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Updated almost 5 years ago, 02/20/2020

User Stats

101
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Ben I.
Pro Member
  • Investor
  • Chicago, IL
52
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101
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Seller attempting to sue me for not buying property.

Ben I.
Pro Member
  • Investor
  • Chicago, IL
Posted

Hiya all. Well here's my situation. 

I wanted to buy a second rental property after we moved to Hawaii for work and became bankable again. I was planning on using the HELOC money from our first rental as the downpayment. I found an agent here on BP from Wisconsin because I wouldn't buy in Hawaii and I wanted to get out of Illinois because the taxes were too high.

So I found a gut rehabbed 2 flat in Milwaukee Wisconsin. I put an offer and it was accepted. I sent the earnest money in time and scheduled the inspection. During the inspection, we found out much of the work was done poorly, including plumbing that didn't lead anywhere. We weren't able to inspect the electrical system because it was turned off from the main. There were other little things, but once I saw the basement walls I knew I didn't want it. Signs of water intrusion, shear wall cracks and a horizontal crack on all 4 walls. So I told my agent to let them know that unfortunately there were too many things wrong with the property and I have to use my inspection contingency to get out of the contract. 

The agent told me the sellers don't want to cancel and have a right to make repairs. So I asked him to make a list with all the mistakes on the inspection. He did and we sent that over. Apparently, the sellers had three days to get back to us about these repairs but didn't until 8 or 9 days later. At that point, they said we need a structural engineer to inspect the property if we wanted them to address the structural issues. They said they'll fix the rest. I'm not sure if they did or didn't because they took too long to even reply. When my agent told them that the contract is void because they didn't have the standard 10 days to reply, but 3 according to our contract, they said they are going to sue us. 

They dragged out the threats for two months. In the meantime, I ended up buying a rental in Chicago. I found out that the sellers and the selling agent's firm didn't have a contract signed so the agency sent me my earnest check back. I thought it was all done until I got a call from the agent today asking if he can give the lawyer my number. 


I really don't have money to hire a lawyer right now and am unsure what to do. I always thought that if you operated fairly and honestly you wouldn't need to lawyer up and try to protect yourself. What do you think I should do? Should I hire a lawyer to speak with this lawyer on my behalf? I am honestly thinking about representing myself if this turns out to be a real lawsuit. If you have a good lawyer for Wisconsin, please let me know. 


All in all, our next step into real estate wasn't as good as I thought it would be. Bad things can and do happen. I will keep you updated on how this turns out because this can honestly happen to anyone. 

Thank you.

  • Ben I.
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    Mike Cumbie
    Agent
    • REALTOR®
    • Brockport, NY
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    Mike Cumbie
    Agent
    • REALTOR®
    • Brockport, NY
    ModeratorReplied

    Hi @Ben I.

    I don't know how Chicago Operates, so @Brie Schmidt may have much more local information. 

    In my experience fair and honest may (WILL) still find someone who disagrees with what you said unless you bend over and give them everything. Litigating is expensive and few are willing to do it. But offering the seller an opportunity to fix (or credit) is how it works in my area. If they disagree then fine we can cancel. But "generally" speaking a good faith offer means "giving them a chance to make it as you expected" and you "willing to look at what was offered". Just a cancel after they took it off the market makes the seller feel like you were not acting in good faith. 

    Yours sounds extreme and may very well be. So your contract will dictate. In my experience if a buyer wants out at that stage then fair enough we go on. But contracts are very local.

    • Mike Cumbie

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    Vincent Incopero
    Pro Member
    • Attorney
    • Elmhurst, IL
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    Vincent Incopero
    Pro Member
    • Attorney
    • Elmhurst, IL
    Replied

    @Ben I. contact a WI Real Estate attorney that is familiar with the contracts that are used and the various clauses. 

    This is a fact intensive situation and contract provision specific question that you are throwing out to the peanut gallery. 


    IMHO - BP is like WebMD, that is, its a good starting point to get an idea of what is going on, but WebMD should never be relied upon or otherwise used as an alternative to the advice of a licensed medical professional. 

  • Vincent Incopero
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    User Stats

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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    52
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    101
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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    Replied
    Originally posted by @Mike Cumbie:

    Hi @Ben I.

    I don't know how Chicago Operates, so @Brie Schmidt may have much more local information. 

    In my experience fair and honest may (WILL) still find someone who disagrees with what you said unless you bend over and give them everything. Litigating is expensive and few are willing to do it. But offering the seller an opportunity to fix (or credit) is how it works in my area. If they disagree then fine we can cancel. But "generally" speaking a good faith offer means "giving them a chance to make it as you expected" and you "willing to look at what was offered". Just a cancel after they took it off the market makes the seller feel like you were not acting in good faith. 

    Yours sounds extreme and may very well be. So your contract will dictate. In my experience if a buyer wants out at that stage then fair enough we go on. But contracts are very local.

    I know Brie. She's awesome! I did some work for some of her clients.  I might even give her a call tomorrow about this. 


    I completely understand what you are saying and you are right that you should be willing to buy when you put an offer. I definitely was willing to buy it. I'm not the type that even cares about most things because I know I can fix them and take care of them. It was when I was on the video call with the inspector and I saw water flowing out of the wall on a brand new remodel and the electricity being shut off that I had a gut feeling that I was being played, that something was fishy and hidden. Had they promised to make the repairs that concerned me using a qualified company, I still would have bought it. From my understanding, they mostly just said, spend more money to prove that the structure isn't good but it was evident the foundation is cracking. I am a licensed EIT with an emphasis in structural engineering so it was even more apparent what the issues were there. 

  • Ben I.
  • User Stats

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    Chaim Lampert
    Property Manager
    • Milwaukee, WI
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    Chaim Lampert
    Property Manager
    • Milwaukee, WI
    Replied

    @Ben I.

    I have used Jim Hiller for real estate law. He’s very reasonable and knowledgeable. You can try him if you decide to go with a lawyer. You can find his number on google by searching Law offices of James A. Hiller.

    business profile image
    Milwaukee Property Management, LLC
    4.0 stars
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    User Stats

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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    52
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    101
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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    Replied
    Originally posted by @Vincent Incopero:

    @Ben I. contact a WI Real Estate attorney that is familiar with the contracts that are used and the various clauses. 

    This is a fact intensive situation and contract provision specific question that you are throwing out to the peanut gallery. 


    IMHO - BP is like WebMD, that is, its a good starting point to get an idea of what is going on, but WebMD should never be relied upon or otherwise used as an alternative to the advice of a licensed medical professional. 

     do you know if lawyers will typically answer these types of questions without charging or do you pay even for asking these questions? 

  • Ben I.
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    Vincent Incopero
    Pro Member
    • Attorney
    • Elmhurst, IL
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    Vincent Incopero
    Pro Member
    • Attorney
    • Elmhurst, IL
    Replied

    @Ben I. I would give an initial consultation for free or for a very fee depending on how much time I anticipated that consult taking. That being said, I cant speak to what another attorney would do. Best of luck. 

  • Vincent Incopero
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  • User Stats

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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    Replied
    Originally posted by @Vincent Incopero:

    @Ben I. I would give an initial consultation for free or for a very fee depending on how much time I anticipated that consult taking. That being said, I cant speak to what another attorney would do. Best of luck. 

     Thank you, sir. I'll try calling some tomorrow. 

  • Ben I.
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    Brie Schmidt
    Agent
    • Real Estate Broker
    • Chicago, IL
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    Brie Schmidt
    Agent
    • Real Estate Broker
    • Chicago, IL
    ModeratorReplied
    Originally posted by @Ben I.:
    Originally posted by @Mike Cumbie:

    Hi @Ben I.

    I don't know how Chicago Operates, so @Brie Schmidt may have much more local information. 

    In my experience fair and honest may (WILL) still find someone who disagrees with what you said unless you bend over and give them everything. Litigating is expensive and few are willing to do it. But offering the seller an opportunity to fix (or credit) is how it works in my area. If they disagree then fine we can cancel. But "generally" speaking a good faith offer means "giving them a chance to make it as you expected" and you "willing to look at what was offered". Just a cancel after they took it off the market makes the seller feel like you were not acting in good faith. 

    Yours sounds extreme and may very well be. So your contract will dictate. In my experience if a buyer wants out at that stage then fair enough we go on. But contracts are very local.

    I know Brie. She's awesome! I did some work for some of her clients.  I might even give her a call tomorrow about this. 


    I completely understand what you are saying and you are right that you should be willing to buy when you put an offer. I definitely was willing to buy it. I'm not the type that even cares about most things because I know I can fix them and take care of them. It was when I was on the video call with the inspector and I saw water flowing out of the wall on a brand new remodel and the electricity being shut off that I had a gut feeling that I was being played, that something was fishy and hidden. Had they promised to make the repairs that concerned me using a qualified company, I still would have bought it. From my understanding, they mostly just said, spend more money to prove that the structure isn't good but it was evident the foundation is cracking. I am a licensed EIT with an emphasis in structural engineering so it was even more apparent what the issues were there. 

     This was WI right?  I am licensed there but only represented myself and haven't done a transaction there in years.  I wouldn't be the best person to talk to.  I would push back on your agent and involve their broker.  Have them walk you through the provision in the contract and explain it to you.  People say they are suing all the time.  That doesn't mean they will get far with it.  

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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    Replied
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:
    Originally posted by @Mike Cumbie:

    Hi @Ben I.

    I don't know how Chicago Operates, so @Brie Schmidt may have much more local information. 

    In my experience fair and honest may (WILL) still find someone who disagrees with what you said unless you bend over and give them everything. Litigating is expensive and few are willing to do it. But offering the seller an opportunity to fix (or credit) is how it works in my area. If they disagree then fine we can cancel. But "generally" speaking a good faith offer means "giving them a chance to make it as you expected" and you "willing to look at what was offered". Just a cancel after they took it off the market makes the seller feel like you were not acting in good faith. 

    Yours sounds extreme and may very well be. So your contract will dictate. In my experience if a buyer wants out at that stage then fair enough we go on. But contracts are very local.

    I know Brie. She's awesome! I did some work for some of her clients.  I might even give her a call tomorrow about this. 


    I completely understand what you are saying and you are right that you should be willing to buy when you put an offer. I definitely was willing to buy it. I'm not the type that even cares about most things because I know I can fix them and take care of them. It was when I was on the video call with the inspector and I saw water flowing out of the wall on a brand new remodel and the electricity being shut off that I had a gut feeling that I was being played, that something was fishy and hidden. Had they promised to make the repairs that concerned me using a qualified company, I still would have bought it. From my understanding, they mostly just said, spend more money to prove that the structure isn't good but it was evident the foundation is cracking. I am a licensed EIT with an emphasis in structural engineering so it was even more apparent what the issues were there. 

     This was WI right?  I am licensed there but only represented myself and haven't done a transaction there in years.  I wouldn't be the best person to talk to.  I would push back on your agent and involve their broker.  Have them walk you through the provision in the contract and explain it to you.  People say they are suing all the time.  That doesn't mean they will get far with it.  

     Yes, this is in Wisconsin. Sadly, the agents got out of this entire thing. It turns out that the sellers never actually had a signed contract with their agency. So the entire thing is off of the agents' table. Right now the seller has the house back on the market but is still pursuing a lawsuit. 

  • Ben I.
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    Brie Schmidt
    Agent
    • Real Estate Broker
    • Chicago, IL
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    Brie Schmidt
    Agent
    • Real Estate Broker
    • Chicago, IL
    ModeratorReplied
    Originally posted by @Ben I.:
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:

    I don't know how Chicago Operates, so @Brie Schmidt may have much more local information. 

    In my experience fair and honest may (WILL) still find someone who disagrees with what you said unless you bend over and give them everything. Litigating is expensive and few are willing to do it. But offering the seller an opportunity to fix (or credit) is how it works in my area. If they disagree then fine we can cancel. But "generally" speaking a good faith offer means "giving them a chance to make it as you expected" and you "willing to look at what was offered". Just a cancel after they took it off the market makes the seller feel like you were not acting in good faith. 

    Yours sounds extreme and may very well be. So your contract will dictate. In my experience if a buyer wants out at that stage then fair enough we go on. But contracts are very local.

    I know Brie. She's awesome! I did some work for some of her clients.  I might even give her a call tomorrow about this. 


    I completely understand what you are saying and you are right that you should be willing to buy when you put an offer. I definitely was willing to buy it. I'm not the type that even cares about most things because I know I can fix them and take care of them. It was when I was on the video call with the inspector and I saw water flowing out of the wall on a brand new remodel and the electricity being shut off that I had a gut feeling that I was being played, that something was fishy and hidden. Had they promised to make the repairs that concerned me using a qualified company, I still would have bought it. From my understanding, they mostly just said, spend more money to prove that the structure isn't good but it was evident the foundation is cracking. I am a licensed EIT with an emphasis in structural engineering so it was even more apparent what the issues were there. 

     This was WI right?  I am licensed there but only represented myself and haven't done a transaction there in years.  I wouldn't be the best person to talk to.  I would push back on your agent and involve their broker.  Have them walk you through the provision in the contract and explain it to you.  People say they are suing all the time.  That doesn't mean they will get far with it.  

     Yes, this is in Wisconsin. Sadly, the agents got out of this entire thing. It turns out that the sellers never actually had a signed contract with their agency. So the entire thing is off of the agents' table. Right now the seller has the house back on the market but is still pursuing a lawsuit. 

    I mean your agent, they one that wrote the contract and negotiated the terms for you.  If they did it right you have nothing to worry about but I have had some serious issues of incompetence with WI agents.  It is their job to protect you so make sure they did, and involve their boss too  

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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    Replied
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:

    I don't know how Chicago Operates, so @Brie Schmidt may have much more local information. 

    In my experience fair and honest may (WILL) still find someone who disagrees with what you said unless you bend over and give them everything. Litigating is expensive and few are willing to do it. But offering the seller an opportunity to fix (or credit) is how it works in my area. If they disagree then fine we can cancel. But "generally" speaking a good faith offer means "giving them a chance to make it as you expected" and you "willing to look at what was offered". Just a cancel after they took it off the market makes the seller feel like you were not acting in good faith. 

    Yours sounds extreme and may very well be. So your contract will dictate. In my experience if a buyer wants out at that stage then fair enough we go on. But contracts are very local.

    I know Brie. She's awesome! I did some work for some of her clients.  I might even give her a call tomorrow about this. 


    I completely understand what you are saying and you are right that you should be willing to buy when you put an offer. I definitely was willing to buy it. I'm not the type that even cares about most things because I know I can fix them and take care of them. It was when I was on the video call with the inspector and I saw water flowing out of the wall on a brand new remodel and the electricity being shut off that I had a gut feeling that I was being played, that something was fishy and hidden. Had they promised to make the repairs that concerned me using a qualified company, I still would have bought it. From my understanding, they mostly just said, spend more money to prove that the structure isn't good but it was evident the foundation is cracking. I am a licensed EIT with an emphasis in structural engineering so it was even more apparent what the issues were there. 

     This was WI right?  I am licensed there but only represented myself and haven't done a transaction there in years.  I wouldn't be the best person to talk to.  I would push back on your agent and involve their broker.  Have them walk you through the provision in the contract and explain it to you.  People say they are suing all the time.  That doesn't mean they will get far with it.  

     Yes, this is in Wisconsin. Sadly, the agents got out of this entire thing. It turns out that the sellers never actually had a signed contract with their agency. So the entire thing is off of the agents' table. Right now the seller has the house back on the market but is still pursuing a lawsuit. 

    I mean your agent, they one that wrote the contract and negotiated the terms for you.  If they did it right you have nothing to worry about but I have had some serious issues of incompetence with WI agents.  It is their job to protect you so make sure they did, and involve their boss too  

     Got it. I believe he did well, but it definitely isn't a bad idea to have them dot their i and cross their t's as well. He definitely documented for me very well the dates he sent the letter with the issues, how many days they had to reply, how they needed to reply and how they failed to follow the proper procedures. I believe my agent is competent but I've been laying off of them because I really didn't believe the sellers would continue pursuing this after realizing nothing illegal took place. 

  • Ben I.
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    Tchaka Owen
    • Real Estate Agent
    • Merritt Island, FL
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    Tchaka Owen
    • Real Estate Agent
    • Merritt Island, FL
    Replied
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:

    I agree with Brie as far as involving your agent and broker. Also, a lot of people are all talk about suing...merely hoping to scare you. IF you are sure you followed your contract, you have nothing to worry about. Just let them know you'll countersue for fees (and maybe more). No matter how this goes, my strong recommendation is that you do not speak with the sellers attorney. Now, re-read that last sentence. There's nothing you will say to him/her that will help your case. You may think it will, but it won't. If they want to sue, let them. At that point you can involve an attorney. Until then, be cool. 

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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    Replied
    Originally posted by @Tchaka Owen:
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:

    I agree with Brie as far as involving your agent and broker. Also, a lot of people are all talk about suing...merely hoping to scare you. IF you are sure you followed your contract, you have nothing to worry about. Just let them know you'll countersue for fees (and maybe more). No matter how this goes, my strong recommendation is that you do not speak with the sellers attorney. Now, re-read that last sentence. There's nothing you will say to him/her that will help your case. You may think it will, but it won't. If they want to sue, let them. At that point you can involve an attorney. Until then, be cool. 

    That last part: "Until then, be cool" is very hard to do. Maybe because this is the first time someone has threatened to sue me. I'm stressing out over here because I really don't want to deal with something like this. I guess even writing all of this isn't a good idea as all of this can be used by their lawyer. Maybe I need to call in a favor with some of the moderators to shut this down?

  • Ben I.
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    John Teachout
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    John Teachout
    • Rental Property Investor
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    Replied

    I doubt very much that they are going to have any success pursuing this failed sale through the courts. Most likely just bluffing. I wouldn't think about it too much unless I got a subpoena or some other type of legal notice.

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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
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    Ben I.
    Pro Member
    • Investor
    • Chicago, IL
    Replied

    @John Teachout I take it you're been down this road before? I'm having a hard time seeing how anyone going through this for the first time could do it without suffering from stress. Maybe this is why people countersue for stress, fees etc.?

  • Ben I.
  • Account Closed
    • Specialist
    • Paradise Valley, AZ
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    Account Closed
    • Specialist
    • Paradise Valley, AZ
    Replied
    Originally posted by @Ben I.:
    Originally posted by @Tchaka Owen:
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:

    I agree with Brie as far as involving your agent and broker. Also, a lot of people are all talk about suing...merely hoping to scare you. IF you are sure you followed your contract, you have nothing to worry about. Just let them know you'll countersue for fees (and maybe more). No matter how this goes, my strong recommendation is that you do not speak with the sellers attorney. Now, re-read that last sentence. There's nothing you will say to him/her that will help your case. You may think it will, but it won't. If they want to sue, let them. At that point you can involve an attorney. Until then, be cool. 

    That last part: "Until then, be cool" is very hard to do. Maybe because this is the first time someone has threatened to sue me. I'm stressing out over here because I really don't want to deal with something like this. I guess even writing all of this isn't a good idea as all of this can be used by their lawyer. Maybe I need to call in a favor with some of the moderators to shut this down?

    How much is at stake? They can only sue for damages and they have to prove they were damaged. It will take them about $20,000 to $25,000 to litigate a situation like this. If the damages aren't significantly higher than that, it is unlikely a lawyer would take it to a lawsuit level. The lawyer may send you a letter threatening all kinds of things, but it usually ends there.

    If for some inexplicable reason the lawyer decides to file a lawsuit, (highly unlikely from what you've described here) you will receive a "Complaint" (a serious looking document with all kinds of court stamps on it). Make a copy to hang on the wall in your office (you are now officially a real estate investor) and make sure you respond in writing in the time allowed. You usually get 20 days to 30 days to respond. Normally your response is something like, "did not happen" or "I have no knowledge of that" or " I refute that supposition". Pretty simple stuff. Then you just go on with life. There is nothing more to do at that point once you respond. It's up to them to prove it and it's going to cost them a lot of money and hassle to try. 

    Next they have to send you interrogatories (written questions you answer and send back.) Wait until the last day to send it back. There is nothing more to do at that point other then to respond. This back and forth part takes about 6 months. They will become broke and bored and simply go away.  They will be advised that no matter how much they were "wronged" they don't appear to have any or much in terms of damages.

     It truly is a "game" attorneys play to make the uninformed think they have to jump through hoops and pay lots of money. And although you have to play by the rules, the rules are simply to answer the questions (vaguely), and to respond on time, dragging out your responses for the time allotted.

    It gets old and boring and they learn that they are not able to frighten you and they should have spent their money and time buying another investment property or finding a different buyer or doing whatever it was they were originally trying to do.

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    Kim Knox
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    • Jacksonville, OR
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    Kim Knox
    • Real Estate Broker
    • Jacksonville, OR
    Replied

    @Ben I. If they returned your earnest money because they could not produce an executed contract, you were never in contract....but your depositing earnest money and completing inspections indicate you felt you were in contract. Tell your Agent to not give your contact info. Let the seller pay the attorney to track you down. It would also be unusual for a title company to open escrow without an executed sales contract.

    Don’t do anything until you get formal Notice if a legal action, if you were within the bounds of your contract.

    They can’t make demands about repairs without your formal acceptance, generally speaking.

    Making another purchase can indicate you are, in fact, a capable and vested buyer. It can also indicate you were wasting their time if you had both offers out at once.

    It is my position, that if I am being sued by an ambulance chaser, that I go after them aggressively in counter suit. I would never represent myself, as I am not equipped to go head to head with an attorney.

    I am not an attorney, this is not legal advice.

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    I am an Illinois real estate attorney and therefore am not familiar with Wisconsin real estate law, contracts and local custom.

    The best advice you've been given here is that you can/should contact a Wisconsin attorney to discuss your situation.

    I do have several comments/questions regarding your experience and based on your statements:

    You stated:

    "So I told my agent to let them know that unfortunately there were too many things wrong with the property and I have to use my inspection contingency to get out of the contract. The agent told me the sellers don't want to cancel and have a right to make repairs."

    Question: Did your Agent tell you that you had the right to cancel the Contract even though the Sellers wanted to do repairs?

    Comment: If so, then it didn't matter what the sellers wanted to do and you should have insisted the Contract be cancelled. If not and If it turns out that you had the legal/Contractual right to cancel at that time, your Agent got you more involved giving the Seller an argument that you can't walk away.

    I agree with @Brie Schmidt who stated "I would push back on your agent and involve their broker. Have them walk you through the provision in the contract and explain it to you."

    Your Agent may not like it but she/he is still a player in this one and will be more so if there is litigation.

    I know hindsight is 20/20 but you really should have invested in hiring an attorney who could have told you whether or not you had a legal/contractual right to cancel and would have created a paper trail of how and when those rights were communicated to the Seller.

    You stated: "I thought it was all done until I got a call from the agent today asking if he can give the lawyer my number."

    Question: Who contacted your Agent asking for your number? The now "uninvolved" Listing Agent?

    Comment: Talking to the Seller's attorney would only help the Seller and his attorney prepare their case against you. A simple phone call is cheap and he, the Seller's attorney, will obtain information from you at no cost to the Seller. The attorney may also be looking to force you to pay something to avoid a lawsuit, even though no lawsuit would ever be filed. It would be foolish for you to represent yourself in a lawsuit so find the money to defend.

    You stated: "I found out that the sellers and the selling agent's firm didn't have a contract signed so the agency sent me my earnest check back."

    and

    You stated: "Sadly, the agents got out of this entire thing. It turns out that the sellers never actually had a signed contract with their agency. So the entire thing is off of the agents' table."

    Comment: I am not a litigator but if this Listing Agent or your Agent think they are "out of this", they should think again. If you are sued, your attorney will force them to disclose all their actions and perhaps file against them so that they are joined/included with you as defendants in any lawsuit against you.

    You also stated: "Maybe this is why people countersue for stress, fees etc.?"

    Comment: I doubt you can countersue for stress but you may have a case for countersuit based on the Seller's actions. I tell my Clients that it is easy to file a lawsuit but may be difficult to extricate themselves from one after they file. If you have a case for countersuit and the Seller is told this, the Seller will likely back off.

    Good luck.

    Account Closed
    • San Jose, CA
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    Account Closed
    • San Jose, CA
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    In real estate law, you must have a signed contract.  Verbal agreements aren't legal.  

    Also, to form a contract, there has to be an offer, an acceptance, and consideration (in this case your earnest money).  Since your money was given back to you, that also shows an agreement was never finalized.

    So, they don't have a leg to stand on.

    I'm guessing the seller is actually attempting to sue the agent, and the agent is hoping to put the deal back together.

    So, I'd say no to giving your contact info to their lawyer and then just tell your agent you're not going to do anything.  If they actually are foolish to file a lawsuit, you'll see them in court and you'll also be asking for all of your attorney fees.  And then, I'd stop talking to the agent, too, because I wouldn't be too sure the agent is on your side anymore and is trying to cover his butt by trying to put the deal back together, too.

    Then, if they actually do serve you with a lawsuit, then contact a lawyer.  But, I see no reason to pay for a lawyer unless that actually happens, which I very seriously doubt, because their lawyer knows he doesn't have a case.  He's hoping to bluff you into a deal.

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    One last comment.

    You stated:   "I found out that the sellers and the selling agent's firm didn't have a contract signed so the agency sent me my earnest check back."

    Question:   How do you really really know this?  Did you get a statement from Seller and Listing Agent admitting this? IF IF your Agent told you this based on a verbal statement from the Listing Agent, I would not accept that as "fact."  

    Comment:   Even if this were true and there was no Agency contract between Seller and the Listing Agent, I don't believe that would give the Listing Agent, still acting as an Escrowee, the legal and/or ethical right to release Earnest Money to you without the Seller's written permission.

    Question: Does this mean that the Listing Agent is stating that they did have to get a signed release from the Seller because there was no Agency agreement between the two of them?

    Comment:   Personally, and I could be wrong, but I think the Listing Agent did get the Seller to sign a release of Earnest Money (which might include an admission that Seller agrees that the Contract is cancelled) and now the Seller has remorse and regrets their decision.

    Good luck.

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    Change in my question above:

    Question:   Does this mean that the Listing Agent is stating that they did NOT have to get a signed release from the Seller because there was no Agency agreement between the two of them?

    Account Closed
    • San Jose, CA
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    Account Closed
    • San Jose, CA
    Replied
    Originally posted by @Account Closed:
    Originally posted by @Ben I.:
    Originally posted by @Tchaka Owen:
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:

    I agree with Brie as far as involving your agent and broker. Also, a lot of people are all talk about suing...merely hoping to scare you. IF you are sure you followed your contract, you have nothing to worry about. Just let them know you'll countersue for fees (and maybe more). No matter how this goes, my strong recommendation is that you do not speak with the sellers attorney. Now, re-read that last sentence. There's nothing you will say to him/her that will help your case. You may think it will, but it won't. If they want to sue, let them. At that point you can involve an attorney. Until then, be cool. 

    That last part: "Until then, be cool" is very hard to do. Maybe because this is the first time someone has threatened to sue me. I'm stressing out over here because I really don't want to deal with something like this. I guess even writing all of this isn't a good idea as all of this can be used by their lawyer. Maybe I need to call in a favor with some of the moderators to shut this down?

    How much is at stake? They can only sue for damages and they have to prove they were damaged. It will take them about $20,000 to $25,000 to litigate a situation like this. If the damages aren't significantly higher than that, it is unlikely a lawyer would take it to a lawsuit level. The lawyer may send you a letter threatening all kinds of things, but it usually ends there.

    If for some inexplicable reason the lawyer decides to file a lawsuit, (highly unlikely from what you've described here) you will receive a "Complaint" (a serious looking document with all kinds of court stamps on it). Make a copy to hang on the wall in your office (you are now officially a real estate investor) and make sure you respond in writing in the time allowed. You usually get 20 days to 30 days to respond. Normally your response is something like, "did not happen" or "I have no knowledge of that" or " I refute that supposition". Pretty simple stuff. Then you just go on with life. There is nothing more to do at that point once you respond. It's up to them to prove it and it's going to cost them a lot of money and hassle to try. 

    Next they have to send you interrogatories (written questions you answer and send back.) Wait until the last day to send it back. There is nothing more to do at that point other then to respond. This back and forth part takes about 6 months. They will become broke and bored and simply go away.  They will be advised that no matter how much they were "wronged" they don't appear to have any or much in terms of damages.

     It truly is a "game" attorneys play to make the uninformed think they have to jump through hoops and pay lots of money. And although you have to play by the rules, the rules are simply to answer the questions (vaguely), and to respond on time, dragging out your responses for the time allotted.

    It gets old and boring and they learn that they are not able to frighten you and they should have spent their money and time buying another investment property or finding a different buyer or doing whatever it was they were originally trying to do.

    This post is absolutely brilliant.  You are my hero.

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    Account Closed
    • San Jose, CA
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    Account Closed
    • San Jose, CA
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    Originally posted by @Ben I.:
    Originally posted by @Tchaka Owen:
    Originally posted by @Brie Schmidt:
    Originally posted by @Ben I.:

    I agree with Brie as far as involving your agent and broker. Also, a lot of people are all talk about suing...merely hoping to scare you. IF you are sure you followed your contract, you have nothing to worry about. Just let them know you'll countersue for fees (and maybe more). No matter how this goes, my strong recommendation is that you do not speak with the sellers attorney. Now, re-read that last sentence. There's nothing you will say to him/her that will help your case. You may think it will, but it won't. If they want to sue, let them. At that point you can involve an attorney. Until then, be cool. 

    That last part: "Until then, be cool" is very hard to do. Maybe because this is the first time someone has threatened to sue me. I'm stressing out over here because I really don't want to deal with something like this. I guess even writing all of this isn't a good idea as all of this can be used by their lawyer. Maybe I need to call in a favor with some of the moderators to shut this down?

    You haven't said anything here that a lawyer can use to prove you signed a contract or that your money wasn't given back to you.  And that's all that matters.

    He or she might see that you were nervous, and they might then try contacting you to try to bluff you.  But, you know what to do about that now - nothing :-) 

    Account Closed
    • Investor
    • Milwaukee, WI
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    Account Closed
    • Investor
    • Milwaukee, WI
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    Originally posted by @Account Closed:

    In real estate law, you must have a signed contract.  Verbal agreements aren't legal.  

    Also, to form a contract, there has to be an offer, an acceptance, and consideration (in this case your earnest money).  Since your money was given back to you, that also shows an agreement was never finalized.

    So, they don't have a leg to stand on.

    I'm guessing the seller is actually attempting to sue the agent, and the agent is hoping to put the deal back together.

    So, I'd say no to giving your contact info to their lawyer and then just tell your agent you're not going to do anything.  If they actually are foolish to file a lawsuit, you'll see them in court and you'll also be asking for all of your attorney fees.  And then, I'd stop talking to the agent, too, because I wouldn't be too sure the agent is on your side anymore and is trying to cover his butt by trying to put the deal back together, too.

    Then, if they actually do serve you with a lawsuit, then contact a lawyer.  But, I see no reason to pay for a lawyer unless that actually happens, which I very seriously doubt, because their lawyer knows he doesn't have a case.  He's hoping to bluff you into a deal.

     Careful now. Wisconsin is a state that recognizes a verbal contract, so the general comment that verbal contracts are not legal is false.

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    Brie Schmidt
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    • Real Estate Broker
    • Chicago, IL
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    Brie Schmidt
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    • Real Estate Broker
    • Chicago, IL
    ModeratorReplied
    Originally posted by @Ben I.:

    Hiya all. Well here's my situation. 

    I wanted to buy a second rental property after we moved to Hawaii for work and became bankable again. I was planning on using the HELOC money from our first rental as the downpayment. I found an agent here on BP from Wisconsin because I wouldn't buy in Hawaii and I wanted to get out of Illinois because the taxes were too high.

    So I found a gut rehabbed 2 flat in Milwaukee Wisconsin. I put an offer and it was accepted. I sent the earnest money in time and scheduled the inspection. During the inspection, we found out much of the work was done poorly, including plumbing that didn't lead anywhere. We weren't able to inspect the electrical system because it was turned off from the main. There were other little things, but once I saw the basement walls I knew I didn't want it. Signs of water intrusion, shear wall cracks and a horizontal crack on all 4 walls. So I told my agent to let them know that unfortunately there were too many things wrong with the property and I have to use my inspection contingency to get out of the contract. 

    The agent told me the sellers don't want to cancel and have a right to make repairs. So I asked him to make a list with all the mistakes on the inspection. He did and we sent that over. Apparently, the sellers had three days to get back to us about these repairs but didn't until 8 or 9 days later. At that point, they said we need a structural engineer to inspect the property if we wanted them to address the structural issues. They said they'll fix the rest. I'm not sure if they did or didn't because they took too long to even reply. When my agent told them that the contract is void because they didn't have the standard 10 days to reply, but 3 according to our contract, they said they are going to sue us. 

    They dragged out the threats for two months. In the meantime, I ended up buying a rental in Chicago. I found out that the sellers and the selling agent's firm didn't have a contract signed so the agency sent me my earnest check back. I thought it was all done until I got a call from the agent today asking if he can give the lawyer my number. 


    I really don't have money to hire a lawyer right now and am unsure what to do. I always thought that if you operated fairly and honestly you wouldn't need to lawyer up and try to protect yourself. What do you think I should do? Should I hire a lawyer to speak with this lawyer on my behalf? I am honestly thinking about representing myself if this turns out to be a real lawsuit. If you have a good lawyer for Wisconsin, please let me know. 


    All in all, our next step into real estate wasn't as good as I thought it would be. Bad things can and do happen. I will keep you updated on how this turns out because this can honestly happen to anyone. 

    Thank you.

    Ben- I think I found the problem.  I pulled up the WI contract and it states the seller has 10 days to decide to fix the problems, so you definitely need to get your agent and their broker involved 

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