Rental Property Investor · Indianapolis, IN · Member since 2015 · 14 posts · 2 votes
I met with a seller last weekend. I put two of her houses on contract, on two separate contracts. I sent the paperwork as well as the earnest money deposits for both properties to the title company set to close on June 1st.
However, I don't think I will move forward with one of the properties but I would like to purchase the other for myself. So I am planning to tell the title company that I am no longer going forward with the first property but I would like to keep moving forward with the second.
I am afraid that if I pull out of the first property though, the seller will back out of the second property. In the contract we used, it does state that "If seller defaults, buyer may pursue all remedies allowed by law and seller agrees to be responsible for all costs incurred by buyer as a result of seller's default." Also, there are no clauses or contingencies as to having to buy both properties for the deal to go through.
Since it is a legally-binding contract, can she back out or what can be done to ensure that she will close on the deal? And if she does default, is it possible to take this to court and have a judge force the closing?
Investor · Belleville, MI · Member since 2015 · 131 posts · 40 votes
11y
I am struggling with the ethical part of this question more than the original question. You are so worried about forcing her to close, but what about her forcing you to close? If you are past all of your due diligence, than why would you back out of the deal?
Investor · Belleville, MI · Member since 2015 · 131 posts · 40 votes
11y
I am struggling with the ethical part of this question more than the original question. You are so worried about forcing her to close, but what about her forcing you to close? If you are past all of your due diligence, than why would you back out of the deal?
Rental Property Investor · Indianapolis, IN · Member since 2015 · 14 posts · 2 votes
11y
well I have a partner that works with me. We had a contingency on both contracts that it would need both partner's approval. We did the numbers for both and the first property would need too much time and money to the point that it just wouldn't work for our budgets. The contracts also say that she can't show the property to others while in a binding contract, which she is and is also taking offers for the property still. I asked her if she could go down on the price at all and she said she couldn't because she has others that would be willing to pay the same price or more. I feel like the property could just go to someone else since she's had such interest in it and I would take the second.
Originally I had sent her a direct mail piece for the property that i would still like to close on. when we met, she told me that she owned the property next door as well and wanted to sell it. So I said okay and we came to terms for both. But the time and repairs for the second home turned out to be too much for us and too little room for profits.
Investor · Belleville, MI · Member since 2015 · 131 posts · 40 votes
11y
Well, if you are still within your "subject to" time on your offer, you have every right to back out of the individual deal. She shouldn't be able to back out of the other deal because it is a signed contract. As long as you and your partner follow the closing requirements as per that particular contract, that property will be yours.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
Well, we don't know exactly what your contract says, so it's all just speculation. As to the "all remedies allowed by law".....generally for a buyer to have the rignt of specific performance, it must specifically be spelled out in the contract. So, I don't know what remedies "are allowed by law" in Indiana, without it being specified. Time for you to find out I guess.
I bet next time you'll run the numbers a lot more first before signing a contract!
At any rate, it's a touchy situation.
If you can still close on the one, then that's great.
I wouldn't, however, force the issue and/or burn any bridges - this course of action usually never works out.
There are plenty more great deals to grab next week, walk away [peacefully] from both if you have to.
Good luck.
Yes, fortunately, after conversing with the seller, I think we finally have the situation all worked out and set to close next week. It was definitely a "newbie" mistake but I guess thats how you have to learn sometimes! :)