Seller suing me for backing out

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Seller suing me for backing out

Bryan Stocklas
Forked River, NJ · Member since 2020 · 35 posts · 37 votes

Hi guys, I recently went to buy a rental property and after inspections were done the house only had a 60amp panel which means I can not get homeowners insurance for it. Since I can’t get homeowners insurance I can’t get a loan for the property. In the contract it says it is contingent upon the buyer obtaining a mortgage, however the seller has already gotten his lawyer involved and has sent a letter to sue me. Has anyone had any similar issues with this? I am obviously going to get a lawyer but just curious on if anyone has dealt with this before. Thanks everyone 

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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
5y

Unless the seller is a licensed electrician the installation won't pass inspection and you still won't be able to get a mortgage. Lawyers letters are meant to squeeze money from people. You are not being sued until notified by a court; I doubt it will get there but I'm not a lawyer and you may wish to talk to one. Sorry you are being jerked around. All the best

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  • Kathy Johnson
    Real Estate Professional · Hayfork, CA · Member since 2015 · 231 posts · 212 votes
    5y

    Are you willing to complete the purchase if the seller upgrades the electrical panel?

    12Reply
  • Bryan Stocklas
    OP
    Forked River, NJ · Member since 2020 · 35 posts · 37 votes
    5y

    @Kathy Johnson I wanted to but he said he won’t have an electrician do it that he would put it in himself which I did not want

    4Reply
    • Andrew SyriosPro Member
      Moderator
      Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
      5y
      Originally posted by @Bryan Stocklas:

      @Kathy Johnson I wanted to but he said he won’t have an electrician do it that he would put it in himself which I did not want

      Get him to put that in writing and then talk to an attorney. If his offer is to basically do something illegal (install an electrical panel without a license), I think he's sunk. One letter from your attorney (which won't cost too much) should end it. His case is already garbage from what I can tell. But you don't win if you have to go to court.

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  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    There are hundreds of insurance options, surely you have not tried them all (I know, I know, stop calling you Shirley).  What state is this in I am sure someone here can suggest an investor friendly insurance co who can work with you.  

    Also, seller can't sue you, I mean for what? You even typed that the contract is contingent on getting a mortgage, you can't get a mortgage so what is he suing you for, the contract is null and void. Maybe for the EMD.

    Seems like solutions are left on the table and there is really nothing to sue you for unless this is all over an EMD?

    13Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    5y

    Unless the seller is a licensed electrician the installation won't pass inspection and you still won't be able to get a mortgage. Lawyers letters are meant to squeeze money from people. You are not being sued until notified by a court; I doubt it will get there but I'm not a lawyer and you may wish to talk to one. Sorry you are being jerked around. All the best

    18Reply
  • Bryan Stocklas
    OP
    Forked River, NJ · Member since 2020 · 35 posts · 37 votes
    5y

    @Scott M. Yes it’s for the earnest money as well as any marketing expenses. The house is in Champaign/Urbana Illinois. And my agent sent me a picture of a letter the lawyer is sending me saying that the panel is working so it doesn’t count as a qualifying deficiency.

    1Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    @Bryan Stocklas I take it you don't have an inspection contingency?  If you still want the property  I would see if you can get the electric cost as a credit. Sometimes an insurance company will insure you if the work is to be done. I had fuses and insurance said as long as you replace. We got them done and the insurance inspector came out afterwords to confirm. 

    2Reply
  • Bryan Stocklas
    OP
    Forked River, NJ · Member since 2020 · 35 posts · 37 votes
    5y

    @Colleen F. Yes I had an inspection contingency however if it is still working they are saying that it doesn’t give me the right to terminate. I told the seller to give me credit or have it fixed by a licensed electrician and he refused saying he will do it himself if I paid him $600. But he’s not an electrician lol.

    3Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    5y

    @Bryan Stocklas Just have your insurance agent and loan officer write the denials…..end of story. Don’t worry about the threatening letter……many attorneys are line prostitutes, they thru assume whatever position the client wants, it doesn’t mean they have a chance. 

    13Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    How much is the EMD that is being held?

    And have you tried one of the other hundreds of insurance companies?

    1Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    @Bryan Stocklas  unless the inspection was for informational purposes only it doesn't matter, where is the relator?   Terminate for the inspection in writing in the inspection period. If you fell out of the inspection period  but said you would only buy if it is fixed by an electrician (with a permit) during inspection period you should be able to cancel.

    Note that If he is not an owner occupant living in the house I don't think they will allow him to perform this work. Your building department can tell you.  I think they require a licensed person for electrical regardless. 

    3Reply
  • Bryan Stocklas
    OP
    Forked River, NJ · Member since 2020 · 35 posts · 37 votes
    5y

    @Colleen F. Inspection was for information but it’s contingent upon everything being in good condition however I had no idea it had a 60amp panel until inspection was done. So my agent sent in a contract release after we couldn’t come to an agreement and than the seller sent me a letter threatening to sue.

    1Reply
  • Bryan Stocklas
    OP
    Forked River, NJ · Member since 2020 · 35 posts · 37 votes
    5y

    @Scott M. It’s only $500 but I’m more worried about what else they can sue me for.

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    relax...they ain't gonna sue...nothing there for them except to have to pay your expenses...

    6Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    Theres no reason you cant get insurance with a 60 amp service. Call another insurance company. 

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    @Bryan Stocklas  he needs to sue you for specific performance of a contract. He can't sell the house to anyone else while he is in escrow with you so there is more disadvantage to him.  don't you have a lawyer for this transaction, in NJ you have the 3 day attorney review, did you ask them, or is it not in NJ?

    2Reply
  • Bryan Stocklas
    OP
    Forked River, NJ · Member since 2020 · 35 posts · 37 votes
    5y

    @Colleen F. It’s in Illinois

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    Unless your contracts are different, you can typically void the contract and get your earnest money back. You are under no obligation to negotiate repairs, even if the seller is willing to pay for it all and use licensed contractors.

    I'm surprised an attorney would even take the case. Even if you were violating the contract, it will cost him a ton of money and time to try and force you to buy the home. It's far more likely that he would lose the case which means he is wasting his money and time.

    I think it's an empty threat to try and force your hand. I wouldn't sweat it. Turn it over to an attorney and let them deal with it.

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    15Reply
  • Craig Janet
    Member since 2019 · 223 posts · 261 votes
    5y

    Are you seriously going to walk away from a deal over $500. I can respect that but surely you can meet in middle somewhere. Good Luck!

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Bjorn Ahlblad:

    Unless the seller is a licensed electrician the installation won't pass inspection and you still won't be able to get a mortgage. Lawyers letters are meant to squeeze money from people. You are not being sued until notified by a court; I doubt it will get there but I'm not a lawyer and you may wish to talk to one. Sorry you are being jerked around. All the best

    YOUR NOT BEING SUED until a process server has served you  with a summons and complaint.  Exceedingly rare especially in this circumstances  this is simply a sabor rattler letter or threat.. just move on they will do nothing as there is nothing to get.. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Colleen F.:

    @Bryan Stocklas  he needs to sue you for specific performance of a contract. He can't sell the house to anyone else while he is in escrow with you so there is more disadvantage to him.  don't you have a lawyer for this transaction, in NJ you have the 3 day attorney review, did you ask them, or is it not in NJ?

    This is not true he could sell the house and sue for damages..  the only way he would have an issue selling it is if the buyer in this case brought and action and filed a Lis pendance which would never happen an attorney would not do that and risk sanctions.. The seller can sell at any time.  while in litigation.. 

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  • Ken A Smith
    Investor · Austin, TX · Member since 2020 · 2 posts · 1 vote
    5y

    @Jay Hinrichs I imagine you will be presented with options, money or Specific Performance. Definitely talk with attorney.

    0Reply
  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    5y

    Pshh...all empty threats. Unless this is a HUGE multimillion $ deal, or the owner is a super-spiteful multimillionaire or an attorney himself, you aren't going to get sued. Worst they'll do is refuse to sign the release and neither of you get the EMD, and the escrow fees will just eat it up over the years (assuming its with the title company). Either ignore the letter or respond like this:

    "Thank you for forwarding over this correspondence. Upon receipt of a filed complaint I will duly forward over and involve my own legal counsel."

    10Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Ken A Smith:

    @Jay Hinrichs I imagine you will be presented with options, money or Specific Performance. Definitely talk with attorney.

    its not my transaction..  Welcome to BP  its a great place to network.. 

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  • Bryan Stocklas
    OP
    Forked River, NJ · Member since 2020 · 35 posts · 37 votes
    5y

    @Matthew Olszak ok yea the letter just says

    “Neither of the cited references constitutes a qualifying deficiency which would be a legitimate basis for termination of contract”

    0Reply
  • Amy Raye Rogers
    Real Estate Agent · Minot, ND · Member since 2021 · 131 posts · 223 votes
    5y

    @Bryan Stocklas

    Of course I’m not an attorney, but even if you are sued the chance of a court ruling in favor of the seller in a matter like this is virtually nil.

    Never buy a property under duress. I agree with the other comments that this is an intimidation tactic.

    I had a very similar scenario happen to me and it turns out the seller was hiding a 10k repair, thus motivating the seller to bully me into the sale.

    3Reply
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