Buying & Selling Real Estate
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
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.
Contact Atty Taylor Rens--he is a MIlwaukee real estate attorney----I was speaking to a couple investors and he just helped them with similar situations but in their case, the sellers were trying to back out.
My two cents as a two-penny wannabe lawyer are this. You have little to worry about. Of course being threatened with a lawsuit is worrisome. Of course actually being named in a lawsuit is even more worrisome. But IMO, they have no case.
For starters they have to prove damages. What damages??? At best, they "suffered" a delay. The "damages" in this cases are highly subjective because, nobody can predict and therefore prove the future. Anything could have happened. So how does one go about quantifying damages in a meaningful way when what those damages are, and if they are even valid in the first place, is subjective? Now, I'm not saying a clever lawyer can't figure out how to make, argue and win a case like that, but I do know clever lawyers cost a lost of money and they typically don't work for free or only if they win in these cases. Therefore, and as others have already pointed out, it will likely cost more money to litigate this than it will cost for any damages awarded (emphasis on the word awarded). And even if they push for legal fees as damages, again they have to actually win AND the court has to side in their favor of legal fees. That's a lot of gambling if you ask me.
Then lets think about their case. What case? Contracts serve both parties and are in place for exactly the reasons you are experiencing - it's actually a way to perform a good faith agreement, and the first example of good faith is the willingness to enter into a written binding contract. Contracts exist to avoid court, not as a tool to go to court, though of course they become an extremely significant piece of evidence once you get to court. Why?
If you end up in court, it's because two parties can't seem to resolve an issue among themselves. This is a service provided by our society, and is a burden on our tax dollars. Many courts are subsequently not keen on the idea of frivolous lawsuits, and often throw stuff out really fast for that very reason. Of course that all depends on the specific court.
Your contract, entered into by both parties in good faith, and my opinion concerning the validity of the contract is this, if you and the seller signed the contract, it's valid. The relationship either of you had with your respective agents is a separate agreement, which you will notice includes a separate contract. While the agents might get dragged into this as material players, and they are subject to over-sight and discipline from the regulatory environment that governs their license, any issue you or the seller have with your respective agents would need to be addressed as a separate case.
You stated your contract was one that was a) entered into by both parties (do you have a written contract signed by you and the seller? Do you have anything additional that reflects the actions made with respect the the repair issue that came up later?), b) included a repair contingency that provided the seller the option to repair any defects (don't do that ever again) and c) had a timeline in which the seller was to respond (time is of the essence, I'm assuming your agents all used the standard WB-11 or, any contract that was written by anyone competent will have that as a condition).
Seems to me it is as you say. The seller had 3 days to respond with respect to their decision to repair or not repair. This is really IMO where this one hinges. There is a difference between providing a response to if they are going to repair and responding to how or when they are going to repair. If they got back to you and said, "yes, we are going to make the repairs" AND you have that in writing, then they might have leg to stand on. If they did not give you an answer if they were going to exercise their option or not, then they did not honor the time is of the essence clause and you had the right to exercise your option to walk away.
If it were me, I would be reading that contract and comparing what the contract says to what actually happened and what can be proven. This is what the court is going to do too. DO NOT respond to any phone calls, DO NOT provide ANY information whatsoever to ANYONE. Tell that agent of yours you will SUE THEM and REPORT THEM if they provide your information to anyone. (You might not actually be able to sue the realtor, for the same reasons it will be difficult to sue you, but your threats will have exactly the same affect on the realtor that the threats being made against you will have, is they will think twice about it).
Based on what you've stated and my two-cent understanding of the law, I don't think they have a case. The agents didn't think so either as the earnest money was returned however, you mentioned some nonsense about the seller not having a contract with their agent??? Good grief. Maybe what is really happening is the seller is furious with their agent and they are mistakenly taking it out on you. People are stupid sometimes and react in silly ways, in fact it happens all the time.
Finally, after my first advice of do and say nothing, if you do receive paperwork from a lawyer, do not delay and take that paperwork straight to your lawyer and go from there. IMO, there is nothing to worry about until that happens and even if that does happen, I don't think there is anything to worry about, save this is going to cost a couple hundred in legal fees at that point.
Finally, this advice is based on what you have said here. I'm not trying to be a jerk, but frankly I don't trust that facts have been presented as they really are. I say this because people accidentally mess up the facts all the time, and it is in fact, the facts, that will ultimately determine the outcome. This is why the lawyers on here are advising the first thing you do is get a lawyer. They deal with people who can't get it all straight all day long, it's one big reason they're in business!
So, get your facts straight and move forward (and maybe that means do nothing) from there.
Good luck!
PS - Hey Chicago cousins, I'm not really feeling the love from a couple of those passive-aggressive insinuations that WI agents are all a bunch of dippys. If y'all want to have a discussion on all the unsubstantiated outrageous generalizations each of our regions has concerning the other, we can do that. But I warn you will lose the one where we talk about which region has a long and documented history of being corrupt. Love ya FIB's! LOL (Me mum's side is from Chicagoland too.)
Originally posted by @Brie Schmidt:
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
Boom. There you go. I wish I had read this post before I wrote my novel. Thanks for digging this up! Call your lawyer OP.
@Ben I. tell your agent they cannot share your phone number or any of your contact information with the attorney. If they want to find you, make them work for it. You may be able to avoid this simply by not talking to them.
I would also encourage you to read your contract carefully. I found this standard contract on the WI website, but it doesn't match what Brie shared, so I don't know if this is the right contract. Assuming this is the right contract, there are two sections to look carefully at:
217 Right to Cure
This section gives you the option in your offer of choosing if the seller has rights to cure and you can fill in the number of days. If left blank it defaults to 10 days. This is probably the critical point as whether they failed to perform on the contract.
490 Default
This section explains what happens if the contract goes into default. The seller or buyer have rights to the earnest money, depending on who breaches. The fact they returned the money to you already helps your case, because they need to prove it was returned in error. The sellers agent seems to acknowledge your rights to the money by returning it.
My comments are based on this contract from the WI state website. Read your specific contract:
https://dsps.wi.gov/Documents/BoardCouncils/REB/Forms/WB11202001.pdf
I would avoid contact until such time you are served court papers. At that time, hire an attorney. Do not represent yourself. My guess is it will go away and I would not spend money defending myself until necessary.
@Joe Splitrock - FYI that version is new and mandated to use as of 1-1-20 but it was available to use as on 11-1-19 so it would depend on how long ago this situation occurred (sounds like it has been months) and if it was recently what contract they used
- Brie Schmidt
- Podcast Guest on Show #132
@Ben I. You are getting some solid advice so I will just make some comments hopefully about lessons learned.
1. What the contract says trumps everything. You should follow it to the letter and require them to follow it to the letter. If someone is exceeding a time limit in the contract, there needs to be a specific agreement. No matter how small.
2. Lawyers should handle real estate contracts, not Realtors. You are far far too dependent on your Realtor for things he likely has no training in. Realtors are sales people....PERIOD. They are not lawyers. Prime example is yours asking if he can share your contact info with the lawyer wanting to sue you. That shows how clueless he is. Their job is not to protect you legally or to do inspections or give financial or tax advice or any of that stuff. You need an inspector and a lawyer for every transaction. The lawyer (not the realtor) is the one who makes or sends the inspection list, and gets agreements signed to extend deadlines, etc.
3. You can't afford NOT to hire a lawyer. If you can afford to buy a rental property you can afford to hire a lawyer.
4. You can't avoid lawsuits by always being "fair" and "honest". That is not the world you live in.
5. Know the laws of the state you are investing in. They are not all the same.
6. Long distance investing invites issues like these. So be prepared for more on all your deals.
7. People threaten a lot of stuff that they don't intend to actually do.
I am sure this will work out fine. You dodged a bullet on a bad reno it sounds like.
Wow! So much great feedback to you! I agree 100% with everything Mike M. typed to you. I would also add that you have nothing to worry about. I've been in this situation a couple of times on both sides of the table both personally and with clients. The super fact that nobody is mentioning here is this....if they sue you, the property is tied up! The cannot sell it until the lawsuit is over and the courts have decided if you are held to specific performance or let off the hook. This will cost them WAY more than any sane person should be willing to spend to get revenge in court.
Anyways, don't spend another minute thinking about anything unless the lawsuit is filed and you are served with a formal complaint. And never ever speak to their attorney about anything....do not let your number be given to the seller or their people.
I also have a thought on the whole agency thing. If they truly did not have an agency agreement with the listing broker, AND you didn't have a buyer's agency agreement with your agent's broker, then your agent also had no agency with you to even legally write the offer. In the abscense of a buyer agency agreement, the selling broker relies on the cooperative broker agreement based off of the listing broker's agency agreement with the seller (and legally works for the seller...not you). So then this whole thing is a mess and likely not a legal contract no matter what. The brokers can be sued for acting as an attorney since WI only allows them to fill out the legal contracts based on their agency agreements...it is otherwise acting as an attorney without a license. The real estate license is not a legal license...it's a license to simply fill in the blanks of WI state approved documents once there is a legal agency agreement between the parties. Also, the broker cannot legally take the earnest money without an agreement and cannot legally disburse it without a signed Cancellation and Mutual Release from the seller with instructions of amount and where it is being sent. Sounds like some brokers are in hot water to me!
I'm not an attorney, and these are just things I've been a party to. My 2 cents is to not sweat it unless it becomes a real thing.
Breathe!
Jacci
- Realtor, General Contractor, and Developer
- Redding, CA & Bend OR
- 4,154
- Votes |
- 7,620
- Posts
@Ben I. Here in CA you have the inspection period for all inspections and if anything shows up you don't like, you can cancel, OR ask for repairs. If they refuse to do repairs, then you can cancel.
It seems as though you were within your bounds, and they couldn't perform. However; we don't have a copy of your contract and can only guess
Your broker needs to deal with this. They were the ones that should have made all requests, filled out contingency releases if necessary, etc. Email them.
I don't know your laws, or contracts. There's usually a clause for arbitration, and if so, hopefully you can do that. But talk to your broker first, then attorney if he can't handle it.
- Karen Margrave
If both parties were represented by Brokerages, did you escalate the matter to the Brokers first? Both companies should have in-house representation to review the contracts and see if the matter was terminated lawfully according to the written contracts. In Texas, you would head to mediation first, not lawsuits. Curious how Wisconsin contracts work.
- Ryan Kelly
@Ben I. Dam Ben I'm sorry it sounds very unfair to me I had a similar situation I've had to fly out the Florida it cost me at $1000 the property look nothing like it did in the pictures what saved me mostly I was backing out anyway because it needed too much work and the appraisal sell short thank God it cost me over 1000 But in the long run saved me hundreds and a lot of headache and he took his sweet time returning the $3000 earnest deposit back but he did so I understand you're pain I'm curious to is he fell short of the 3 days or whatever's written in the contract I don't know why he got an attorney I don't know what he thinks unless he has a relative that's doing it for free
In TN, it's pretty simple: do you have an EMD Disbursement/Release form (whatever the local name for it is) and if so, who all is it signed by? Should be both Agents, both Buyer and Seller, and both Brokers. Look through your docs and see if you signed one; if you don't have a copy then take better records in the future, then reach out to the Agent and ask for one.
With this signed and acknowledged by all parties then it's literally a mutual dissolution of the contract and all parties move on, so there's not much they can do.
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 is gold. Thank you
Originally posted by @Kim Knox:
@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.
Thank you for your reply. This was the only house I offered on. It wasn't until a few weeks after the inspection that I found another property to buy. We did have a signed offer letter and were under contract. Why the agency didn't cash my check, I have no idea. They just sent it back after realizing that they were never under contract with the seller. Upon further research, these sellers are now on their third agent/agency.
OK so in this situation would it be possible for the seller to sue the buyer for specific performance? Or breach of contract? Would the brokerage's E&O insurance step in if the agent was found to have given incorrect advice?
Originally posted by @Clint Votruba:
No, the agent told me he will make a list of the repairs needed based on the inspection report. It didn't seem like we had an option since they checked off the right to make repairs in the contract. We gave them three days to get back to us and they didn't. Here is where I believe the mistake was made on the seller's part. I don't think his agent read the contract well. The old Wisconsin contract (See what Brie posted below) had 10 days to respond, but the new contract we signed allowed for a number of days to be written in. See below. I don't think the agent knew so he advised his client wrong. In which case, they should try suing the agent, not me.
Question: Who contacted your Agent asking for your number? The now "uninvolved" Listing Agent?
No seller's lawyer contacted my agent.
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."
Well for one they changed the listing to a new agency and agent. We also have written communication between the brokers stating they never had a signed contract with the seller. They also mailed me back my earnest money check.
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?
I am unsure if they got a signed release from the seller.
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?
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 :-)
They can't make the case that the earnest wasn't given back because I have the check.
Originally posted by @Brie Schmidt:
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
That was the case when you bought a few years ago, but they changed the contract. We used the new contract. It looks like this.
Originally posted by @Account Closed:
My two cents as a two-penny wannabe lawyer are this. You have little to worry about. Of course being threatened with a lawsuit is worrisome. Of course actually being named in a lawsuit is even more worrisome. But IMO, they have no case.
For starters they have to prove damages. What damages??? At best, they "suffered" a delay. The "damages" in this cases are highly subjective because, nobody can predict and therefore prove the future. Anything could have happened. So how does one go about quantifying damages in a meaningful way when what those damages are, and if they are even valid in the first place, is subjective? Now, I'm not saying a clever lawyer can't figure out how to make, argue and win a case like that, but I do know clever lawyers cost a lost of money and they typically don't work for free or only if they win in these cases. Therefore, and as others have already pointed out, it will likely cost more money to litigate this than it will cost for any damages awarded (emphasis on the word awarded). And even if they push for legal fees as damages, again they have to actually win AND the court has to side in their favor of legal fees. That's a lot of gambling if you ask me.
Then lets think about their case. What case? Contracts serve both parties and are in place for exactly the reasons you are experiencing - it's actually a way to perform a good faith agreement, and the first example of good faith is the willingness to enter into a written binding contract. Contracts exist to avoid court, not as a tool to go to court, though of course they become an extremely significant piece of evidence once you get to court. Why?
If you end up in court, it's because two parties can't seem to resolve an issue among themselves. This is a service provided by our society, and is a burden on our tax dollars. Many courts are subsequently not keen on the idea of frivolous lawsuits, and often throw stuff out really fast for that very reason. Of course that all depends on the specific court.
Your contract, entered into by both parties in good faith, and my opinion concerning the validity of the contract is this, if you and the seller signed the contract, it's valid. The relationship either of you had with your respective agents is a separate agreement, which you will notice includes a separate contract. While the agents might get dragged into this as material players, and they are subject to over-sight and discipline from the regulatory environment that governs their license, any issue you or the seller have with your respective agents would need to be addressed as a separate case.
You stated your contract was one that was a) entered into by both parties (do you have a written contract signed by you and the seller? Do you have anything additional that reflects the actions made with respect the the repair issue that came up later?), b) included a repair contingency that provided the seller the option to repair any defects (don't do that ever again) and c) had a timeline in which the seller was to respond (time is of the essence, I'm assuming your agents all used the standard WB-11 or, any contract that was written by anyone competent will have that as a condition).
Seems to me it is as you say. The seller had 3 days to respond with respect to their decision to repair or not repair. This is really IMO where this one hinges. There is a difference between providing a response to if they are going to repair and responding to how or when they are going to repair. If they got back to you and said, "yes, we are going to make the repairs" AND you have that in writing, then they might have leg to stand on. If they did not give you an answer if they were going to exercise their option or not, then they did not honor the time is of the essence clause and you had the right to exercise your option to walk away.
If it were me, I would be reading that contract and comparing what the contract says to what actually happened and what can be proven. This is what the court is going to do too. DO NOT respond to any phone calls, DO NOT provide ANY information whatsoever to ANYONE. Tell that agent of yours you will SUE THEM and REPORT THEM if they provide your information to anyone. (You might not actually be able to sue the realtor, for the same reasons it will be difficult to sue you, but your threats will have exactly the same affect on the realtor that the threats being made against you will have, is they will think twice about it).
Based on what you've stated and my two-cent understanding of the law, I don't think they have a case. The agents didn't think so either as the earnest money was returned however, you mentioned some nonsense about the seller not having a contract with their agent??? Good grief. Maybe what is really happening is the seller is furious with their agent and they are mistakenly taking it out on you. People are stupid sometimes and react in silly ways, in fact it happens all the time.
Finally, after my first advice of do and say nothing, if you do receive paperwork from a lawyer, do not delay and take that paperwork straight to your lawyer and go from there. IMO, there is nothing to worry about until that happens and even if that does happen, I don't think there is anything to worry about, save this is going to cost a couple hundred in legal fees at that point.
Finally, this advice is based on what you have said here. I'm not trying to be a jerk, but frankly I don't trust that facts have been presented as they really are. I say this because people accidentally mess up the facts all the time, and it is in fact, the facts, that will ultimately determine the outcome. This is why the lawyers on here are advising the first thing you do is get a lawyer. They deal with people who can't get it all straight all day long, it's one big reason they're in business!
So, get your facts straight and move forward (and maybe that means do nothing) from there.
Good luck!
PS - Hey Chicago cousins, I'm not really feeling the love from a couple of those passive-aggressive insinuations that WI agents are all a bunch of dippys. If y'all want to have a discussion on all the unsubstantiated outrageous generalizations each of our regions has concerning the other, we can do that. But I warn you will lose the one where we talk about which region has a long and documented history of being corrupt. Love ya FIB's! LOL (Me mum's side is from Chicagoland too.)
Thank you for that. Very helpful! I believe you are right. This whole thing hinges on them not responding to our repair requests within the provided window. See the section from our contract that stated they had 3 days.
It says at the bottom that the offer will be null and void if the seller doesn't timely deliver the written notice of election to cure. Seems very clear to me. If it weren't I wouldn't be putting this on a public forum. What do you think?
Originally posted by @Joe Splitrock:
@Ben I. tell your agent they cannot share your phone number or any of your contact information with the attorney. If they want to find you, make them work for it. You may be able to avoid this simply by not talking to them.
I would also encourage you to read your contract carefully. I found this standard contract on the WI website, but it doesn't match what Brie shared, so I don't know if this is the right contract. Assuming this is the right contract, there are two sections to look carefully at:
217 Right to Cure
This section gives you the option in your offer of choosing if the seller has rights to cure and you can fill in the number of days. If left blank it defaults to 10 days. This is probably the critical point as whether they failed to perform on the contract.
490 Default
This section explains what happens if the contract goes into default. The seller or buyer have rights to the earnest money, depending on who breaches. The fact they returned the money to you already helps your case, because they need to prove it was returned in error. The sellers agent seems to acknowledge your rights to the money by returning it.
My comments are based on this contract from the WI state website. Read your specific contract:
https://dsps.wi.gov/Documents/BoardCouncils/REB/Forms/WB11202001.pdf
I would avoid contact until such time you are served court papers. At that time, hire an attorney. Do not represent yourself. My guess is it will go away and I would not spend money defending myself until necessary.
You got to it before I did. We wrote in three days in that section.
What do you think? Is this clear now or is there an angle they can chip at?
Originally posted by @Brie Schmidt:
@Joe Splitrock - FYI that version is new and mandated to use as of 1-1-20 but it was available to use as on 11-1-19 so it would depend on how long ago this situation occurred (sounds like it has been months) and if it was recently what contract they used
We put an offer at the end of November so it was valid.
Originally posted by @Eric M.:
@Ben I. You are getting some solid advice so I will just make some comments hopefully about lessons learned.
1. What the contract says trumps everything. You should follow it to the letter and require them to follow it to the letter. If someone is exceeding a time limit in the contract, there needs to be a specific agreement. No matter how small.
2. Lawyers should handle real estate contracts, not Realtors. You are far far too dependent on your Realtor for things he likely has no training in. Realtors are sales people....PERIOD. They are not lawyers. Prime example is yours asking if he can share your contact info with the lawyer wanting to sue you. That shows how clueless he is. Their job is not to protect you legally or to do inspections or give financial or tax advice or any of that stuff. You need an inspector and a lawyer for every transaction. The lawyer (not the realtor) is the one who makes or sends the inspection list, and gets agreements signed to extend deadlines, etc.
3. You can't afford NOT to hire a lawyer. If you can afford to buy a rental property you can afford to hire a lawyer.
4. You can't avoid lawsuits by always being "fair" and "honest". That is not the world you live in.
5. Know the laws of the state you are investing in. They are not all the same.
6. Long distance investing invites issues like these. So be prepared for more on all your deals.
7. People threaten a lot of stuff that they don't intend to actually do.
I am sure this will work out fine. You dodged a bullet on a bad reno it sounds like.
You are definitely right that I cannot afford to not hire a lawyer. This isn't something I know how to handle on my own, clearly. If they do end up suing, I will definitely hire a lawyer. I spoke with one yesterday who said we will countersue if sued and he showed me why we have more of a case than they do.
Originally posted by @Jacci Konkle:
Wow! So much great feedback to you! I agree 100% with everything Mike M. typed to you. I would also add that you have nothing to worry about. I've been in this situation a couple of times on both sides of the table both personally and with clients. The super fact that nobody is mentioning here is this....if they sue you, the property is tied up! The cannot sell it until the lawsuit is over and the courts have decided if you are held to specific performance or let off the hook. This will cost them WAY more than any sane person should be willing to spend to get revenge in court.
Anyways, don't spend another minute thinking about anything unless the lawsuit is filed and you are served with a formal complaint. And never ever speak to their attorney about anything....do not let your number be given to the seller or their people.
I also have a thought on the whole agency thing. If they truly did not have an agency agreement with the listing broker, AND you didn't have a buyer's agency agreement with your agent's broker, then your agent also had no agency with you to even legally write the offer. In the abscense of a buyer agency agreement, the selling broker relies on the cooperative broker agreement based off of the listing broker's agency agreement with the seller (and legally works for the seller...not you). So then this whole thing is a mess and likely not a legal contract no matter what. The brokers can be sued for acting as an attorney since WI only allows them to fill out the legal contracts based on their agency agreements...it is otherwise acting as an attorney without a license. The real estate license is not a legal license...it's a license to simply fill in the blanks of WI state approved documents once there is a legal agency agreement between the parties. Also, the broker cannot legally take the earnest money without an agreement and cannot legally disburse it without a signed Cancellation and Mutual Release from the seller with instructions of amount and where it is being sent. Sounds like some brokers are in hot water to me!
I'm not an attorney, and these are just things I've been a party to. My 2 cents is to not sweat it unless it becomes a real thing.
Breathe!
Jacci
Well if it's true that the broker cannot send the money back without a signed agreement from the sellers, then they signed it and all this is a bluff. They even put the house back on the market after we told them the three days are up. For the sake of peace in my life, I hope this goes away. I'm not sweating because of the outcome (it seems pretty clear), but I don't want to waste my days dealing with people like this. I guess this comes with the territory.
Originally posted by @Randall Weatherall:
In TN, it's pretty simple: do you have an EMD Disbursement/Release form (whatever the local name for it is) and if so, who all is it signed by? Should be both Agents, both Buyer and Seller, and both Brokers. Look through your docs and see if you signed one; if you don't have a copy then take better records in the future, then reach out to the Agent and ask for one.
With this signed and acknowledged by all parties then it's literally a mutual dissolution of the contract and all parties move on, so there's not much they can do.
I was 100% not given one to sign. I will ask to see.
Originally posted by @Gina Cardarella:
@Ben I. Dam Ben I'm sorry it sounds very unfair to me I had a similar situation I've had to fly out the Florida it cost me at $1000 the property look nothing like it did in the pictures what saved me mostly I was backing out anyway because it needed too much work and the appraisal sell short thank God it cost me over 1000 But in the long run saved me hundreds and a lot of headache and he took his sweet time returning the $3000 earnest deposit back but he did so I understand you're pain I'm curious to is he fell short of the 3 days or whatever's written in the contract I don't know why he got an attorney I don't know what he thinks unless he has a relative that's doing it for free
I am also wondering if the lawyer if family/friends.
Originally posted by @Ryan Kelly:
If both parties were represented by Brokerages, did you escalate the matter to the Brokers first? Both companies should have in-house representation to review the contracts and see if the matter was terminated lawfully according to the written contracts. In Texas, you would head to mediation first, not lawsuits. Curious how Wisconsin contracts work.
We did and the brokerage lawyer said the contract is clear. They didn't want to give me any legal advice, obviously, they want to stay as far from this as possible.