Need advice for a weird situation with a property sale gone bad

6 Replies

Hi!  I'm looking for some advice on a situation I am in with one of my rental properties.  Here's the background on what has happened so far...

In August 2018 I had a townhome flip that was completed and we got a cash offer for full asking price with waiving the inspection.  The buyer asked if they could close in December 2018 but move into the property in August after the purchase contract was signed and they would pay $500/month rent until they closed in December.  We were happy to get the full price offer and were okay with them moving in, so that is what happened.  They paid each month and when December rolled around they said that they couldn't close due to the TRUST that was going to pay for the property required repairs needed to be made before the trust would approve the purchase.  Okay, weird... but they waived the inspection so my lawyer pushed for the sale to still close.  They keep coming back with excuses on why they can't close and offer to do the repairs and pay for them so we can close.  I agreed to this.  (They wanted to replace the deck in the back with a paver patio since they claimed the deck was unsafe... not true, but I'm getting a new paver patio and full asking price so we said okay).  I asked them to now pay market rent of ($1500/mo) going forward, since they didn't close per the original contract and they agreed.

Fast forward to September 2021 and they are still in the property, and paying rent each month of $1500 and STILL refuse to close for more and more reasons that always seem to come up from them.  The house was a full rehab in 2018 and everything was in great working order, but the list goes on of what they 'need to fix' in order to close

-had to repair plumbing issues

-had to replace windows

-had to fix a leaking front door? wtf

-had to replace deck, etc etc

So I don't trust these people at all, I think they're definitely lying about intending to close, however they're paying market rent and the property is cash flowing $300/mo so it's not the worst situation.  I don't want to provoke them too much since I can't evict them now due to covid if they decide to just stop paying rent.  We don't have a rental lease agreement, just the original contract from 2018 that is a normal purchase and sale agreement with an addendum stating they can live in the property for the 4 months prior to closing.

So my main question is what should I do!!??  Also the property is now worth around an additional $20k since prices have been going up.  If I try to evict them so I can sell, I'm not sure what will happen about the money they invested into the property so far which I estimate to be around $6,000.

Does anybody have any suggestions?  Can I just void the contract from 2018 and renegotiate another one?

Thanks for your help!


I think IL is an attorney close state? If so you should do whatever it is your attorney advises you and nothing else. There is way too much to unpack here to even hope for good advise from a forum. Also your local Covid procedures may or may not cover this situation...again too many pieces parts and specifics to truly say what is going on. 

So do whatever your attorney says, and I'd work towards any option that either closes at the now market value OR gets them out so you can sell at current market. 

Sounds like you have an attorney. I'd ask them, not random people on the internet. The fact that you let this drag on for 3 years is mind blowing. 

I have no idea what their game is, but I'd be very worried. What are you going to do when they try to close on the 2018 contract and deduct "$30K" in upgrades they did while you owned the place? You say it was their choice and their attorney screams unjust enrichment. And no lease agreement? Maybe they call those $1500 monthly payments toward the purchase price and not rent...

It is very possible the 2018 contract is still valid since neither of you cancelled it and they have been paying rent under the assumption the original contract will get executed at some point.

If you're happy with it as a rental, have them sign a lease and a contract stating that previous sale agreement is void and any repairs/upgrades done belong to you and no reimbursement is due to them.

If you want the place sold, expect hell from them if you try selling it to anyone else. Sorry, but you brought this upon yourself.

What a mess.  Sorry you are going through it.  I think you need to decide what it is you want.  It sounds like you want them out and get your property back.  Whatever it is, you should first decide what you want to do.  Second, you need to ask yourself if you have the right attorney on the case.  Not every attorney is great for every project.  Has this attorney had your back and been doing all they can to move the project in the direction you want it to move in?  Or not?  Be honest with yourself.  Not always easy changing horses mid ride but might be needed.  Just depends on what you have been trying to do 3 years and if the attorney has been helping you in that direction. Get COVID has added 18 months of issues so need to be fair to the attorney as well.  

Sounds like at the very least it is time for a chat with the attorney to tell them your goals and get a game plan together.  

Like it has been mentioned above, more than once, this is a job for your lawyer.  With that in mind, these are the questions I would ask your lawyer:

1 - Doesn't your original purchase agreement have a maximum time to close clause in it, or do you not put one in?  If there is one in it, and they are (I assume) well past that date, I think the P.A. is null and void.

2 - Do you have in writing that the improvements that were paid for by the "buyer" are at the buyer's expense and will not be reimbursed by you at closing, or will not be credited in any way towards the agreed upon P.P.?  If not, I would assume the buyer will attempt to get their money back.

3 - Do you have a lease in writing?...or at least a mention of rent to you if the closing has not happened after a certain date?

I'm not a lawyer, so all of the above isn't advice, just suggested questions you should be asking your lawyer.

@Karl Kaeser if they are not moving forward I would ask them to leave and if they did put money on escrow I would tell them their escrow will get refunded when they leave. Before you put the house back on the market make sure to have a new agreement on that existing contract because if you do go in contract with a new buyer you would be breaching that existing contract. Talk to a local attorney to help you with that. That's what I would do.

@Karl Kaeser   what a mess.  Call your lawyer or maybe you need a new lawyer if the contract doesn't address what  @Joe Villeneuve mentioned or your lawyer is not moving this along AND you have made it clear you want to move it along.    This doesn't sound like it is going to be an easy one because the improvements may create an equitable interest in the property.   One thing you need to demand is proof of application for mortgage. Proof that these changes are required to close etc. 

Is IL still under an eviction moratorium?  If not can you start an eviction.  Sounds to me like they don't qualify for a mortgage and are delaying.