Seller threatening to break contract to put back on market (for more $)

Investor · Dallas, TX · Member since 2017 · 19 posts · 19 votes

I have a small SFR under contract that's being sold by a flipper. It's a turn key, good flip with a few minor issues. We asked for a reduction in sale price for an AC not working and a clogged cleanout drain (concrete/construction debris fell in?). He said he's not fixing a thing, and furthermore, said he wants out of the contract so he can sell it for a higher price. What are the PRACTICAL remedies if he does indeed decide not to sell or show up at closing. I have a small amount of investment (inspections) in it now. I know I can sue him for breach, but what will that get me? Can I get either money (how much typically...worth the attorney fees?) or make it hard for him to turn around and put it back on MLS? (leverage him before he acts?) Thx

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

Quote from @Stan Tallman:

The ball is in your court. You either buy the property or you choose not to. You can't force them to make repairs or lower the price. So make your decision.

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2y
Quote from @Stan Tallman:

I have a small SFR under contract that's being sold by a flipper. It's a turn key, good flip with a few minor issues. We asked for a reduction in sale price for an AC not working and a clogged cleanout drain (concrete/construction debris fell in?). He said he's not fixing a thing, and furthermore, said he wants out of the contract so he can sell it for a higher price. What are the PRACTICAL remedies if he does indeed decide not to sell or show up at closing. I have a small amount of investment (inspections) in it now. I know I can sue him for breach, but what will that get me? Can I get either money (how much typically...worth the attorney fees?) or make it hard for him to turn around and put it back on MLS? (leverage him before he acts?) Thx

The ball is in your court. You either buy the property or you choose not to. You can't force them to make repairs or lower the price. So make your decision.
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Stan TallmanPro Member
OP
Investor · Dallas, TX · Member since 2017 · 19 posts · 19 votes
2y
He's contractually obligated to sell-my point is if he tries to break the contract, what then? (assuming I still want to buy as is)
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Shafi Noss
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
2y
Some states require a release form to cancel the transaction. If it's not signed, title isn't clear. You could refuse to sign and create problems for him.
If it does come to litigation, you could look at recouping the legal fees as a closing cost credit on the purchase. It is cash you wouldn't have been able to finance anyway and easier to enforce than a judgement or bank levy.
5 Reply
Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
2y
Quote from @Stan Tallman:

He's contractually obligated to sell-my point is if he tries to break the contract, what then? (assuming I still want to buy as is)

A sternly worded letter from an attorney advising that the buyer intends to pursue all available remedies (including recovering all costs and expense incurred in enforcing the contract, if it provides for that) tends to help most sellers understand the reality of what they agreed to.
If the contract isn’t bulletproof this is when the buyer makes that unfortunate discovery.
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
2y
It sounds like you told the buyer you don’t want the property at its current price with these two problems. So you just go ahead and cancel your offer and you’ll get your money back.
If instead you meant you did want the property even with these problems but just wanted to try and nickel and dime the seller on an already good deal then you know better for next time.
Honestly I can’t believe your realtor let you counter/haggle over a few hundred dollars. Anyway, just tell the seller you’re sorry and rush to the closing table. Make sure you hit every deadline with any paperwork and/or responses. Heck, I’d even ask the title company about being able to close your part of the sale a day or two early in case a problem comes up. Good luck and lesson learned.
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Shafi Noss
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
2y

What? This guy is in Texas.

"Texas is one of the few states that allows parties to recover attorneys’ fees even if the contract itself does not contain an attorneys’ fees provision."

https://griffithbarbee.com/the-ins-and-outs-of-recovering-at...
https://statutes.capitol.texas.gov/Docs/CP/htm/CP.38.htm

Edit: No I was wrong. It is only for suits involving monetary damage.
2 Reply
Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
2y
@Stan Tallman assuming you used a TAR contract, check paragraph 15 titled “default.” Are you working with a realtor or real estate attorney?
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
2y
Are you working with a realtor? If you have the contract drawn up and signed, unless you change the terms (eg want money back and he says no), he can't go and sell it to another person...if you follow the terms and conditions in the offer that he accepted. As soon as you want to change stuff, he can say no and if you don't agree, then that's another story.
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Stan TallmanPro Member
OP
Investor · Dallas, TX · Member since 2017 · 19 posts · 19 votes
2y
Quote from @Bill B.:

It sounds like you told the buyer you don’t want the property at its current price with these two problems. So you just go ahead and cancel your offer and you’ll get your money back.
If instead you meant you did want the property even with these problems but just wanted to try and nickel and dime the seller on an already good deal then you know better for next time.
Honestly I can’t believe your realtor let you counter/haggle over a few hundred dollars. Anyway, just tell the seller you’re sorry and rush to the closing table. Make sure you hit every deadline with any paperwork and/or responses. Heck, I’d even ask the title company about being able to close your part of the sale a day or two early in case a problem comes up. Good luck and lesson learned.

Who ever said it was a couple hundred dollars? What lesson learned?
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
2y
You tell me. You still want the property even if the seller won’t lower the price. It sounds like the property was priced correctly for it’s condition.
The lesson that you’ve unnecessarily created an adversarial relationship that didn’t need to happen. Your first response is to spend thousands extra in legal fees to get back to where you were before you asked for a discount on a properly priced property.
Lastly I think the seller may have a legitimate complaint against his realtor. They should have simply returned your request denied and not shared any additional details or motivations. Their fiduciary responsibility is to the seller.
But the rest of my recommendations stand. Don’t miss a deadline which is a legitimate reason for the seller to cancel your agreement and stay on top of everything.
Ps. MAYBE the seller’s agent is a friggin genius. They turned down your price adjustment request. And instead of you cancelling they have you begging them to sell to you at the original price. You’re even considering a lawsuit to force it. Maybe the agent didn’t let their client down. Maybe they’re playing you like a fiddle. A next level move.
Good luck. Believe me when I say you won’t even remember this happening in the future. It’s a non-event in the life of a real estate investor.
8 Reply
Stan TallmanPro Member
OP
Investor · Dallas, TX · Member since 2017 · 19 posts · 19 votes
2y
good point. His realtor (brother, family member?) should have just denied the request. no further comments to us (buyer/agent).
1 Reply
Lynn McGeein
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
2y
@Stan Tallman your contract should already have terms in it about if seller will pay up to x% or $x if problems on Walk Through items like appliances, hvac etc., are found. If it’s already stated in contract that it’s $0, then he’s likely talking termination because you’re not following terms by asking. If there is an amount stated and repairs are within it, then point it out to him and hopefully he’ll comply. In my state, if it’s an as-is sale then normally inspection is treated as pass/fail, not new price negotiations. Even then, if something breaks between inspection and closing, seller can be responsible to repair if that term in contract is not $0. So get into the details of your contract and it likely already has the answer.
0 Reply
Guy Gimenez
Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
2y
It depends on your contract and whether or not you've breached any provision in the contract. If you used the TREC contract form, your remedies are noted in section 15. You should have an attorney review your contract and all communications to determine your best course of action. This is another reason why having binding arbitration in all your contracts...it can be far less expensive and much faster to remedy a contractual dispute.
1 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
2y
Sue for specific performance, sounds like they aren't adjusting the price.
0 Reply
Stan TallmanPro Member
OP
Investor · Dallas, TX · Member since 2017 · 19 posts · 19 votes
2y
Follow up on the final outcome-
Seller doubtfully would have breached the contract in the end...he is a contractor/investor and just plays hard. Transaction went smoothly-Seller agreed to repair AC and give a warranty, and seller's agent gave a concession for the cleanout and I bought it. Now on to leasing! Thanks all!
5 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
2y
Quote from @Stan Tallman:

Follow up on the final outcome-
Seller doubtfully would have breached the contract in the end...he is a contractor/investor and just plays hard. Transaction went smoothly-Seller agreed to repair AC and give a warranty, and seller's agent gave a concession for the cleanout and I bought it. Now on to leasing! Thanks all!

glad it worked out!
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Shafi Noss:

Some states require a release form to cancel the transaction. If it's not signed, title isn't clear. You could refuse to sign and create problems for him.
If it does come to litigation, you could look at recouping the legal fees as a closing cost credit on the purchase. It is cash you wouldn't have been able to finance anyway and easier to enforce than a judgement or bank levy.

This is not true.. you don't have to sign a release .. U do have to have mutual signed instructions to get your earnest money back.. But the seller simply goes to a different title company and closes with them and leaves your contract and EM setting at the original title company. and after some months that title company will want some resolution to the dead file and if nothing is done they will inter plead the EM to the court for disposition.
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1 Reply
Shafi Noss
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
2y
Quote from @Jay Hinrichs:

Quote from @Shafi Noss:

Some states require a release form to cancel the transaction. If it's not signed, title isn't clear. You could refuse to sign and create problems for him.
If it does come to litigation, you could look at recouping the legal fees as a closing cost credit on the purchase. It is cash you wouldn't have been able to finance anyway and easier to enforce than a judgement or bank levy.

This is not true.. you don't have to sign a release .. U do have to have mutual signed instructions to get your earnest money back.. But the seller simply goes to a different title company and closes with them and leaves your contract and EM setting at the original title company. and after some months that title company will want some resolution to the dead file and if nothing is done they will inter plead the EM to the court for disposition.

I was in this situation in a Wisconsin closing recently. No real estate agents would re-list and a lawyer told us title could be clouded.

0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Shafi Noss:

Quote from @Jay Hinrichs:

Quote from @Shafi Noss:

Some states require a release form to cancel the transaction. If it's not signed, title isn't clear. You could refuse to sign and create problems for him.
If it does come to litigation, you could look at recouping the legal fees as a closing cost credit on the purchase. It is cash you wouldn't have been able to finance anyway and easier to enforce than a judgement or bank levy.

This is not true.. you don't have to sign a release .. U do have to have mutual signed instructions to get your earnest money back.. But the seller simply goes to a different title company and closes with them and leaves your contract and EM setting at the original title company. and after some months that title company will want some resolution to the dead file and if nothing is done they will inter plead the EM to the court for disposition.

I was in this situation in a Wisconsin closing recently. No real estate agents would re-list and a lawyer told us title could be clouded.

well you did not talk to every agent and there would be no need to tell a new agent about your failed escrow. So they would only know this if you blabbed it to them. And yes if someone clouded your title IE recorded the contract then yes but short of that .. NO you simply move the escrow I have done it a few times and seen it done many..
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1 Reply
Shafi Noss
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
2y
Quote from @Jay Hinrichs:

Quote from @Shafi Noss:

Quote from @Jay Hinrichs:

Quote from @Shafi Noss:

Some states require a release form to cancel the transaction. If it's not signed, title isn't clear. You could refuse to sign and create problems for him.
If it does come to litigation, you could look at recouping the legal fees as a closing cost credit on the purchase. It is cash you wouldn't have been able to finance anyway and easier to enforce than a judgement or bank levy.

This is not true.. you don't have to sign a release .. U do have to have mutual signed instructions to get your earnest money back.. But the seller simply goes to a different title company and closes with them and leaves your contract and EM setting at the original title company. and after some months that title company will want some resolution to the dead file and if nothing is done they will inter plead the EM to the court for disposition.

I was in this situation in a Wisconsin closing recently. No real estate agents would re-list and a lawyer told us title could be clouded.

well you did not talk to every agent and there would be no need to tell a new agent about your failed escrow. So they would only know this if you blabbed it to them. And yes if someone clouded your title IE recorded the contract then yes but short of that .. NO you simply move the escrow I have done it a few times and seen it done many..

You call it blabbing, I call it being transparent with the people on my team. I'd want to be treated that way if I was an agent.
As you know, the PSA doesn't get recorded. But a buyer could put down a lis pendens and mess up the sale. The release form would prevent that.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Shafi Noss:

Quote from @Jay Hinrichs:

Quote from @Shafi Noss:

Quote from @Jay Hinrichs:

Quote from @Shafi Noss:

Some states require a release form to cancel the transaction. If it's not signed, title isn't clear. You could refuse to sign and create problems for him.
If it does come to litigation, you could look at recouping the legal fees as a closing cost credit on the purchase. It is cash you wouldn't have been able to finance anyway and easier to enforce than a judgement or bank levy.

This is not true.. you don't have to sign a release .. U do have to have mutual signed instructions to get your earnest money back.. But the seller simply goes to a different title company and closes with them and leaves your contract and EM setting at the original title company. and after some months that title company will want some resolution to the dead file and if nothing is done they will inter plead the EM to the court for disposition.

I was in this situation in a Wisconsin closing recently. No real estate agents would re-list and a lawyer told us title could be clouded.

well you did not talk to every agent and there would be no need to tell a new agent about your failed escrow. So they would only know this if you blabbed it to them. And yes if someone clouded your title IE recorded the contract then yes but short of that .. NO you simply move the escrow I have done it a few times and seen it done many..

You call it blabbing, I call it being transparent with the people on my team. I'd want to be treated that way if I was an agent.
As you know, the PSA doesn't get recorded. But a buyer could put down a lis pendens and mess up the sale. The release form would prevent that.

Ya i call it blabbing because its information that does not need to be circulated. And yes I already addressed if someone does sue you which given the facts of this deal is going to be rare to the extreme. But if they did then yes the deal would be stalled unless the seller can bond around the litigation which for 99% of sellers would be pretty much impossible.

I just responded on this thread because your response was not correct..
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Shafi Noss
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
2y
@Jay HinrichsEven without getting to a lawsuit, a lis pendens does the job. And even without that, the threat of one can be similarly effective.

Also, the agent's contact information is publicly accessible on a listing. It would be easy to notify the listing agent of the unsigned release that could interfere with their commission. If the seller failed to blab ahead of time, the agent may back out in the middle of the listing.

The OP asked if there was a way to make it hard for the seller to turn around and put the property back on the MLS and create leverage. Refusing to sign the release does that.

0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Shafi Noss:

@Jay HinrichsEven without getting to a lawsuit, a lis pendens does the job. And even without that, the threat of one can be similarly effective.

Also, the agent's contact information is publicly accessible on a listing. It would be easy to notify the listing agent of the unsigned release that could interfere with their commission. If the seller failed to blab ahead of time, the agent may back out in the middle of the listing.

The OP asked if there was a way to make it hard for the seller to turn around and put the property back on the MLS and create leverage. Refusing to sign the release does that.

OK since you really dont know what your talking about.. a Lis pendence is a lawsuit and is filed to give the world notice of its existence.. if a new broker takes the listing an unsigned release has zero effect on their commission these are separate transactions and the old agent is not privy to them nor should they be its non of their business.. again your full of misinformation.. I will let it rest at that.
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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
2y
Quote from @Shafi Noss:

@Jay HinrichsEven without getting to a lawsuit, a lis pendens does the job. And even without that, the threat of one can be similarly effective.

Also, the agent's contact information is publicly accessible on a listing. It would be easy to notify the listing agent of the unsigned release that could interfere with their commission. If the seller failed to blab ahead of time, the agent may back out in the middle of the listing.

The OP asked if there was a way to make it hard for the seller to turn around and put the property back on the MLS and create leverage. Refusing to sign the release does that.

You need a pending lawsuit to file a lis pendens.
Translate it.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Tom Gimer:

Quote from @Shafi Noss:

@Jay HinrichsEven without getting to a lawsuit, a lis pendens does the job. And even without that, the threat of one can be similarly effective.

Also, the agent's contact information is publicly accessible on a listing. It would be easy to notify the listing agent of the unsigned release that could interfere with their commission. If the seller failed to blab ahead of time, the agent may back out in the middle of the listing.

The OP asked if there was a way to make it hard for the seller to turn around and put the property back on the MLS and create leverage. Refusing to sign the release does that.

You need a pending lawsuit to file a lis pendens.
Translate it.

exactly lots of wrong advice coming from Shafi.. its OK he just does not know just like his stance on title insurance.. hopefully no one took that advice.
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