A Deal Gone Wrong - What's Next?

[Tinah Canda]

Hi BP community, my name is Tinah and I'm a newbie investor in Worcester County, MA. I need some direction on how to handle a deal that has gone insanely wrong.

I made an offer on a 100-year old house for rental. My realtor and lawyer advised me that I don't need to inspect for lead and I believed them. Until I found online what the lead laws state in MA - no child under six is allowed to live in an apartment without a deleading certificate. 

After fruitless renegotiation, I decided to back out of the deal knowing I can lose my deposit. The lender was able to provide me a denial letter. Seller's attorney called my lender and bullied them into redacting the denial letter they provided. And now, seller's attorney is intimidating me into working with his client to close the deal or settle by agreeing that the deposit is now non-refundable or litigate and collect liquidated damages.

I don't have any support from my existing realtor and lawyer, they are just regurgitating whatever the seller's team says. 

Is this intimidation typical?

What happens in litigation? What are the potential consequences a buyer faces during a litigation? I thought in MA realtors can not force a buyer to buy but they can lose their deposit. What liquidated damages are they referring to?

Need some help, thank you in advance.

[Joe Splitrock]

Originally posted by @Tinah Canda:

Hi BP community, my name is Tinah and I'm a newbie investor in Worcester County, MA. I need some direction on how to handle a deal that has gone insanely wrong.

I made an offer on a 100-year old house for rental. My realtor and lawyer advised me that I don't need to inspect for lead and I believed them. Until I found online what the lead laws state in MA - no child under six is allowed to live in an apartment without a deleading certificate. 

After fruitless renegotiation, I decided to back out of the deal knowing I can lose my deposit. The lender was able to provide me a denial letter. Seller's attorney called my lender and bullied them into redacting the denial letter they provided. And now, seller's attorney is intimidating me into working with his client to close the deal or settle by agreeing that the deposit is now non-refundable or litigate and collect liquidated damages.

I don't have any support from my existing realtor and lawyer, they are just regurgitating whatever the seller's team says. 

Is this intimidation typical?

What happens in litigation? What are the potential consequences a buyer faces during a litigation? I thought in MA realtors can not force a buyer to buy but they can lose their deposit. What liquidated damages are they referring to?

Need some help, thank you in advance.

 You can't really force anyone to buy in any state. Theoretically they could go to court, claim some type of damages and sue you. The trouble is how much money could they reasonable claim and at what cost to litigate? Given that property values have been increasing this summer in many markets, odds are good the property is even worth more. 

I would refuse to release the property out of contract until they agree to return your money. If they want to close the deal, tell them they need to test for lead. Your lender should not be speaking with anyone but you about your financial matters. 

How much is your deposit? Maybe if it is a small amount you just agree to give it up as a condition of them releasing you from the contract.

Here is the problem for the seller that you may want to point out. They can't put the property back on the market and find a new buyer until they release you from your contract and return your money (or get you to agree to give up your money). You could theoretically tie this property up for months arguing with them. I would point out it is in their best interest to just return your money and relist ASAP.