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Updated almost 5 years ago, 02/20/2020
Seller attempting to sue me for not buying property.
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.
Originally posted by @Ben I.:
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 don't believe they can have it on the market and go under contract with someone else if they are still under contract with you. I think they have to release you from the contract.
Also, your contract should say Specific Performance or Liquidated Damages. Specific Performance is where they can force you to perform, or buy the house. If it isn't checked, they are limited to Liquidated Damages, which is typically the earnest money.
I'm not licensed in WI and haven't sold a house there since 2012, so this is based on my CO license and that state's laws.
I would also put this on YOUR agent's lap and ask them and their broker for guidance.
Originally posted by @Mindy Jensen:
Originally posted by @Ben I.:
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 don't believe they can have it on the market and go under contract with someone else if they are still under contract with you. I think they have to release you from the contract.
Also, your contract should say Specific Performance or Liquidated Damages. Specific Performance is where they can force you to perform, or buy the house. If it isn't checked, they are limited to Liquidated Damages, which is typically the earnest money.
I'm not licensed in WI and haven't sold a house there since 2012, so this is based on my CO license and that state's laws.
I would also put this on YOUR agent's lap and ask them and their broker for guidance.
Well, the contract says this:
If buyer defaults, seller may:
1. Sue for specific performance and request the earnest money as partial payment of the purchase price; or
2. terminate the offer and have the option to: (a) request the earnest money as liquidated damages; or (b) sue for actual damages
If seller defaults, buyer may:
1. sue for specific performance; or
2. Terminate the offer and request the return of the earnest money, sue for actual damages, or both.
I guess it says both things? I'm unsure how this affects anyone.
I saw a post that included a screenshot of the contract, stating you can cancel if the seller does not get back to you within the correct timeframe, which it sounds like he absolutely did not.
I know it's scary the first time someone SAYS they're going to sue you. It's even MORE scary when they actually DO file a lawsuit.
You followed the contract. It doesn't matter that he didn't know about the deadline or any other reason he may have had for not following the contract. While I am not an attorney, I would find it difficult to believe that any judge would find in his favor or that he would even find an attorney to file the lawsuit.
Originally posted by @Mindy Jensen:
I saw a post that included a screenshot of the contract, stating you can cancel if the seller does not get back to you within the correct timeframe, which it sounds like he absolutely did not.
I know it's scary the first time someone SAYS they're going to sue you. It's even MORE scary when they actually DO file a lawsuit.
You followed the contract. It doesn't matter that he didn't know about the deadline or any other reason he may have had for not following the contract. While I am not an attorney, I would find it difficult to believe that any judge would find in his favor or that he would even find an attorney to file the lawsuit.
Seeing how the lawyer hasn't even made any effort to call me back, I take it you are right. I'm not losing any sleep over it after reading how many people have gone through something similar.
Originally posted by @Ben I.:
Originally posted by @Mindy Jensen:
Originally posted by @Ben I.:
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 don't believe they can have it on the market and go under contract with someone else if they are still under contract with you. I think they have to release you from the contract.
Also, your contract should say Specific Performance or Liquidated Damages. Specific Performance is where they can force you to perform, or buy the house. If it isn't checked, they are limited to Liquidated Damages, which is typically the earnest money.
I'm not licensed in WI and haven't sold a house there since 2012, so this is based on my CO license and that state's laws.
I would also put this on YOUR agent's lap and ask them and their broker for guidance.
Well, the contract says this:
If buyer defaults, seller may:
1. Sue for specific performance and request the earnest money as partial payment of the purchase price; or
2. terminate the offer and have the option to: (a) request the earnest money as liquidated damages; or (b) sue for actual damages
If seller defaults, buyer may:
1. sue for specific performance; or
2. Terminate the offer and request the return of the earnest money, sue for actual damages, or both.
I guess it says both things? I'm unsure how this affects anyone.
It's just saying that both sides have the same rights - if one side doesn't fulfill their end, the other side can terminate their offer or sue for actual damages. Actual damages is real out of pocket expenses caused by the other side.
So, for instance, the seller would have to prove that you actually cost him money by not going through with the sale. Not likely. There's way more to it than that, but as far as just this clause, that's what it's saying.
But, you never had a contract, because you never signed. In real estate, contracts must be in writing - including a signature. No signature, no contract. No contract - no right to sue to enforce it.
Plus, you were given your money back. No seller, in any kind of contract whatsoever, gets to give a customer back their money for something, and then sue them to force them to buy it again.
No need to drive yourself crazy anymore. If they actually file a lawsuit, which is very doubtful, then get a lawyer. But, for the seller to get a lawyer, the lawyer's first question is going to be, let me see the signed contract...
I've been sued for unjust BS that went nowhere. It's almost a right of passage these days.
This thread reminded me of the contract law class I took in MBA school. The professor said "You can see your neighbor for being ugly. Ain't gonna go anywhere, but you can sue".
Originally posted by @Jack B.:
I've been sued for unjust BS that went nowhere. It's almost a right of passage these days.
There aren't many things I don't like about living here, but this attitude of your fellow neighbors wanting to sue is jacked up. I've heard people say that someone was lucky to get hit by a car because they can sue and get rich. Fundamentally, that's messed up when society thinks that way. Just my 2 cents.
Originally posted by @Ben I.:
Originally posted by @Jack B.:
I've been sued for unjust BS that went nowhere. It's almost a right of passage these days.
There aren't many things I don't like about living here, but this attitude of your fellow neighbors wanting to sue is jacked up. I've heard people say that someone was lucky to get hit by a car because they can sue and get rich. Fundamentally, that's messed up when society thinks that way. Just my 2 cents.
Welcome to 2020. One of my colleagues told me his mom's neighbor let her borrow their ladder. She then fell off the ladder and sued, got 200K settlement. She broke her legs.
One of my employees told me her daughter was in a car accident. She got 250K for her "hand injury". I've met her daughter. Her hand is fine....
A piece of crap colleague claimed he hurt his back trying to sit down in his chair because someone lowered it...funny thing is he never said anything to anyone and has had back pain ever day for YEARS prior to this, get's up and complains about back pain and does stretches daily for years in front of everyone...then claims his back pain is as a result of someone lowering his chair. He is a piece of crap human being...
It's American culture. Something for nothing. In 1996, out of all the law suits filed around the world, 92% of them were filed here in the US...spill a cup of coffee on yourself and become a millionaire...
Originally posted by @Jack B.:
Originally posted by @Ben I.:
Originally posted by @Jack B.:
I've been sued for unjust BS that went nowhere. It's almost a right of passage these days.
There aren't many things I don't like about living here, but this attitude of your fellow neighbors wanting to sue is jacked up. I've heard people say that someone was lucky to get hit by a car because they can sue and get rich. Fundamentally, that's messed up when society thinks that way. Just my 2 cents.
Welcome to 2020. One of my colleagues told me his mom's neighbor let her borrow their ladder. She then fell off the ladder and sued, got 200K settlement. She broke her legs.
One of my employees told me her daughter was in a car accident. She got 250K for her "hand injury". I've met her daughter. Her hand is fine....
A piece of crap colleague claimed he hurt his back trying to sit down in his chair because someone lowered it...funny thing is he never said anything to anyone and has had back pain ever day for YEARS prior to this, get's up and complains about back pain and does stretches daily for years in front of everyone...then claims his back pain is as a result of someone lowering his chair. He is a piece of crap human being...
It's American culture. Something for nothing. In 1996, out of all the law suits filed around the world, 92% of them were filed here in the US...spill a cup of coffee on yourself and become a millionaire...
It's a tragedy this is how things are. I hope this trend stops but I won't hold my breath.
@Ben I. When I write offers for myself or clients, I select that Sellers 'may not' be allowed to make repairs. It's easier to change it later if you decide to let the seller make repairs. It can be difficult to make that change in reverse. If you were going to walk away after the inspection your agent should have sent the Cancellation and Mutual Release along with the Notice of Defects. Hopefully they did that for you. Also, just because an attorney calls you and tries to scare they cannot force you to do anything; especially if they haven't filed suit. If you didn't do anything wrong, tell the attorney to pound sand! If they actually file suit, then you will need to contact a real estate attorney.
-Troy
Originally posted by @Troy Owen:
@Ben I. When I write offers for myself or clients, I select that Sellers 'may not' be allowed to make repairs. It's easier to change it later if you decide to let the seller make repairs. It can be difficult to make that change in reverse. If you were going to walk away after the inspection your agent should have sent the Cancellation and Mutual Release along with the Notice of Defects. Hopefully they did that for you. Also, just because an attorney calls you and tries to scare they cannot force you to do anything; especially if they haven't filed suit. If you didn't do anything wrong, tell the attorney to pound sand! If they actually file suit, then you will need to contact a real estate attorney.
-Troy
What you normally do, is what I will do from now on. The lawyer never made contact and I'm not concerned about this anymore. I've moved on.