Rental Property Investor · Santa Rosa, CA · Member since 2013 · 38 posts · 4 votes
I HAVE A PROPERTY UNDER CONTRACT STARTED ESCROW AND NOW THE SELLER SAID BROTHER WANTS HOUSE AND IT SEEMS LIKE SHE MIGHT BE TRYING TO BACK OUT OF CONTRACT MY QUESTION IS DOES SHE LEGALLY HAVE A RIGHT TO DO SO OR CAN I ENFORCE THE CONTRACT?
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y
How bad do you want it?
I always file a memorandum of sale or an affidavit with the courthouse, that I'm under contract to purchase a certain property. That clouds the title and makes it impossible for them to sell to someone else with clear title.
The 2 times where I had sellers backing out, I sued them for performance. There was a lot of profit involved and I was just stubborn ;-). The first one I used an attorney and it took us a while. We got it on summary judgment, when the seller didn't respond to the court. The seller finally came to closing and she had to pay for all the attorney fees.
The 2nd one I filed my own lawsuit, following the pattern of the first one. He caved and came to closing without any further legal action.
If it's just something that would get you a few $, then I would file an affidavit and sit back and see what happens.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y
How bad do you want it?
I always file a memorandum of sale or an affidavit with the courthouse, that I'm under contract to purchase a certain property. That clouds the title and makes it impossible for them to sell to someone else with clear title.
The 2 times where I had sellers backing out, I sued them for performance. There was a lot of profit involved and I was just stubborn ;-). The first one I used an attorney and it took us a while. We got it on summary judgment, when the seller didn't respond to the court. The seller finally came to closing and she had to pay for all the attorney fees.
The 2nd one I filed my own lawsuit, following the pattern of the first one. He caved and came to closing without any further legal action.
If it's just something that would get you a few $, then I would file an affidavit and sit back and see what happens.
Investor · Nashville, TN · Member since 2009 · 483 posts · 228 votes
12y
I agree with Michaela Graham but I have to give my disclaimer that when you do things like cloud the title you open the door up for other things to happen. I have had other wholesalers in my market go to my sellers and bad mouth me and my company just so that the seller would back out. I use memorandums and non discloser agreements too but be careful and use good judgment.
If the seller has a good reason "like tenants won't leave" or if I can't lower the price I will just let the seller out. I may loose money by doing that but you can't put a price on your reputation.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y
@David Mora - suggest you don't post in upper case; it's considered shouting.
In CA, title companies now tend to pass when memorandums are encountered. I've confirmed this with the head attorney for my company, Old Republic. While I understand their logic, it doesn't help when attempting to bulletproof your deal.
Really, you have two primary methods to cloud title title: voluntarily or involuntary. If voluntarily, I prefer using a performance trust deed. If involuntary, is just gave my attorneys record a Lis Pendens. No one want to buy a property that you've left muddy legal footprints on. Plus you can easily enforce if properly executed.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
Regardless, when it gets down to it, you can never force a seller to sell, you can make them wish they did. I have never heard of any judge forcing sale of a residence regardless of what any contract said. You can have damages for them failing to perform.
While you can have filing options to cloud title, any can be removed ultimately and if they decide not to sell, such a filing is useless as they are still in possession.
You can get nasty, fight, threaten suit (and if you do you better follow through) to motivate a seller, but you can't force their hand to sign any deed.
Usually, if they really can't be motivated to sell, take the damages and walk away, it could be more than you'd make on a deal, especially after legal battles. :)
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
Your contract should specify "liquidated damages" or "specific performance" as the penalty if one party can't perform under the contract. For you, the buyer, liquidated damages means you get your EM back. That's the most common choice on a contract. Specific performance means you can sue to force the seller to sell. What does your contract say?
In either case, though, its unlikly you'll force a sale. Best to just say "let me know if anything changes" and move on to the next deal.
, actually, I sued for performance and the judge signed off and forced the seller to perform and close.
Your's is the first I've ever heard of, being in Cali.....well......The seller must have had a really inept attorney if it was an owner occupied SFD (which I should have added). Usually, you can't force someone out of their home. Congrats. :)
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y
Interesting that this long thread was begun by the OP's first post.
Only once did I seriously initiate legal action to compel the completion of a purchase. This was for my ranch property, not an SFR, and involved three Intermediaries who needed an education on contract law.
For those considering ways to enforce the completion of a sale, I can only add that litigation is expensive and will surely kill the profit potential of even the juiciest SFR deal. Also, investors don't make very sympathetic plaintiffs in the eyes of juries.
When purchasing, unless I've properly bulletproofed a deal, it doesn't make much sense to waste energy with a flakey seller.
I make more money working with people are truly motivated than trying to persuade and convince people that they ought to be motivated
Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
12y
I usually let sellers with a problem out, work some kind of agreement. Even taken an option for a couple that just wasn't ready and needed much more time to come to terms with their life yet.
I did sue for specific performance in California for a house I was going to move into. This was a neighborhood that had a sale about once a decade, and those homes were always bought first by the neighbors so they could control who the future buyer/neighbor was going to be, a very closed shop. The judge told the sellers forget your neighbors and get out, and pay the plaintiff couple's attorney fees and other costs while your at it.
The only other time I sued was when a newer investor went behind my back to try and buy my deal at a higher price and the seller cooperated with him. Seller lost and paid, investor paid plenty for interference with a contract and paid even more when I mailed a copy of the verdict to every investor in town, even the bird dogs and wholesalers put him on their he doesn't exist list.
Point is something can usually be worked out, and in this case maybe she does want to sell to her brother to avoid family strife, but then maybe he is only interested in making a buck for himself and doesn't really care about the house or his sister and just sees an opportunity. I think I would have a heart to heart with the sister and find out more clues about the brother. I might even sign a release reserving the right to buy at my price if the brother doesn't buy and retain full title only in his name and maintain possession for x years, that might change the brothers attempts to make a buck by cutting you out or turning it into a rental, etc.
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
The OP's situation probably doesn't warrant a law suit for specific performance. The deal would have to have seriously substantial profit to make it worthwhile. If I suspected the seller had received a better offer, I might try to legally strong arm them into paying me off to release them from the contract.
Do not listen to anybody who says that you can't force sellers to sell, with or without homestead in CA. Judges compel sellers, including owner/occupants, to sell real property every day. If the owner/seller refuses to perform or is MIA, the courts will take over and list and/or sign on their behalf.
Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
12y
K,
The only way a judge would rule is by Eminent Domain. K do you have a case law in California where a judge has taken someone's property outside an Eminent Domain? It would be strange, and in the news if this was going on every day like K is saying.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
K. Marie, show the cases ! Link us to some cases that were simple contracts of sales by owner occupied homes where a judge forced a sale, You love to ask for cases, now it's your turn. Think it's done everyday, it should be easy to find them. As I said, you can make them wish they sold. It could be that they saw that it was going to cost so much they did sell, but find where a judge ordered the sale. Thanks.
K. Marie, show the cases ! Link us to some cases that were simple contracts of sales by owner occupied homes where a judge forced a sale, You love to ask for cases, now it's your turn. Think it's done everyday, it should be easy to find them. As I said, you can make them wish they sold. It could be that they saw that it was going to cost so much they did sell, but find where a judge ordered the sale. Thanks.
Challenge accepted. I worked with two different plaintiffs this year where the judge ordered and controlled the sale of real property, both long, drawn out divorce cases. In one, the defendant failed to refinance or sell, so the judge ordered the listing and named who the agent would be and sold the property to the buyer with the best offer (unfortunately not mine), and distributed the funds owed to the plaintiff and the rest to the defendant. One was owner occupied with homestead. Many partition suits result in court ordered forced sales. But I realize that's not the same as forcing a sale on a contract. Will report back.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
Neither example is a buyer in a purchase contract where a judge kicked out the owner occupant and forced them to sell, which I think is our topic. Those situations, enforcing a sale contract such as that will be like finding hen's teeth.
Yes, owners sue to each other, people get divorced, properties go into estates, buyers living in the home having to sue the seller on some installment deal, there are tons of examples where performance can and is ordered, but find a deal where the owner occupant is tossed out to perform on a purchase agreement. :)
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
Looks like the ladies are sticking together. LOL
You're right, it's not specified by the OP, but my statements are specific as to making a seller sell in my first post concerning the matter and the subject to my comments.
So far, no one has provided a link to a case, just making claims. I've already said there are cases, but since th OP didn't mention any estate issue or other odd circumstance, the first assumption is that it's a sale transaction, can you show it's not from what was posted?
Now, I'm leaving the playground, recess is over, on to other things. :)
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y
@Bill Gulley why be so quick to dismiss what K. Marie or I wrote as 'Ladies sticking together?'
In your first post you wrote " Regardless, when it gets down to it, you can never force a seller to sell, you can make them wish they did. I have never heard of any judge forcing sale of a residence regardless of what any contract said"
So, I wrote that I have had a judge force a seller to sell a residence and you dismiss it, because it was just an estate. So, what? The mother had died 10 years before and now the daughter owned the house and she tried to sell it behind my back to another investor for more money. For all we know that could be the exact same thing as this poster's situation. Nowhere does he write that the seller is living in this property.
While you may have taken your ball and gone home on this thread, I hope you'll come back to play on others, since you have a lot of good knowledge to impart ;-)
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
Specific performance law suits in RE are for when a monetary judgment will not suffice. The courts have to find that liquidated damges are not enough compensation. The CAR contract has language to limit damages to monetary, as do many private RE contracts. Regardless, buyers may still be entitled to specific performance by the seller (selling the property).
Galdjie v. Kramer Darwish et al was upheld on appeal:
The court ruled in favor of respondent and issued a judgment ordering “Barbara Kramer Darwish and David Darwish” to “specifically perform pursuant to the parties’ written Real Estate Purchase Contract and Receipt of Deposit agreement, dated February 5, 1998, and . . . sell the Property . . . to [respondent] within ninety (90) days.”
Real Estate Analytics LLC v. Vallas
The plaintiff sued the seller for specific performance on a real estate contract and the trial court awarded them $500K monetary damages. They appealed and the appellate court overturned the decision. The original court was directed to order the defendant to sell the real property.