Abandonment. What to do?

[Kevin S.]

Hi BP members,

I entered into a contract to purchase a SFH for investment, had inspection done, came up with few issues, went back and forth and finally came to an agreement with price and who takes care of what. On the day of sending EMD to escrow a business deal came my way. The bank involved with the business deal advised against buying the property as it would affect the financing of the business. I immediately called my agent to cancel the contract.

The next day the bank called me to reverse their call.  It was ok to go ahead to buy the property.  Apparently, the first person from the bank did not review my financials.  His manager did and determined it was good enough not to affect the business deal.  I called my realtor immediately to explain the situation and left a message.  I texted screenshot of my communications with the bank.  I have yet to get a response.  Seems like she is upset, and understandably so.  My questions are,

 Can I approach the listing agent directly if my agent do not respond?  The listing agent may be more understanding.

Would the listing agent get all 6% commission?   

Is there such thing as 'abandonment' by agents?

Should I get in touch with brokerage firm(Broker) about the agent's handling of this?  I have a feeling the broker is aware of it.

Can my ex-agent claim her commission even after abandonment?

What do I do if I am still interested in that property?  I feel I should not be hindered just because my agent is upset.  Situation was beyond my control.  Please advise.  Thanks in advance.

[Kevin Sobilo]

@Kevin S., a few questions/comments:

1. How long have you been trying to contact your buyer's agent? Yes, you should contact the broker if they don't respond. Perhaps they have an issue going on such as a medical or family emergency and another agent is handling some of her business in her absense.

2. Did you sign anything to terminate the original deal? The termination would have included an agreement for how to disperse the EMD. In a case like this often the brokerage/agents get a cut of that EMD that you would typically forfeit. So, they may not be as disgruntled as you believe because they may have already cashed in on a small payday from their share of your EMD.

Since you didn't mention signing anything to terminate the contract, I suspect you are still in the deal you signed up for and that EMD is in escrow right now.

BTW, the situation was within your control. You made choices all along here. 

[John Clark]

Quote from @Kevin S.:

Hi BP members,

I entered into a contract to purchase a SFH for investment, had inspection done, came up with few issues, went back and forth and finally came to an agreement with price and who takes care of what. On the day of sending EMD to escrow a business deal came my way. The bank involved with the business deal advised against buying the property as it would affect the financing of the business. I immediately called my agent to cancel the contract.

The next day the bank called me to reverse their call.  It was ok to go ahead to buy the property.  Apparently, the first person from the bank did not review my financials.  His manager did and determined it was good enough not to affect the business deal.  I called my realtor immediately to explain the situation and left a message.  I texted screenshot of my communications with the bank.  I have yet to get a response.  Seems like she is upset, and understandably so.  My questions are,

 Can I approach the listing agent directly if my agent do not respond?  The listing agent may be more understanding.

Would the listing agent get all 6% commission?   

Is there such thing as 'abandonment' by agents?

Should I get in touch with brokerage firm(Broker) about the agent's handling of this?  I have a feeling the broker is aware of it.

Can my ex-agent claim her commission even after abandonment?

What do I do if I am still interested in that property?  I feel I should not be hindered just because my agent is upset.  Situation was beyond my control.  Please advise.  Thanks in advance.

By what authority did you “cancel” the contract? Sounds like you breached the contract. If I were the seller I’d return your deposit on two grounds: first, you breached the purchase agreement by not performing, and; second you seem like a flake.

[Kevin Sobilo]

Quote from @John Clark:

Quote from @Kevin S.:

Hi BP members,

I entered into a contract to purchase a SFH for investment, had inspection done, came up with few issues, went back and forth and finally came to an agreement with price and who takes care of what. On the day of sending EMD to escrow a business deal came my way. The bank involved with the business deal advised against buying the property as it would affect the financing of the business. I immediately called my agent to cancel the contract.

The next day the bank called me to reverse their call.  It was ok to go ahead to buy the property.  Apparently, the first person from the bank did not review my financials.  His manager did and determined it was good enough not to affect the business deal.  I called my realtor immediately to explain the situation and left a message.  I texted screenshot of my communications with the bank.  I have yet to get a response.  Seems like she is upset, and understandably so.  My questions are,

 Can I approach the listing agent directly if my agent do not respond?  The listing agent may be more understanding.

Would the listing agent get all 6% commission?   

Is there such thing as 'abandonment' by agents?

Should I get in touch with brokerage firm(Broker) about the agent's handling of this?  I have a feeling the broker is aware of it.

Can my ex-agent claim her commission even after abandonment?

What do I do if I am still interested in that property?  I feel I should not be hindered just because my agent is upset.  Situation was beyond my control.  Please advise.  Thanks in advance.

By what authority did you “cancel” the contract? Sounds like you breached the contract. If I were the seller I’d return your deposit on two grounds: first, you breached the purchase agreement by not performing, and; second you seem like a flake.

As the seller, why would you return the deposit? The point of a deposit is to secure performance under the contract. So, if you wouldn't seek to forfeit the deposit, there isn't any point in even asking for one in the first place. 

[John Clark]

Quote from @Kevin Sobilo:

Quote from @John Clark:

Quote from @Kevin S.:

Hi BP members,

I entered into a contract to purchase a SFH for investment, had inspection done, came up with few issues, went back and forth and finally came to an agreement with price and who takes care of what. On the day of sending EMD to escrow a business deal came my way. The bank involved with the business deal advised against buying the property as it would affect the financing of the business. I immediately called my agent to cancel the contract.

The next day the bank called me to reverse their call.  It was ok to go ahead to buy the property.  Apparently, the first person from the bank did not review my financials.  His manager did and determined it was good enough not to affect the business deal.  I called my realtor immediately to explain the situation and left a message.  I texted screenshot of my communications with the bank.  I have yet to get a response.  Seems like she is upset, and understandably so.  My questions are,

 Can I approach the listing agent directly if my agent do not respond?  The listing agent may be more understanding.

Would the listing agent get all 6% commission?   

Is there such thing as 'abandonment' by agents?

Should I get in touch with brokerage firm(Broker) about the agent's handling of this?  I have a feeling the broker is aware of it.

Can my ex-agent claim her commission even after abandonment?

What do I do if I am still interested in that property?  I feel I should not be hindered just because my agent is upset.  Situation was beyond my control.  Please advise.  Thanks in advance.

By what authority did you “cancel” the contract? Sounds like you breached the contract. If I were the seller I’d return your deposit on two grounds: first, you breached the purchase agreement by not performing, and; second you seem like a flake.

As the seller, why would you return the deposit? The point of a deposit is to secure performance under the contract. So, if you wouldn't seek to forfeit the deposit, there isn't any point in even asking for one in the first place. 

 Ordinarily I would agree, but this contract hasn't gone too far and the buyer is squirrelly. Just as landlords often have a make each other happy clause, I'd say here's your money go away, come back when you know what a contract is.

[Kevin S.]

Quote from @Kevin Sobilo:

@Kevin S., a few questions/comments:

1. How long have you been trying to contact your buyer's agent? Yes, you should contact the broker if they don't respond. Perhaps they have an issue going on such as a medical or family emergency and another agent is handling some of her business in her absense.

2. Did you sign anything to terminate the original deal? The termination would have included an agreement for how to disperse the EMD. In a case like this often the brokerage/agents get a cut of that EMD that you would typically forfeit. So, they may not be as disgruntled as you believe because they may have already cashed in on a small payday from their share of your EMD.

Since you didn't mention signing anything to terminate the contract, I suspect you are still in the deal you signed up for and that EMD is in escrow right now.

BTW, the situation was within your control. You made choices all along here. 

Thank you Kevin for your input. Sorry if I was not clear. The bank that was financing the business deal called me literally 2 hours before wiring the EMD. So I called my agent immediately and told her I cannot proceed and no deposit was sent.

The bank then called me within hours to correct themselves. They mis-read my finances and mis-informed me.  They apologized and told me buying the property would not affect buying the business.  The bank screwed up and made me pull out of the deal.  This part was out of my control. 

I tried calling my agent and texted her the screen shots of the back and forth texts between me and the bank.  I wanted to explain and still proceed with the purchase.  She has ignored so far. 

Since no deposit was sent is the contract still valid?  Do I need a written termination? If the property is still listed how can I proceed if she doesn't respond?  Thanks.

[Kevin Sobilo]

Quote from @Kevin S.:

Quote from @Kevin Sobilo:

@Kevin S., a few questions/comments:

1. How long have you been trying to contact your buyer's agent? Yes, you should contact the broker if they don't respond. Perhaps they have an issue going on such as a medical or family emergency and another agent is handling some of her business in her absense.

2. Did you sign anything to terminate the original deal? The termination would have included an agreement for how to disperse the EMD. In a case like this often the brokerage/agents get a cut of that EMD that you would typically forfeit. So, they may not be as disgruntled as you believe because they may have already cashed in on a small payday from their share of your EMD.

Since you didn't mention signing anything to terminate the contract, I suspect you are still in the deal you signed up for and that EMD is in escrow right now.

BTW, the situation was within your control. You made choices all along here. 

Thank you Kevin for your input. Sorry if I was not clear. The bank that was financing the business deal called me literally 2 hours before wiring the EMD. So I called my agent immediately and told her I cannot proceed and no deposit was sent.

The bank then called me within hours to correct themselves. They mis-read my finances and mis-informed me.  They apologized and told me buying the property would not affect buying the business.  The bank screwed up and made me pull out of the deal.  This part was out of my control. 

I tried calling my agent and texted her the screen shots of the back and forth texts between me and the bank.  I wanted to explain and still proceed with the purchase.  She has ignored so far. 

Since no deposit was sent is the contract still valid?  Do I need a written termination? If the property is still listed how can I proceed if she doesn't respond?  Thanks.

In my experience you would still be under contract unless the seller decided to terminate the contract because you didn't submit the EMD within the timeframe on the contract. If that happened you would have been notified. 

[Kevin S.]

@Kevin Sobilo

After the incident I received no communication from either my realtor or the seller/listing agent.  The property is back on the market.  

What is my next step?  Request for a written termination from the seller?  What if they ignore?  

I don't think I can use another realtor for the same property, even if seller is willing to enter into contract again.  What do you suggest?  Thanks.

[Kevin Sobilo]

Quote from @Kevin S.:

@Kevin Sobilo

After the incident I received no communication from either my realtor or the seller/listing agent.  The property is back on the market.  

What is my next step?  Request for a written termination from the seller?  What if they ignore?  

I don't think I can use another realtor for the same property, even if seller is willing to enter into contract again.  What do you suggest?  Thanks.

Did you even have a fully executed contract? If so, I would contact your agents broker and then the seller's agent.

[Theresa Harris]

Where I am the contract is not valid until the EMD has been received and that is usually within 24 hours of submitting your offer. Then you have whatever time you negotiated (often 2 weeks) to remove conditions. Once conditions are removed, you lose the deposit if you back out.

how long ago did all of this happen?  My guess is neither the seller's agent or yours trusts that you'd follow through if you submitted another offer.

[Kevin S.]

@Theresa Harris

My guess is contract is null and void since EMD wasn't sent. I cannot confirm this is why I turned to BP members who are experienced.

This happened a week ago.  The property is back on the market.

I understand their(both agents) sentiments and your thoughts about submitting another offer did cross my mind.  Thanks for your input, Theresa. 

[Kevin S.]

@Kevin Sobilo

The contract was signed by both me and the seller.  Inspection was completed and we re-negotiated the price based on inspection findings.  The new price was again signed by both parties. If that is a fully executed contract, then yes.  

The last step was to wire the EMD which was halted because of the call I received from the bank.

Since EMD wasn't sent, is it considered a fully executed contract or is it automatically null and void when the date to sent/receive EMD expired?

My guess is both agents are upset to see any reasoning.  The only thing I wouldn't know is whether my agent's brokerage is in the dark.

I appreciate your input, Kevin.

[Kevin Sobilo]

Quote from @Kevin S.:

@Kevin Sobilo

The contract was signed by both me and the seller.  Inspection was completed and we re-negotiated the price based on inspection findings.  The new price was again signed by both parties. If that is a fully executed contract, then yes.  

The last step was to wire the EMD which was halted because of the call I received from the bank.

Since EMD wasn't sent, is it considered a fully executed contract or is it automatically null and void when the date to sent/receive EMD expired?

My guess is both agents are upset to see any reasoning.  The only thing I wouldn't know is whether my agent's brokerage is in the dark.

I appreciate your input, Kevin.

Yes, then in my opinion it sounds like you are still under contract.

If there was a time-frame to submit the EMD, then that could give the seller the OPTION to terminate the contract, but that should have happened in writing and you would know about it.

Your agent's broker may or may not be aware of the situation, but they can take actions to help rectify it.

[Kevin Sobilo]

Quote from @Theresa Harris:

Where I am the contract is not valid until the EMD has been received and that is usually within 24 hours of submitting your offer. Then you have whatever time you negotiated (often 2 weeks) to remove conditions. Once conditions are removed, you lose the deposit if you back out.

how long ago did all of this happen?  My guess is neither the seller's agent or yours trusts that you'd follow through if you submitted another offer.

I'm curious, what state is that in? 

In my state (PA) an EMD is legally optional although I have never seen a deal without one and the submission of the EMD might happen with execution of the contract or often the contract gives the buyer 5 or 7 days to submit the EMD, but the deal doesn't automatically become  void if it isn't submitted. It is like any other breach of the contract where it can be remedied or the opposing party can use that as a reason to terminate for nonperformance. At least that is how the contract realtor's use is written.

[Theresa Harris]

Quote from @Kevin Sobilo:

Quote from @Theresa Harris:

Where I am the contract is not valid until the EMD has been received and that is usually within 24 hours of submitting your offer. Then you have whatever time you negotiated (often 2 weeks) to remove conditions. Once conditions are removed, you lose the deposit if you back out.

how long ago did all of this happen?  My guess is neither the seller's agent or yours trusts that you'd follow through if you submitted another offer.

I'm curious, what state is that in? 

In my state (PA) an EMD is legally optional although I have never seen a deal without one and the submission of the EMD might happen with execution of the contract or often the contract gives the buyer 5 or 7 days to submit the EMD, but the deal doesn't automatically become  void if it isn't submitted. It is like any other breach of the contract where it can be remedied or the opposing party can use that as a reason to terminate for nonperformance. At least that is how the contract realtor's use is written.

 I'm in Canada and I've never heard of a deposit being optional. The amount is up to the buyer (and seller), so it could be a trivial amount; but it needs to be there.

[Kevin Sobilo]

Quote from @Theresa Harris:

Quote from @Kevin Sobilo:

Quote from @Theresa Harris:

Where I am the contract is not valid until the EMD has been received and that is usually within 24 hours of submitting your offer. Then you have whatever time you negotiated (often 2 weeks) to remove conditions. Once conditions are removed, you lose the deposit if you back out.

how long ago did all of this happen?  My guess is neither the seller's agent or yours trusts that you'd follow through if you submitted another offer.

I'm curious, what state is that in? 

In my state (PA) an EMD is legally optional although I have never seen a deal without one and the submission of the EMD might happen with execution of the contract or often the contract gives the buyer 5 or 7 days to submit the EMD, but the deal doesn't automatically become  void if it isn't submitted. It is like any other breach of the contract where it can be remedied or the opposing party can use that as a reason to terminate for nonperformance. At least that is how the contract realtor's use is written.

 I'm in Canada and I've never heard of a deposit being optional. The amount is up to the buyer (and seller), so it could be a trivial amount; but it needs to be there.

Legally it is optional where I am. There is no legal requirement to have a deposit although almost all deals have them. I would guess many private party deals between people who know each other well may not bother with deposits. That is probably the most common case here.

[Kevin S.]

@Kevin Sobilo

I think I'll do that, email the brokerage owner.  Someone else also suggested I do that.  

Since the EMD was withheld and the date expired(you mentioned I am still under contract), when does the contract expires or become null and void?

Is it possible to use another agent without commission due to the original agent?  I have a strong feeling the seller/listing agent is in the dark.  They just know what happened but not  why it happened.  I think it's my agent who has put a brake on this.  The title of my post is "abandonment'.  I was hoping there is a way to show abandonment so I can move on with another agent without further attachment to the first agent.  Your thoughts. 

[Kevin Sobilo]

Quote from @Kevin S.:

@Kevin Sobilo

I think I'll do that, email the brokerage owner.  Someone else also suggested I do that.  

Since the EMD was withheld and the date expired(you mentioned I am still under contract), when does the contract expires or become null and void?

Is it possible to use another agent without commission due to the original agent?  I have a strong feeling the seller/listing agent is in the dark.  They just know what happened but not  why it happened.  I think it's my agent who has put a brake on this.  The title of my post is "abandonment'.  I was hoping there is a way to show abandonment so I can move on with another agent without further attachment to the first agent.  Your thoughts. 

Contracts may vary in their language but in my area the contract would not end until someone chose to end it. It wouldn't happen automatically except at closing. 

Why email the brokerage? I would call. You are all eager to make things happen and declare yourself abandoned but choosing a less direct form of communication. That makes no sense. If the broker doesn't answer, I would call the seller's agent and advise them of the situation.

This sounds like it just happened. Abandonment is a thing, but not hearing back from your agent in a timely manner is not abandonment. I would focus on opening the lines of communication rather than making the situation more complicated by trying to introduce another new agent to the mix and try to claim abandonment to exclude the original agent.

[Nicholas L.]

@Kevin S.

can you go to their office and talk it over?

as @Kevin Sobilo noted - i have found that being ignored is a huge part of RE investing.  you have to figure out how to get a response.  sending one email or one text is nothing.

also, you're asking for questions that will be answered by your contracts, which we don't have.  

what does the sale agreement say about EMD?

what does the agency agreement you signed say about how long the agency lasts?

[Kevin S.]

@Kevin Sobilo

This happened a week ago.  I was out of town right after it happened and came back 2 days ago.

I just emailed the brokerage today and waiting for response.  I'll take your advice and call if I don't hear from them.  Thank you.   

[Kevin S.]

@Nicholas L.

I live 3 hrs away so not able to physically walk into the office and discuss in person. I wasn't aware of but learning now that being ignored is a huge part of RE investing. It's my first experience :)

I don't recall specifics of how long things last but will now re-read it again.  Thanks for your comments, Nicholas. 

[John Clark]

Quote from @Kevin S.:

@Kevin Sobilo

The contract was signed by both me and the seller.  Inspection was completed and we re-negotiated the price based on inspection findings.  The new price was again signed by both parties. If that is a fully executed contract, then yes.  

The last step was to wire the EMD which was halted because of the call I received from the bank.

Since EMD wasn't sent, is it considered a fully executed contract or is it automatically null and void when the date to sent/receive EMD expired?

My guess is both agents are upset to see any reasoning.  The only thing I wouldn't know is whether my agent's brokerage is in the dark.

I appreciate your input, Kevin.

 I think you're under contract and are liable for breach. The seller has an obligation to minimize his damages, but he might be able to sue for the difference after he closes on the contract with the person whose word is good.

[Kevin Sobilo]

Quote from @John Clark:

Quote from @Kevin S.:

@Kevin Sobilo

The contract was signed by both me and the seller.  Inspection was completed and we re-negotiated the price based on inspection findings.  The new price was again signed by both parties. If that is a fully executed contract, then yes.  

The last step was to wire the EMD which was halted because of the call I received from the bank.

Since EMD wasn't sent, is it considered a fully executed contract or is it automatically null and void when the date to sent/receive EMD expired?

My guess is both agents are upset to see any reasoning.  The only thing I wouldn't know is whether my agent's brokerage is in the dark.

I appreciate your input, Kevin.

 I think you're under contract and are liable for breach. The seller has an obligation to minimize his damages, but he might be able to sue for the difference after he closes on the contract with the person whose word is good.

I think you would be correct in some cases. In the sales contract the option to limit the seller to retaining the deposit instead of suing for liquidated damages is usually selected. So, in those cases there would be no additional obligation.

Also, since they are offering to correct the breach before the contract has been terminated would bring the contract back into compliance I think and negate any claim of damage.

Contracts (not just sales contracts) are breached every day. I think typically they are handled by notifying the other party of the breach along with actions needed to correct. Unless there is a dispute beyond that the contract would not be terminated and no additional damages would apply. Sometimes contracts have fatal breaches which give the opposing party the option to simply terminate if a breach of that type happens. 

[Jeyo Punnakottil]

@Kevin Sobilo

To my knowledge that is not how it works .Was there a written contract between you and the seller .Did both you and seller sign the contract. Depending on the state that you are in ,EMD should get to the title company in "X"amount of days stated in the contract along with the signed contract to make the contract binding.If EMD has not reached the title in the " X "days the contact becomes nullified.That coube be the reason why the seller has relisted back the ppty in market as available.

# dont sue me bro#Not a legal advice

[Kevin Sobilo]

Quote from @Jeyo Punnakottil:

@Kevin Sobilo

To my knowledge that is not how it works .Was there a written contract between you and the seller .Did both you and seller sign the contract. Depending on the state that you are in ,EMD should get to the title company in "X"amount of days stated in the contract along with the signed contract to make the contract binding.If EMD has not reached the title in the " X "days the contact becomes nullified.That coube be the reason why the seller has relisted back the ppty in market as available.

# dont sue me bro#Not a legal advice

I just doubled checked the sales contract used by realtors in my state (PA) and it does not have any language like you suggest, but you COULD be correct if a sales contract specifically stated those things.

EMDs are optional in my state by law, so it would be impossible for what you suggest to be required in my state.

In general, a contract is considered fully executed when it has been signed by the 2nd party and returned to the first party. So, if a buyer submits a full contract offer, the contract becomes binding aka fully executed after the seller signs it when they return that signed copy to the buyer (or their agent). The title company and EMD have nothing to do with the contract being binding/fully executed.

Also, I was speaking in generalities about how breaches of a contract are handled. Any breach of contract can have language in the contract allowing a remedy to terminate the contract, but if there isn't specific language like that then I believe it would be handled as I suggested.

You could be correct, but I think the seller would need to notify the buyer if they were terminating the contract.