All Forum Posts by: Tom Gimer

Understood re a threat to one's ability to earn a living being a motivating factor.

Are you sure about your legal responsibilities? On our end the law requires us to alert the parties if a deposit check is dishonored... not if it isn't made at all.

Sorry @Sol Silverstein there are a few different arguments going on in this thread.

My question was that once a licensee such as your buyer discloses his/her status as a REALTOR in the contract (as required), and clarifies that he/she is acting as a principal in the transaction rather than your agent, and yet breaches the agreement by failing to make a required EMD, how does a complaint to the real estate commission factor into this? Isn't this just a private transaction?

Would you file an ethics complaint against a co-member of your association if he/she "breached" a contract while acting as a principal and having properly disclosed that and licensee status in the agreement? Probably requires a much finer review.

For example, I saw one the other day that didn't require EMD to be deposited until after partner approval. Some are $100 cash and acknowledged as received, with no cash given. These are pitiful of course but the seller agreed.

@Kevin Sobilo Interestingly enough, I had this issue come up a couple of years ago and consulted with underwriting about it. This situation would be a red flag / kill the deal / don't insure the transfer in several states we cover due to a violation of the borrower's equity of redemption. However in PA there was no caselaw on point and no statutory law. Despite an apparent green light, we killed the deal internally.

Anybody reviewing a DIL checklist will pause at the "was the deed signed voluntarily" and review all of the the docs and conclude there is not a chance that a DIL signed at origination of the loan has been executed voluntarily. So in the instant scenario I would fight... and on more grounds than just the lender misled me by not giving me proper notice concerning the DIL vs. foreclosure sale. I think an additional argument is the lender stole any equity there was in the property by recording the DIL rather than foreclosing and giving the borrower the benefit of a commercially reasonable competitive bidding scenario and the opportunity of perhaps recovering some or all of that equity... and thus the entire transaction is now subject to judicial review.

Maybe PA will catch up and forbid this practice as other states have done.

Read the contract and figure out whether it includes limitations on remedies in the event of a buyer breach. Many contracts (especially those used by wholesalers) limit the seller's relief to a forfeiture of the deposit... and here a deposit was never collected. If that is the case I would agree with @Bill B. that the seller would need to sue for those funds. Business decision.

It's funny to see specific performance suggested as a seller remedy. Absent some very unique circumstances no court is going to award this form of equitable relief because there is always an adequate remedy at law -- contract damages.

I would never file or threaten to file a lis pendens under these circumstances because as a buyer I am not claiming an interest in the subject property or litigating over title to the property, which is the purpose of a lis pendens (in the USA anyway). This dispute is about a deposit, not the property. 

The buyer admittedly cannot close so attempting to tie up the property with a lawsuit isn't going to work. The title company handling the next sale will pull the underlying suit paperwork and figure out this issue does not even create a cloud on title... unless the complaint is full of lies.

The title company coordinates the closing date with the end buyer and the seller. We typically first determine when the buyer intends to fund the deal and work around that tentative date (it often changes). 

Unless the seller has some issue (travel, availability) that requires a pre-sign, there is generally no point in having a seller sign docs until the deal has been funded. In my opinion pre-signing can cause more problems than it solves, especially with wholesalers involved. 

Most settlements since COVID hit are split... meaning buyer and seller close separately in that order.

@Dave Rav This is insurer v. bank so I'm having trouble feeling sorry for anybody. Why the bank was in control of this recording is a mystery, but they failed to record and secure their interest for 6 years. I agree with you generally regarding the insurance industry disappointing by finding ways to deny claims but in this case I have no problem with the court's decision. The bank created the problem.

You are the assignor. Aside from making sure your assignment fee is accurate on the HUD and that the EMD is properly secured and forfeited to you in the event the end buyer defaults, try to stay out of the way. Make sure your contract with the seller extends beyond the time allotted for the assignee to settle and have a back up buyer ready.