Can I salvage this deal?

Question

I locked up a good deal last week and had it wholesaled in a matter of hours for a $20k profit.  The seller was satisfied with the deal at the time of signing, however, one of the "buyers" on my list was competing with me to buy the house and told the seller what I was doing and she immediately tried to back out.  This is an estate, so the contract is contingent upon court approval.  The seller's attorney basically told me I can either tear up the contract or they will simply petition the court to throw out the contract.

Ned Carey · Answer

How about scaring the scumbag by having an attorney threaten him with a lawsuit for interference with your contract?

Adrian Tilley · Answer

You may not want to do this practically, but legally you may be able to sue the defendant as a John Doe, then compel the seller to tell you who it was, then amend your defendant to whomever squealed (legal term).

Robert Davidson · Answer

To avoid, or at least be able to sue a scum buyer who goes around your offer after he/she learns of it, use a document common in corporate transactions.  First, in your advertising to your buyers' list, never give out the address.  Just give financial details.  ARV, your estimate of repairs, and comps without addresses, and your price.  Then require three things from your potential buyer.  First acknowledgement he can provide funds in five days, second a hard proof of funds (meaning bank statement or stock statement)  but not a pre-qual letter.  And third an NCND.  Non-Circumvent/ Non-Disclosure agreement.  Only upon receipt of the NCND and hard POF do you give out the address.  If the buyer doesn't want to give that, your response is simple - NEXT. By the way, this is not a Non-Compete/Non-Disclose agreement; different animals.  Have your real estate attorney give you one. They have it in their Word docs.  Honest buyers (there are many) have the attitude that if the numbers are what I'm looking for, then I don't care what you get out of finding the deal.  Your problem comes up often when advertising on Craig's List or Facebook where you haven't worked with that buyer before.

Account Closed · Answer

You can't record the contract as suggested unless it's notarized.  You could try to record a memorandum of contract and you could get it notarized.  But that would be one-sided and those aren't recordable where I am.  Your state may allow for something that would truly cloud title.

Are you prepared to show up in court to protect your position?  Your contract may be binding, but that doesn't mean the attorney won't make a case.  He could tell the courts that the executor made a mistake when entering the contract, that she was unaware of value, that she did not know what she was signing.  He could rip apart your contract or prove no consideration, etc.  A judge could easily side with the estate.

You probably made an "all cash" offer, correct? If you do plan to go all the way on this, I suggest lining up the cash you need to close on it.  The judge could ask you to tender the total purchase price in order to show your good faith to close on the contract.

Travis Sperr · Answer

@Bill R. hit this one on the head - I would record the contract. But being able and ready to close on it, even with hard money or transnational funding and reselling would be a good way to keep most of ht profit.  Not much to lose but a lot to gain so don't get bullied.

Bill R. · Answer

Do you have And \ or Asigns after purchaser \ buyers name or entity. If so it is a binding contract that you have the legal right to assign. With that being said, are you prepared to purchase property if you cannot assign? If not walk - but I personally would not allow a attorney to strong arm me out of a legal contract. Side note, what a scumbag investor that you were dealing with huh..... I also put a addendum of contract on land records so seller can't back door me for a few extra dollars with another investor.

Adrian Tilley · Answer

This is true regarding the Courts.  However, they will probably also give some weight to the contract aspect of this - parties to a contract need to know that someone will not just arbitrarily decide to cancel for no reason.  No way to know ahead of time though, and it will require some attorneys' fees.  Good luck.

Larry Flanagan · Answer

I think he was competing for the deal.

Elizabeth Colegrove · Answer

@Larry Flanagan

Any idea why he snitched?  Glad you are able to get your deal back on the table.

Larry Flanagan · Answer

Well i got a hard-ass litigator involved that I know and it looks like we are headed down the settlement path to salvage this deal.

Also, today I found out the mole is a long-time investor in town who has bought a half-dozen houses from me over the years.  And to top it off I had a friendly lunch with him two days ago...

Can I salvage this deal?

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