I am coordinating a wholesale deal in Michigan. The seller is in foreclosure, and I am almost done negotating with the banks. I found out late last week, that to move out, she sold the fridge, microwave, shed, playhouse (real property) all the draperies and refuses to give all the keys back (she said that she only had one key, she has given that back). The house now smells like urine too. She did this in direct violation of our contract. My end buyer is P____ ___. The final price plus the assignment fee is going to be around $259,000. I stand to make around $15,000 on this deal.
I need to try to keep the deal together as I have a lot riding on it. She sold so much stuff that even if I assigned it to him for free, the seller will still probably have to put money into the property to put it back into the condition it was when all the contracts were signed.
Any suggestions? By the way, the seller has no money either.
Be glad she is out of there and you didn't have to evict. You could kick in $5K for the cleanup as a good will gesture.
If your contract specifically states the personal property is to be there, you could try for a small claims judgment against her. If she has no money, you're not likely to get paid soon, but maybe later. Most real estate contracts specifically exclude personal property. Even the playhouse is probably personal property, unless it appears somewhere in public records.
Change the locks. As long as I get one key I'm happy, because my first step after closing is to change all the locks and secure the property.
I've dealt with worse. Like stolen furnaces and wiring. I'm with Mike, if she's out, and its no worse than this, move on.
These types of situations though very difficult do pop up occasionally. Be glad that you were able to move the prior owner out and you did not have to evict. You will need to work with your buyer delicately and try to come to some type of agreement so you can move the deal forward. I agree with Mike that a good faith gesture of 5k to assist with clean up will go a long way. Keep us up to date on the progress of the deal.
I would explain this situation to your buyer and see what they say. Maybe they want the house bad enough to deal with it. If not, slowly toss some of your assignment fee their way to help make it go through.
I wouldn't take the lady to small claims court, but that's me. It seems like it would be more hassle than good. Spend that time looking for another deal, it will most likely be more profitable for you when all is said and done.
The contract specifically has those items reserved. The playhouse is real property, it has concrete footings.
good advise gainsville, thanks!
Just one more thing- Jon made a good point regarding small claims court. It doesn't take much effort, but you should be able to get a judgement, and then just let it stay on the books until one day when she tries to buy a house again, and the judgement will still be there, and she'll have to pay it then. By suggesting this to the buyer, he may feel better that he may get this money back someday.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing