Has anyone ever had to sue for specific performance when a seller won't sell?!

Rehabbing & House Flipping
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Has anyone ever had to sue for specific performance when a seller won't sell?!

Account Closed
Investor · NH · Member since 2023 · 54 posts · 25 votes

I have a signed contract to purchase a property to fix and flip. The first week under contract the seller asks if I will pay $6,000 now and take it off the closing price to help get the tenants out of the property by the closing date. I said: NO!!!

About a week later my title company tells me that the seller's payoff amounts are about $20,000 higher than our contract price. The seller is saying he can't make up the difference and is looking into a short sale...or raising funds to make up the difference.

The bottom line here is this deal seems very unlikely to close. Should I look into legal options or just walk away from the deal?

This deal seemed to have a big profit margin but I don't want to waste more time dealing with it when it appears to be a situation where you can't get blood from a stone...the seller appears to be heading toward bankruptcy.

I'm leaning toward finding something else and walking away from the deal. 

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y

You’re saying you’re not willing to only make $80k? If there’s a $100k profit and you can get the deal by paying an extra $20k, try to survive only making $80k. Or take the loss and move on if it’s not worth it for $80k. 

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  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y
    Quote from @Account Closed:

    I have a signed contract to purchase a property to fix and flip. The first week under contract the seller asks if I will pay $6,000 now and take it off the closing price to help get the tenants out of the property by the closing date. I said: NO!!!

    About a week later my title company tells me that the seller's payoff amounts are about $20,000 higher than our contract price. The seller is saying he can't make up the difference and is looking into a short sale...or raising funds to make up the difference.

    The bottom line here is this deal seems very unlikely to close. Should I look into legal options or just walk away from the deal?

    This deal seemed to have a big profit margin but I don't want to waste more time dealing with it when it appears to be a situation where you can't get blood from a stone...the seller appears to be heading toward bankruptcy.

    I'm leaning toward finding something else and walking away from the deal. 


     You are way overthinking this , just move on, 

    3Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    3y

    Even if you win a specific performance judgement, how do you expect to collect?  The seller can't afford to pay off his mortgage, so the bank would be in line in front of you to collect anything that the seller had should you try to enforce the judgement.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    3y

    To sell they need to be able to provide clear title. The seller can not actually provide clear title because the debts on the property outweigh the sales price.

    Are you willing to clear the liens yourself with $20k out of your pocket?

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  • Account Closed
    OP
    Investor · NH · Member since 2023 · 54 posts · 25 votes
    3y
    Quote from @J Scott:

    Even if you win a specific performance judgement, how do you expect to collect?  The seller can't afford to pay off his mortgage, so the bank would be in line in front of you to collect anything that the seller had should you try to enforce the judgement.

    The seller has a legal address on the contract that is worth around $1,000,000.

    He is saying he is almost tapped out, at this point I don't believe much of what he says.

    Plus if I don't enforce the contracts when people sign an agreement and break the agreement then I'm out the time and the $100,000+ Profit Margin. In his position I'd sell my car or take a small loan to avoid the foreclosure.




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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    3y
    Quote from @Account Closed:
    Quote from @J Scott:

    Even if you win a specific performance judgement, how do you expect to collect?  The seller can't afford to pay off his mortgage, so the bank would be in line in front of you to collect anything that the seller had should you try to enforce the judgement.

    The seller has a legal address on the contract that is worth around $1,000,000.

    He is saying he is almost tapped out, at this point I don't believe much of what he says.

    Plus if I don't enforce the contracts when people sign an agreement and break the agreement then I'm out the time and the $100,000+ Profit Margin. In his position I'd sell my car or take a small loan to avoid the foreclosure.


    I've only sued for specific performance once -- I was the seller and the buyer didn't show up to closing. 

    Ultimately got the judgement, as well as my money.  But, it took about 2 years, and I was out of pocket tens of thousands in legal costs during that time.  And I only got the money because the seller's creditors agreed to pay me off in order to do a cash-for-keys deal.  Otherwise, I likely still wouldn't have been paid.

    In retrospect, it wasn't worth the time, effort, or headaches, despite nearly a six-figure collection.

    Just my $.02...

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Luke Stillwagon

    Pay thousands in legal fees or pay $20k more for property or walk away

    Those are your options and completely up to you - if it were me I would just walk away

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Legal action is expensive and may not land you anywhere. I have filed MOC's if sellers do not want to close. 

    0Reply
  • Andy SabischPro Member
    Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes
    3y
    As others have said, walk away there are other deals out there.  We have found that the legal system allows you to win the battle and lose the war.  We have gotten judgements but considering the time, expense and hassle, they were not worth it. As the old song went "You got to know when to hold them and when to fold them" and if you are looking at legal actions, you are usually the only one that is not going to make money in doing so.
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @J Scott:
    Quote from @Account Closed:
    Quote from @J Scott:

    Even if you win a specific performance judgement, how do you expect to collect?  The seller can't afford to pay off his mortgage, so the bank would be in line in front of you to collect anything that the seller had should you try to enforce the judgement.

    The seller has a legal address on the contract that is worth around $1,000,000.

    He is saying he is almost tapped out, at this point I don't believe much of what he says.

    Plus if I don't enforce the contracts when people sign an agreement and break the agreement then I'm out the time and the $100,000+ Profit Margin. In his position I'd sell my car or take a small loan to avoid the foreclosure.


    I've only sued for specific performance once -- I was the seller and the buyer didn't show up to closing. 

    Ultimately got the judgement, as well as my money.  But, it took about 2 years, and I was out of pocket tens of thousands in legal costs during that time.  And I only got the money because the seller's creditors agreed to pay me off in order to do a cash-for-keys deal.  Otherwise, I likely still wouldn't have been paid.

    In retrospect, it wasn't worth the time, effort, or headaches, despite nearly a six-figure collection.

    Just my $.02...


    I have been on both sides.. as a buyer I sued for performance B/C I front 60k to pay the back tax's before the seller lost the property.. property was free and clear.. I won. BUT  I had to put the full cash price into escrow on the day of closing and let it sit there during 2 years of litigation.  Now this was Oregon other states my not require you to perform like that.. but my offer was like many of us in the industry all cash no loan contingency.  So come closing day the money had to go in. While i went through the legal process.. Another 20k in legal fee's and the seller still would not sign even with the judges order.. So the title company actually used the judges order to convey title to me.. then we had to go through a year long eviction process..  But in the End we built 3 nice new homes and came out on top.. But the point is Suing for performance takes time money and you may have to pony up all the money while you litigate.  Forcing a seller to come up with money might be an option but thats going to cost and take time.  The only reason I sued was I wanted to protect my 60k and by subdividing the property I knew we had a substantial pay day.
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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    You’re saying you’re not willing to only make $80k? If there’s a $100k profit and you can get the deal by paying an extra $20k, try to survive only making $80k. Or take the loss and move on if it’s not worth it for $80k. 

    5Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    3y

    No, but did have a wholesaler once have to sort of threaten to do so.

    I had a property under contract w a wholesaler, and the seller ended up refusing to sell as she said she signed the contract "under duress" 

    He went back to her and offered an extra $5k on the purchase price and she agreed. 

    Lawyers were involved but no lawsuit. 

    0Reply
  • Craig Janet
    Member since 2019 · 223 posts · 261 votes
    3y

    I would move on. Keep an eye on the property and maybe you can get it cheap at a foreclosure auction.

    0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    3y

    Time to let it go and move on.

    The seller's issues aren't your problem. Walk away.

    0Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y
    Quote from @Bill B.:

    You’re saying you’re not willing to only make $80k? If there’s a $100k profit and you can get the deal by paying an extra $20k, try to survive only making $80k. Or take the loss and move on if it’s not worth it for $80k. 


    Is it seriously only Bill and I catching this? That it's a whole issue over "only" making $80k profit vs $100k????

    If certain it's solid at that profit potential, I'd tell seller I am willing to help out cause I'm such a "Mr Wonderful" and I will give him a personal loan to cover that $20k to close. And I'd press for what other assets he can present to secure it, an auto, boat, lemonade stand, whatever. End of day, if I'm certain about that profit, I wouldn't walk away from $80k profit in a tantrum it's not $100k, makes no sense. 

    Helps us out here, what are we missing????

    2Reply
  • Account Closed
    OP
    Investor · NH · Member since 2023 · 54 posts · 25 votes
    3y
    Quote from @James Hamling:
    Quote from @Bill B.:

    You’re saying you’re not willing to only make $80k? If there’s a $100k profit and you can get the deal by paying an extra $20k, try to survive only making $80k. Or take the loss and move on if it’s not worth it for $80k. 


    Is it seriously only Bill and I catching this? That it's a whole issue over "only" making $80k profit vs $100k????

    If certain it's solid at that profit potential, I'd tell seller I am willing to help out cause I'm such a "Mr Wonderful" and I will give him a personal loan to cover that $20k to close. And I'd press for what other assets he can present to secure it, an auto, boat, lemonade stand, whatever. End of day, if I'm certain about that profit, I wouldn't walk away from $80k profit in a tantrum it's not $100k, makes no sense. 

    Helps us out here, what are we missing????

    The contract was extended to give the seller time to figure out a solution. I'm going to either stick to the price or walk away at some point. Giving away 20% of the projected profit isn't going to happen, we all know many things can go wrong between now and the time the property is flipped.

    The seller might be able to come up with the money, but giving that guy a personal loan is basically lighting $20,000 on fire.

    In my opinion moving on isn't throwing a tantrum or losing $100,000. The time is lost before shifting to another deal.

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