so he can come live with me during the cold Colorado winters.

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It’s also been over a year since the house went under contract with him. I called to tell him the bad news at the end of February 2018. The contract originally had a close date of 1/3 which was the same day we signed the contract. So he emailed and said “oh, I just noticed I set the close date as 1/3, I’ll change it to TBD since you don’t know when you will get the job offer. 

@Patrick Meade This is not so uncommon.  This cloud achieved exactly what it is intended to do.  He knew that you could not sell the property without his knowledge considering you had a binding contract that was not fulfilled.  You may just want to pay what he is requesting or contact an attorney to review your contract and potentially go through litigation.  In his mind, when you were ready to sell, you would contact him and he'd buy the property.  So instead of asking you to contact him when you are ready to sell he clouded the title.  If you need to sell quickly, make an agreement with him, if not seek an attorney's assistance with the matter.  Not sure about the laws in Texas but you could very well end up paying for the attorney and having to pay him all or a portion of what he is requesting to have the cloud lifted.  All the best.  Persist and you will WIN!!!

Doesn’t the contingency void the contract? And isn’t the memo void too since the thing was notarized by the wife who was on the actual contract and mentioned she owns more that 10% interest in the company?

Ok there seems to be some confusion so I will attempt to just point out the facts. 

 Signed contract January 2018, with contingency that if the job offer and relocation was declined I could cancel without penalty.

 February I called to tell him I didnt get the job to drop Contract. 

 I still work for the same company as I did when I signed the contract and have no plans to leave. 

 I still live in the home in dispute and I’m only selling now because I’m staying in Houston and want to upgrade. 

 The buyers are husband and wife who own an investment llc. The husband is unlicensed the wife is a licensed agent not broker so the contract actually has the name of the company which employs her on it, listed at the bottom. 

 The contract states the buyer is an agent and has more than 10% interest. 

 The only one on contract is myself and the investment llc, the wife wrote the sales contract. 

 The memo is from the llc, but signed by the husband and notarized by the wife. 

 The contract contingency was met, in February 2018 by me not getting the job offer and relocation and states if that is met I would be able to cancel the contract free of penalty. He text me wanting 3400 dollars. 

Refuses to release even after 1 year and multiple requests with contingency in place and met. 

I'm no expert of the law but definitely there is some shenanigans going on here specially with the notary public and the licensed wife . Your attorney should get this situation squared away and bring these people down to reality with a simple phone call.    

@Patrick Meade hey Patrick, sorry to hear about this unfortunate situation. Disclaimer: I am not an attorney, and I'm half asleep but my addiction to BiggerPockets is forcing me to respond. Please excuse any typos and bad grammar as I'm typing this response from one thumb and half closed eyes.

It sounds like this may end up having to be handled in court in which case that will probably take a significant amount of time and the current buyer for your home may not want to, or be able to, stick around for that long until this gets figured out. If that's the case, in addition to asking for reimbursement of your attorney's expenses, calculate the holding costs of how much it costs you daily to live in your existing home (holding costs) and keep track of how many days it has been since the original scheduled closed date and make sure to include reimbursement for those days in the suit as well. In addition, you can also sue for emotional damages due the the stress this has caused you and you family for not being able to move into the new home you desire to be in, in the time frame you desire. I hope this helps and I hope things work out for you!

He was going to buy it a year ago at 15% below market value.  A year later you have a new seller paying $2K over the asking price.  The first guy from last year won't give you a clear title unless you pay him $3460.  The fastest is to pay him and move on.  I don't know what the sales price is, so using fictitious numbers if the house is $100K, assuming market value didn't change of the course of a year), buyer 1 would have paid $85K and buyer 2 is paying $102K...even after the $3462, you are still much further ahead.  How much will an attorney cost and how much time will it take dealing with buyer 1?

The other option is to tell the first buyer the market has changed over the last year and the new buyer is paying $102K (using my made up numbers).

can you say extortion

Originally posted by @Shawn Ackerman :

@Patrick Meade This is not so uncommon.  This cloud achieved exactly what it is intended to do.  He knew that you could not sell the property without his knowledge considering you had a binding contract that was not fulfilled.  You may just want to pay what he is requesting or contact an attorney to review your contract and potentially go through litigation.  In his mind, when you were ready to sell, you would contact him and he'd buy the property.  So instead of asking you to contact him when you are ready to sell he clouded the title.  If you need to sell quickly, make an agreement with him, if not seek an attorney's assistance with the matter.  Not sure about the laws in Texas but you could very well end up paying for the attorney and having to pay him all or a portion of what he is requesting to have the cloud lifted.  All the best.  Persist and you will WIN!!!

this is just sick..  contract says is void if he does not get the job.  this a great case study of what not to do with unlicensed wholesalers that claim they solve problems..  this guy has major liability in my mind.. not only Notary fraud.. but clouding title and causing harm to the seller.  but like you said he knows he can try to extort 3500 out of this seller.. this is why Sellers should NEVER sign contracts with wholesalers or allow them to be notarized  you have to notarize to record them..  thats why these slim balls do this.. just for this exact reason. 

So anyone reading this and of course there wont be many since its innocent people that get taken and they are not on BP .  DO NOT notarize any sale contract with anyone.. its not necessary to be enforceable.. but its necessary to record.  Also clearly denote in your contact that this contract is null and void if it is recorded.  Lastly if you dont have an agent then this is when you need to go to an attorney before you sign anything..  this is just so wrong on so many levels... what a scumbag and people wonder why wholesalers have such a bad wrap..  they come on with the HEY we solve problems  its just BS  total BS

Originally posted by @Faraad Mohamed :

@Patrick Meade hey Patrick, sorry to hear about this unfortunate situation. Disclaimer: I am not an attorney, and I'm half asleep but my addiction to BiggerPockets is forcing me to respond. Please excuse any typos and bad grammar as I'm typing this response from one thumb and half closed eyes.

It sounds like this may end up having to be handled in court in which case that will probably take a significant amount of time and the current buyer for your home may not want to, or be able to, stick around for that long until this gets figured out. If that's the case, in addition to asking for reimbursement of your attorney's expenses, calculate the holding costs of how much it costs you daily to live in your existing home (holding costs) and keep track of how many days it has been since the original scheduled closed date and make sure to include reimbursement for those days in the suit as well. In addition, you can also sue for emotional damages due the the stress this has caused you and you family for not being able to move into the new home you desire to be in, in the time frame you desire. I hope this helps and I hope things work out for you!

I am not fond of New western or the other big wholesale brokerage model.. but that said this is good advice.

I would also file a complaint against the wife at the TREC..  strong letter well worded will get this weasel off of title. Also 

if the contract is that clear a sit down with the escrow companies title officer may just get it done.. and they will remove the exception. I know they wont for just one off buyers.. but i could get my title company to write around that no sweat.

Thanks everyone For taking the time to respond it really is appreciated. I’m so stressed I can’t sleep haven’t eaten in days and my mood is completely off.. I had no idea how little stress I had until I came across this nightmare. This has seriously consumed me, I’m literally at work researching and trying to figure out if or how this could be my fault. The answers provided have calmed me. And I’m truly thankful for that.

Someone stated I should just pay him and end it.. I would rather pay an honest man 10,000 and lose my case then to pay a crook 4000. 

So I’ve come to terms with having to sue this guy.. that’s fine I have more than enough money to get that done even if it’s at a loss financially for me. 

My question is, if I sue I could probably collect damages from the notary bond? Could I also go after the insurance the broker? The broker has to have insurance for this right? The contract list that firm on the bottom..

This investor seems like he might have been a "wholesaler" type, who gets properties under contract in order to flip the contract.   Maybe he would have bought it, but he seems to be a hustler.

I've seen contracts recorded on the title by these types of investors that clearly can be considered to be no longer valid.  Yours is one of them.  

Consult an attorney and the last resort is to take them to court.  Presumably, they will review the contract and dismiss it, and it can be removed. 

It seems like she is a member of the LLC, and correctly discloses that she is a licensed agent. It does seem like that is notary misuse, which could also help you out in your case. An aggressive attorney can go beyond the title clean up: threaten to counter sue them, her brokerage and threaten to pursue a case on her errors and omissions insurance and notary misuse.

Have the attorney send a demand letter to all of the members of the LLC, and possibly her brokerage.

Then try to settle before court.

Avoid lawsuits if you can.

Why not contact the broker first and see if they can resolve it

@Jay Hinrichs I’m with you all the way I wholesale a great number of deals each year in Milwaukee and  never considered resortimg to this tactict.  Sellers have pulled the plug on me many times before, even at the closing table when they are reviewing the closing statement. I also have allowed other wholesalers to assign me contracts and when I take a look at the original offer to purchase the “cloud title” language is clearly written in. Problem is not many sellers take the time to fully read the agreement. As in this case Patrick was eager to get property sold to move on with his life. This is common place unfortunately and further discredits the niche of wholesaling.  @Patrick Meade have you concluded what your next course of action will be?

Originally posted by @Shawn Ackerman :

@Jay Hinrichs I’m with you all the why. I wholesale a great number of deals each year in Milwaukee andI never considered resortimg to this tactict.  Sellers have pulled the plug on me many times before, even at the closing table when they are reviewing the closing statement. I also have allowed other wholesalers to assign me contracts and when I take a look at there original offer to purchase the “cloud title” language is clearly written in. Problem is not many sellers take the time to fully read the agreement. As in this case Patrick was eager to get property sold to move on with his life. This is common place unfortunately and further discredit the niche of wholesaling.  @Patrick Meade have you concluded what your next course of action will be?

this is something that a decent title company should review and remove.  the contract has an end date I bet as well that has long come and go. and the person who slandered this title made no claim just laid in the weeds.. Slimmy slimmy business 

If all is exactly as you say it it, you may want to visit with an attorney regarding a claim of slander of title. If the former buyer continues to cloud title with not right to do so, and he harms you by causing you to lose a buyer and the ability to purchase a new home, you may just have a good case. Of course, it will cost you plenty to win but it may be worth it. 

Lots to respond to, 

 first, the llc is only owned by the husband and wife, no one else listed. She also works for a real estate company here in Houston and used that companies contract in the purchase. So the llc was buying my home using the broker license of the “real” real estate company. 

Second, I contacted the broker, which by the way was almost impossible. She doesn’t answer her phone if you call the office phone none of the options work.. I did finally get ahold of her and explained my situation she seemed concerned and said she would talk to them but I haven’t been able to reach her since. Even sent pictures to her cell phone of the contract and memo she hasn’t responded. 

Third, Yes I will be taking the advice of you guys and get a real estate attorney. 

Originally posted by @Guy Gimenez :

If all is exactly as you say it it, you may want to visit with an attorney regarding a claim of slander of title. If the former buyer continues to cloud title with not right to do so, and he harms you by causing you to lose a buyer and the ability to purchase a new home, you may just have a good case. Of course, it will cost you plenty to win but it may be worth it. 

The contract originally dated to close the day we signed the contract, over looked by me...( I’m not a real estate guy.. I’m an engineer. ) he text me later and said “hey I messed up on the close date I’ll change this to TBD because we don’t know when the job offer will be extended “. I didn’t even think about what that does to a contract but even now I would still sign it because my contingency was in place and that should have ended it. 

Originally posted by @Theresa Harris :

He was going to buy it a year ago at 15% below market value.  A year later you have a new seller paying $2K over the asking price.  The first guy from last year won't give you a clear title unless you pay him $3460.  The fastest is to pay him and move on.  I don't know what the sales price is, so using fictitious numbers if the house is $100K, assuming market value didn't change of the course of a year), buyer 1 would have paid $85K and buyer 2 is paying $102K...even after the $3462, you are still much further ahead.  How much will an attorney cost and how much time will it take dealing with buyer 1?

The other option is to tell the first buyer the market has changed over the last year and the new buyer is paying $102K (using my made up numbers).

 He literally told me “pay me 3462 or sell me the house for contracted price or sue me” and hung up... well, I’m not paying a crook anything. So looks like I’m going to sue him.

Call her MANAGING BROKER at her real estate company. Tell him/her that you will be filing a complaint about this deal and just wanted to give them a heads up. 

It's free to make a phone call and her broker might just talk some sense into her. 

Edit: just saw the part about you contacting her broker.  I'd escalate it to the real estate commission if you have one. 

Originally posted by @Jay Hinrichs :
Originally posted by @Shawn Ackerman:

@Patrick Meade This is not so uncommon.  This cloud achieved exactly what it is intended to do.  He knew that you could not sell the property without his knowledge considering you had a binding contract that was not fulfilled.  You may just want to pay what he is requesting or contact an attorney to review your contract and potentially go through litigation.  In his mind, when you were ready to sell, you would contact him and he'd buy the property.  So instead of asking you to contact him when you are ready to sell he clouded the title.  If you need to sell quickly, make an agreement with him, if not seek an attorney's assistance with the matter.  Not sure about the laws in Texas but you could very well end up paying for the attorney and having to pay him all or a portion of what he is requesting to have the cloud lifted.  All the best.  Persist and you will WIN!!!

this is just sick..  contract says is void if he does not get the job.  this a great case study of what not to do with unlicensed wholesalers that claim they solve problems..  this guy has major liability in my mind.. not only Notary fraud.. but clouding title and causing harm to the seller.  but like you said he knows he can try to extort 3500 out of this seller.. this is why Sellers should NEVER sign contracts with wholesalers or allow them to be notarized  you have to notarize to record them..  thats why these slim balls do this.. just for this exact reason. 

So anyone reading this and of course there wont be many since its innocent people that get taken and they are not on BP .  DO NOT notarize any sale contract with anyone.. its not necessary to be enforceable.. but its necessary to record.  Also clearly denote in your contact that this contract is null and void if it is recorded.  Lastly if you dont have an agent then this is when you need to go to an attorney before you sign anything..  this is just so wrong on so many levels... what a scumbag and people wonder why wholesalers have such a bad wrap..  they come on with the HEY we solve problems  its just BS  total BS

 He didn’t notarize the sales contract,  he was sneaky and had his wife notarize a memorandum of contract and filed it electronically without my knowledge. 

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