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Updated over 6 years ago on . Most recent reply

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Pratik P.
  • Flipper/Rehabber
  • Sacramento, CA
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Likelihood of forcing a seller to perform?

Pratik P.
  • Flipper/Rehabber
  • Sacramento, CA
Posted

Hey everyone,

So about a month ago, I went under contract to purchase a fixer property. The property was occupied by the seller's 92year old mother and also had A LOT of junk in it. My plan was to buy it, have all the junk removed and immediately sell it to a flipper. The seller told me that she would have her mother moved out before closing...ok no problem.

A week before closing, the seller calls me with a sob story about how her mom has no where to go and that this house was her only asset left, etc and wants to cancel the contract. I feel bad and say ok let's cancel and instruct escrow to cancel....Now I find out that she's actually selling it to the lender for 5k more than what I offered...so I got played.

My question is, for future reference, what are the chances of being able to legally force a seller to perform on the contract? Or should I place a clause in the contract for a "back out fee"? I was going to make a large profit on this deal and don't want this happening again. 

Thanks in advance for the advise :]

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Jay Hinrichs
#1 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
63,544
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43,041
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Jay Hinrichs
#1 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
Replied

well you can sue for performance.. and most people would probably back down and it would cost them for them 5k

although you would open yourself up to scrutiny ..  IE was it a fair price was .. they could counter with unconscionable profit claim.. 

just because you have a contract and modest EM is fairly week and would really depend on judge.

however I have did last year do my first specific performance action and I prevailed.. 

but different circumstances.. 1. I put up 40k in back tax's she was going to lose the home in a matter of days and in Oregon there is no overages you simply lose the house.. I think its the only state that does that.

but then she went dark .. so after about 6 months of trying to get her to come to closing IE we were paying cash of course not assignment funny business or double close BS.. 

I finally got an attorney and filed the action.. as I had 40k large at stake and this was a hoarder house extreme. you could not even see the house berries had grown all the way over it.. and there was over 60k in code violations.

long story short 2 years later 20k in legal fees judge orders her to sell to us and she still wont sign.. title company makes me amend our order that takes another 2 months then we closed.

Also I had to put up the entire amount of the purchase price in CASH into escrow on the date we were suppose to close it sat there for over 2 years and we are talking low 6 figures.. 

It was the first time in my 40 some years that I bought a property without a deed.. the title company gave me a title policy based on the judges order she simply would not sign.. then I had to evict her that took another 6 months.

it would have been better not to have that dough tied up that long but I was able to make 3 lots out of it once I demo'd the house.. and we sold it for a nice profit at the end of the day.. 

at least in our state that is how you have to sue for performance.. if you offered cash you have to put cash up on the closing date and let it sit there until it winds through the court.  and she never defended but the judge would not give us a summary judgement they don't like us investors buying homes from folks without those folks having their day In court.. she never showed.. Now I bet if she lawyered up it would have been something quite different.

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