I'm currently in a bit of an unusual situation.
I put a property under contract with intentions to reassign the contract, then started marketing it. Within a few days a potential buyer contacted me and put down a $1,000 binder. We both signed the assignment contract and then he was gone and unresponsive. A few days have passed and the buyer has not returned any calls, texts, e-mail, etc.
What am I to do in a situation like this? Do I have to let the original purchase contract expire before I can attempt anything with the property?
This should be addressed in the Assignment Agreement. You may still be on the hook for the purchase should the assignee fail to perform unless you have language in the contract which specifically provides the seller will only look to assignee OR unless your seller signed a properly drafted assignment agreement too.
@Guy Gimenez care to share what kind of clause can be put in an assignment agreement that forces the end buyer to answer your calls and be responsive to your attempts to connect with them prior to closing?
@Jarrell Smith Is lining up a backup buyer an option for you? If you explain to them your situation and let them know they will get the deal if buyer #1 falls through? I've never been in this situation, but I'm thinking that's what I would try next..while also hunting down buyer #1.
Before marketing the contract did you submit it to the title company for them to open escrow? If yes, contact them to see if the buyer submitted any payment or informed them of anything. Always keep in touch with the title company until the deal is closed.
Was the binder deposit non-refundable?
Your assignment contract should have a "non-refundable" deposit clause. I would go a step further and indicate that "Assignor will not accept an offer from assignee until after assignee does their own due diligence (with absolutely no contingencies) and submits the non-refundable deposit immediately upon acceptance of the Assignment. In other words you are letting the buyer know that you will continue to market the contract until he/she does these 2 things.
If your Purchase contract or Assignment contract does not indicate that you cannot reassign, then just continue to market it. However, you are not reassigning at this point. Let the 2nd interested buyer know that you may already have a buyer, but he/she can still see the property and you would like to put him/her on a waiting list. Do this again for a 3rd buyer.
Just my 2cents.
@Guy Gimenez Just about everything was covered in the assignment contract with the exception of the buyer "disappearing" without notice. Even if they were trying to flip their position as the assignee to another investor there is a clause requiring written consent from me to do so.
@Terrence Smith That's exactly where I am in this deal. I have a #2 buyer that is eager to do the deal while still trying to find buyer #1. What if buyer #1 never responds to anything? Would I be stuck until the contract contingency date expires?
@Belinda D. Yes, I have contacted the title company and they have not heard anything since he put up the $1,000 non-refundable deposit. The whole situation is rather bizarre to me. There is no clause saying I could not reassign the contract again, but how much time would you let pass before you did reassign to another buyer? Or do I need to somehow get buyer #1 to sign a document to nullify their assignment before I reassign it to another buyer?
Thanks everyone for your input!
Please take everything I say with a grain of salt. I am attempting to help until someone who has experienced this will chime in.
At this point I see no valid indication that buyer #1 will not close. He is aware of the closing date???, you submitted both contracts to title, so it depends on how close to closing you are. Let the title company know your about your concern and see if they can reach him. Also ask them if you should record Memorandum of Agreement/Notice of Contract (I'm not sure what you call it in the USA). This will put a lien on the property. This way "if" buyer #1 is planning to go around you, then he will need your authorization to remove the lean in replacement for your full assignment amount. However, I am not sure if this is the route you should take. Again someone with experience can advise you better.
Another point that you may want to included in your assignment contract is "full purchase price and assignment fee/consideration should be submitted by (... o'clock on ... 2014)". Two days prior to closing date should be good. This way if it's not done, then you know to reassign to buyer #2, while still having buyer #3 on the waiting list.
Still keep in constant touch with #2, ask him if he can hold on until day of closing. He might not want to, but its worth a try.
I am just speculating here, but what if #1 is a wholesaler stalling until they get their end buyer? Your Assignment contract should also have wording that does not allow that.
For all you know buyer #1 may not be the communicative and he is totally unaware that his lack of follow up is making you uneasy. As far as I know, a buyer is not contractually obligated to speak with you.
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