All Forum Posts by: Latoya Pryor

 It's very simple. If you enter into a contract to purchase something...could be real estate, could be a car, could be a watch.....and you know you do not have the ability to fulfil that contract....that is Fraud by the Inducement. Also if you make any false statements to the seller this would fall under that as well.

Do not enter into contracts if you are unable to meet the terms of that contract. Look up your state statutes and case law on the subject to see what your liability could be potentially if you have an injured party (the seller) who presses the issue.

Here in DC we are seeing many a seller lately being represented by legal aid on fraud by inducement issues with wholesalers. 

Nothing wrong with assigning a contract (assuming that is legal in your state) but you need to be able to fulfil the terms of any contract you enter into.

@Bonnie Jones

There are investors that do the same thing. I have a friend that just bought a 10k house on the east side that was condemned and he’s going to put 20k in and sell for 100k. Buying a house at discount isn’t shady or theft. It’s the whole aim of real estate.

 I dont even know you and Im proud of you!! Good job for sticking to your guns and trusting your gut! If he was willing to offer 20K that means its worth a lot more. Great job. 

If you entered into a contract with out the ability to fulfil the terms of that contract knowingly, then you have committed fraud by inducement. 

Thank you so much for your useful information. I'm proud of myself because my contract is very detailed to provide my own coverage should I not be able to sell within the due diligence period and get my EMD funds back. Also that other wholesaler has been cut loose. My last contact was him asking if I would accept $20,000 and assign the contract over to him. My answer was a flat no I will not. I'm so glad I used my instincts as well as my awareness and ability to be able to tell that his intentions were dishonest. Once again thank you!

 First of all, dont panic. Panic only clouds your judgement and causes you to make a rash decision instead of an informed, rational one. 

First thing you need to do is have a conversation with your title company. Ask them if they charge a fee for title work that is completed for deals that dont close. This is a common practice with smaller title companies. Obviously your preference should be to work with a title company that does not charge you if your deal falls apart. I mean, what if the reason the deal falls apart is the title not being clear? That would be a situation beyond your control. 
Second of all, you really should have a better understanding of the entire escrow and title process because otherwise you are at the mercy of those who are more well informed and you are also susceptible to those who dont know what the heck they are talking about but because you dont either you believe what they are saying. When I was in college the girl who lived in the dorm room next to mine truly believed she could not get pregnant if she was on the top. Because of gravity. Yeah....thats what happens when you are uninformed. Please dont be this girl. And Im sure it wont shock you to learn that she got pregnant second semester and dropped out. 

Let me give you a quick crash course in the title and escrow process. The title company is responsible for, among many things, examining the chain of title and making sure there are no title issues or mistakes or unpaid debts that are clouding the title and preventing the eventual buyer from receiving a clear and clean title report on the day of closing. The typically begin this process right away in order to meet the closing date deadline. EMD is refundable but only in the circumstances laid out within your contract. So you might want to pull it out and read what it says about EMD.

You absolutely do NOT have the right to terminate the contract because you could not find a buyer. That is not a valid reason for termination and if that is the reason you provide, you will most certainly lose your EMD. You should read what your contract says about termination. It should outline the valid reasons you can terminate, including the seller's inability to provide clear title and structural defects found within the property that were not disclosed prior to the contract. Again, without reading your contract I cannot tell you for certain what the termination options are.

From the little bit of background you've given, it sounds like this person is just trying to steal your deal. There is ABSOLUTELY no reason for you to assign the contract to their LLC if you already have it under contract. My best guess is that this is an experienced wholesaler who can clearly tell how green and new you are and they are trying to take full advantage. Unfortunately this is a sharkey business and this happens more often than it should. If I were you, I would completely cut off communication with this person because they are quite literally trying to steal your deal.

I have a friend/investor in VA and I trust her implicitly. I can put you in contact with her, she might be a buyer for your deal but if not she can at least give you an education on the actual process in your state so you know how things go and you wont be such a target in the future. Knowledge is power for sure! Send me a PM and I will put you in contact with my friend, her name is Natalie. Shes a sweetheart and she will be more than happy to help you. Sorry this is happening to you but you came to the right place to get advice!

Hey @Latoya Pryor,

You want to ensure that you open escrow promptly after signing an agreement with the seller because the earnest money deposit (EMD) is what solidifies the agreement. Additionally, it's important to inform the title agent that you intend to assign the contract to an end buyer. However, you should instruct them to only conduct a title search and hold off on running a municipal lien search, as the latter incurs costs.

If you have clearly specified in your assignment contract, your EMD can be refunded as soon as the end buyer places their EMD. Furthermore, if your agreement with the seller allows you to terminate the agreement at any point before closing for any reason, and especially during the inspection period, you should be entitled to receive your EMD back. In such a case, it would be difficult for them to sue you for insufficient funds.

Good luck!

I’ve never heard of a title co charging someone for pulling title on a deal that doesn’t close. To cover yourself ask the title co to not pull title until your due diligence period has passed. 
Technically anyone can sue anyone for anything, but if you follow the contract you and the seller signed why would they sue you? And what would they gain out of it?
It sounds like this wholesaler is spreading half truths and misinformation to weasel in on your deal. 

@John Evangelist It sounds like you got it. Just stay in touch with everyone until the documents are signed and it's closed. Congrats! Make sure you get a HUD-1 for your records. A recommendation, put some away for tax purposes, invest some in your marketing and overhead, and work the next deal.