Seller suing me for backing out

93 Replies

Originally posted by @Colleen F. :

@Bryan Stocklas   It sounds like you had a right to inspect for informational purposes only so you need to walk on financing.  Me, If money wise it works I  would just try to get the electric credited or use one of the insurance companies @Jim Spatzenfeld   uses. Good possibility at least you lose EM if you walk and any other costs you paid. You would upgrade the electric anyway.  What is the local cost of an upgraded panel?  Is it still a good deal with that cost rolled in?  He could be blowing smoke but what is it gonna cost to find out? What does your real estate lawyer say (the one that did contract review).

@Jay Hinrichs  Thanks for the explanation  I guess since contracts are private going to another closer works. It looks like you have seen a few sneaky tricks in real estate. 

AS it relates to Real Estate transactions there is nothing Sneaky.. its either legal or not..  LOL 

@Scott M. I appreciate your advice and it’s not about the $500 I am completely ok with walking and letting him keep that, it’s everything else that was threatened is what I’m worried about. For me I’m not going to get strong armed into a deal especially when we paid beyond what was fair for the house and now he’s trying to muscle me into it. That alone causes even more concern that he is hiding something bigger. Thanks again

@Dorianne Reynard Santa that’s what I thought, they have to be related somehow but I am in the middle of trying to get the letter from my lender. I spoke with multiple insurance companies and all stated it has to have an upgraded panel of at least 100amps. Thank you

@Braden C. I originally cancelled for inspection because after we went back to seller asking that an licensed electrician replace the panel so we can obtain insurance he came back saying he would do it himself if we paid him $600. We said no he said than give me $600 and I’ll have someone else do it. We said we want to pick our own electrician that we can verify and he refused. So we submitted our cancellation. Than he had his lawyer send that. I am now working on getting a denial letter from lender.

You need to check the contract.  In California you have to go through Mediation and Arbitration before court.  

If you have contingencies then you have the right to back out as long as it falls within the parameters, which in this case it does.  

As others have stated, I'm sure there is an amicable way of sorting out this trouble. Change the insurance carrier or change the electrical box. Federal Pacific Boxes are particularly hazardous. They are still being found to burn down houses. However, it does always leave a bad taste in your mouth when the seller says they are going to sue you. It is the kind of thing, where pride wants to say, I don't have to buy from you anyway, jerk. They get angry, you get angry, they threaten to sue, you threaten to sue. You will just make your lawyers rich. I do think if you can manage to thread a needle here and solve both of your issues you will be the bigger man and still end up with a cash-producing asset. In 15 years, would it have mattered to fight and lose a battle of an electrical box?

This may have been answered already but in my state there is a loan contingency, i.e. the buyer is only obligated to consumate the transaction if they qualify for financing. If financing falls through, they can get their earnest money back and cancel the contract.

Anyone can sue anyone for the cost of the filing fee. Is the electric panel the problem, or have you decided against the transaction? If insurance is really the problem tell the owner to upgrade and inspect. That would be a simple solution. If in fact you can not get the mortgage and you have made a good faith effort to apply than you should prevail in a law suit for money damages. In most States a seller can only sue for money damages. A buyer can sue for specific performance.    

Are you in or out? If you are out you have a small risk of legal defense costs when you walk.

Unless they actually launch a lawsuit assume its a bluff. I have never seen a seller actually sue a buyer for non-performance although have had it threatened multiple times when breaking contracts. Tell them if they sue you will record a lien on the property making it impossible for them to sell to another buyer. 

P.S You can insure a 60 amp panel with Geico, they do not have any minimum requirements. 

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.

Originally posted by @Bryan Stocklas :

@Braden C. I originally cancelled for inspection because after we went back to seller asking that an licensed electrician replace the panel so we can obtain insurance he came back saying he would do it himself if we paid him $600. We said no he said than give me $600 and I’ll have someone else do it. We said we want to pick our own electrician that we can verify and he refused. So we submitted our cancellation. Than he had his lawyer send that. I am now working on getting a denial letter from lender.

So, are you saying that you Already submitted a notice of cancellation, within your timeline to do so?  Does your inspection clause say you have to find something Major to cancel, or can you just cancel for no specific reason (like we can here) during your inspection period?

@Bryan Stocklas I wouldn’t hire a lawyer just yet. There’s a big probability they’re just trying to scare you out, I’d just ignore it for now and wait to see if they’re really moving forward with their threat, then you’ll still have plenty of time to lawyer up if necessary.

I receive similar letters several times over the years, my attorney explained to me that most lawyer will send 1 mail and see if you bite, if you hire an attorney they will be “forced” to go back and forth a few times to scale up their fees. Most people are willing to spend a few bucks to get a letter drafted but it won’t go further than that.

That being said, next time make sure you got additional “exit doors” built in your PA, from what you’re saying you might need a refusal from the lender to get out of this one. Try an inspection contingency next time.

Just my 2cts.

@Wayne Brooks it states that no major defects are present during time of inspection so he’s saying that the panel works so in his mind it would be an upgrade if he had to switch the panel out. But from the 5 insurance companies that I called that I would get insurance from they all turned me down and said they would not insure and I have one writing me a formal denial so I can submit it to my lender.

@Bryan Stocklas

I am based in Cincinnati, but here locally 60 amp services are very common in older homes with gas appliances. I have never had an insurance company deny me or any of my clients insurance because of that. I would definitely call around. 

Makes sense lawyer is forcing you to accept the faulty wiring or forfeit EMD, if letter came from laywer

I'd contact the local BAR and file suit for my EMD back in response to their written threat.

@Bryan Stocklas is this market a buyers market? I mean why would the seller actually want to spend money on this issue? Have him drop the price of the panel so you can hire an electrician properly, or counter sue when he loses. He has no case IF the panel prevents your closing correct? I cant figure this one out. Negotiations before lawyers! Work to find a win-win, and why back out of a deal that is so simple. We are talking $1000-1500 max right?

The final step is meeting the finance contingency.  So you can demonstrate, according to what you have said here, that you cannot get financing.   the crux of the matter is the electric panel.  you could agree to him doing the work as long as there is a permit and inspection and final sign off on by the inspector on his work. It might be a useful compromise if you want the house.

I’m assuming that you are having second thoughts on the house even without the stated issue.

Clearly there is more wrong with the house than the small breaker panel. Why would the seller be so opposed to having a licensed electrician replace the panel? Tell seller you'll pay $750 directly to his licensed electrician to upgrade the service to 200a and install a new panel. Have his electrician provide you pictures and a receipt. If seller refuses, chances are there are bigger issues with the house than the electric panel itself. 

IMO chances are if the panel is only 60a the main service wires are undersized. The meter, mast, and branch circuits may also need to be upgraded. The branch circuits may be cloth wrapped and ungrounded. I bet the seller plans to install the cheapest panel off the old service drop with non code-compliant breakers and pocket the difference.

This is an upgrade that can turn into a $3000k-$5000k+ project if the house has to be totally rewired FYI. Two years ago we paid $2000 just to upgrade a 60a service and panel to 200a.