What to do if seller wants out of already signed contract?

Question

I think i see my first deal going bye bye.I already have a signed contract and my time period to find a buyer is not up yet. The seller wants to now sell property to a family member. He says the family member has title company lined up.I have a potential buyer who is supposed to get back to me. Do i just let the time period expire and allow him to sell to family member or do i hold him to our contract he signed and proceed with finding a buyer.The only one i see losing in this situation is me.

Tamarra

Jay Miller · Answer

You could put a cloud on the title by filing a Notice or Interest at the County Recorders Office. When the seller need to get your lien released to sell to the new party try to get some money out of the deal to release your lien.

I had a similar situation this month and did exactly the above. I ended up getting the property.

Good Luck.

I had a similar situation this month and did exactly the above.  I ended up getting the property.

Good Luck.

Michael Quarles · Answer

If the seller wants out make it a condition on them signing a 12 month deed restriction giving you the first right to purchase

James Hiddle · Answer

Jay hits the nail on the head. Put a cloud on the title and have the seller either accept your offer or have them pay you to release the lien.

Tamarra Banks · Answer

I was just wholesaling the property. I wasnt going to keep the property for myself. The contract used was an option to purchase real estate with ccntigencies to include finding a buyer in 21 days. The 21 days arent up yet.I'm going to see if i can still assign the contract to the family member. I will just accept a lower assignment because i rather get a little something than nothing at all.

Peter Giardini · Answer

Tamarra,

Chris's point is critical.  If something of value (cash) was exchanged for the option then you are in a better position... because you do have a contract.

Without reading the option agreement it is hard to speculate beyond that... however with a straight purchase agreement you have taken an equitable position in the property and gives you many advantages that an option by itself might not give you.... it would depend on how a judge evaluates the agreement... and your only recourse had the seller walked away would have been to take them to court.  Probably not worth in this situation... but by using the most effective instrument you can avoid many obstacles.

Where in Maryland is the property located... as I may have client or two interested.

Best of luck getting this property wholesaled.

Pete

Chris Martin · Answer

What was the consideration for the option? The seller gives up his right to sell for 21 days... did you pay anything for this option? If I were going to sell an option, I would want some consideration. However, seems to me a straight purchase contract may have been more appropriate?

Tamarra Banks · Answer

After talking to the seller again, he is going to adhere to our contract and give me the time to find a buyer.

@ Peter - This is my first  wholesale deal. The contract I used is an option to purchase real property contract. Is this not the right contract to use with the seller?

Jimmy C. · Answer

It depends on how the option was written.  Exclusive vs non exclusive etc....

Down here on either side most attorneys say dont waste your time suing someone for non performance.  At least thats been the experience on residential deals.

Peter Giardini · Answer

Tamarra,

Jay and James are absolutely correct... make noise that you are going to cloud the title and they will either have to pay you to release your equitable interest in the property or allow you to fulfill the contract.

I had this exact situation occur a couple of years ago and ended up making $5K by having the owner buy me out of my position to purchase their property.

On a side note... I am wondering why you allowed yourself to be in a relatively weak position by executing an option contract instead of a purcase contract?

Best of luck!

Pete

Corey Demuth · Answer

Some people will say it's not worth it, some will probably say sue for non-performance. I think you'll have to provide more details about exactly what paperwork you have that the seller signed, before anyone can give you much advice.

What to do if seller wants out of already signed contract?

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