Attorney Response Time - Is This Reasonable?

Question

In July 2011, I sold a SFR in a small town in NC. The selling price was $87,900 and the buyers had a downpayment of  $19k+. I financed the balance. The payments were to be made every 2 weeks (at their request, since that's how they were paid). The first payments were several weeks late. As time went by, they got to be a couple months behind. They never caught up or made any payments unless I wrote multiple letters. I had to pay the taxes and insurance (which were not factored into their mortgage payments). If/when I pestered them enough, they'd get caught up, only to fall behind again.

Because I was aggravated at having to write them letters constantly (including certified at $5+), I consulted the attorney I used to draw up the contract and do the closing. I had written my own contract, which the buyers signed prior to going to the attorney. In it, I had a 5% late fee penalty and it stipulated that the payments would increase from $250 to $300 after 52 weeks. My attorney said he had to rewrite it in legal terms, as it was written in layman's terms. Stupidly, I trusted him to recreate the same terms and I signed his 'legal' version at closing without reading it. (I know - dumb move - but he didn't have it prepared until closing and I trusted him).

When the issue of the late payments/fees came up, he informed me that he must have missed the late fee because he didn't include one in the promissory note and he said that his contract supersedes mine, so I'm not entitled to any late fees. Also, instead of increasing the payments after 52 weeks, he made it after 52 payments. Again, I did not notice this until it was too late.

So... the buyers were 3 payments past due and had not reimbursed me for the last homeowner's insurance I had paid (because I received a cancellation notice). I finally got fed up and asked my attorney to send them a letter. This was on Aug 20, 2012. I sent an email, as that's been the most effective way to communicate with him in the past.

When I hadn't heard anything for a week, I called his office to confirm he received my email. his paralegal said he did get it and was working on the file. She said he was busy that week because it was the end of the month, but when I told her I needed the money I was owed, she said she'd ask him to make it a priority.

I've sent email updates as payments were due/missed and also when I received another insurance cancellation notice. He responded on Sept 10 and asked me the amount of the pays due payments and the total they owed. I responded the same day. When I hadn't heard anything for a few days, I contacted him again and asked if he'd confirm he received the information and if he sent the letter yet. I received a reply yesterday saying he did get the info and has not sent them a letter yet, but he'd try to get something put together in the next few days.

Since I asked the attorney to intervene, the people have missed two more mortgage payments and an insurance payment. They're now 5 mortgage payments behind; I've made one insurance payment and will have to make another on Sept 24 to avoid a lapse.

I don't want to be unreasonably demanding of the attorney, as I really like him as a person. I've never been in this situation before, so I don't know if it's customary to wait more than a month for such a request. (???) This is a small town one-man office, if that makes any difference.

I also have a question about another house I sold/financed in June 2012. Three payments have been due ($1000/month) and each has been late. I made sure the late fee was included in this one, but I'm getting the 'lost in the mail' excuse. Is there any way to avoid this?

Many thanks for your time.

Joe Bertolino · Answer

Cindy,

This is a small southern town and you are a outsider female Yankee landlord... they all know each other and are playing dumb with you.  Ask the attorney if the "oversight" on his regarding the late fees would be covered by his errors and omissions policy as it sounds like an omission to me.  This will get his attention.  Then let him know if he cannot be more responsive you will have an outside lawyer review his work for a second set of eyes.   That will make him respond to this issue quickly but I am afraid you need an attorney that is not one of the local good ole boys.  Foreclose, sell it and invest in an area where you have more control.

Cindy McHugh · Answer

Ugh. Really? I had two realtors look at the house and I sold it within the range they suggested. It definitely wasn't overpriced and I had more than one person who wanted to buy it, but I went with these people because they had the biggest downpayment. But I guess the point was that they could challenge it. Where are the laws that protect us? Seems they have all the rights.

Live and learn. I never would have anticipated this mess.

Thanks again.

Carlos Flores · Answer

Watch them challenge the foreclosure, claim you sold them the house above market value, and go after that down payment.  Can they do that in NC you ask?  Get ahead of whatever might come your way so you'll be prepared ... and get a new attorney.

Cindy McHugh · Answer

I thought I'd post an update since you all were so kind to share your thoughts on the matter.

I contacted the attorney and told him that if he was too busy, I'd have someone else look over the file and handle it. He responded by  finally contacting the people (after six full weeks!). About two weeks later, they filed for bankruptcy.

My attorney said  not to worry because they'll either have to pay or I can foreclose, it's just delayed. He also said he may not be able to represent me in foreclosing because the buyers didn't have their own (separate) representation when they bought the house, we both used my attorney. After having to wait so long for the letter, I don't mind using another attorney myself if/when the time comes.

Thanks again.

Corey Dutton · Answer

I agree with Joe Bertolino. I don't think you're being unreasonable in wanting this taken care of in a timely manner. Good attorneys are usually busy and everyone always wants their issues handled immediately but in your case I think he's taking too long!!!

Ned Carey · Answer

I have little tolerance for professionals that ignore their Fiduciary duty. I think Joe Bertolino has given excellent advice. Ask about his errors and omissions insurance.

I had an attorney that did a closing and was totally unresponsive afterwards. He reacted quickly however when I left him a message saying I hope his E & O insurance is paid up because I got a demolition notice for the property I sold. I was served not the new owner because he hadn't recorded the deed.

Cindy McHugh · Answer

Hi Dave,

There was no agreed upon time frame. I had spoken with him about the problem at the closing in June and he said to let him know if I wanted him to get involved. So when I emailed on Aug 20, I detailed the payments they missed, including insurance, and my efforts thus far to collect. I asked if he would send them a letter on my behalf, but there was no deadline stated.

When I called his office on Aug 27, his paralegal said she's ask him to make it a priority, but again, nothing was specific. The closest I've gotten to a time frame was his email from yesterday, in which he said he referenced the next few days.

Regarding criteria, yes, that's another lesson learned. Initially, I thought the deposit amount (22%) was a safeguard. I also called their prior and current (at the time) landlord as references. For the second buyer, I also verified employment/income.

Prior to financing the first sale (which went well), I had a consultation with the attorney (same attorney) and discussed buyer criteria. I asked about running a credit check and he basically said it would be a waste of time because I was essentially guaranteed they'd have a bad score, as otherwise they'd be financing conventionally.

Cindy McHugh · Answer

Thank you for your replies. These are homeowners who purchased and are living in the homes. This is a specialized real estate attorney - that's all he does; he's one of only two in town and he came highly recommended by my realtor. I've used him to buy 4 houses and sell 3 of them. All were financed and I had no problems with the first sale (which was paid off within a year).

Yes, I blame myself for not insisting on seeing/reading the documents prior to closing. I mistakenly assumed that he was a professional that I hired to represent me, specifically to translate a document I created. But I accept and take responsibility for my error. For that reason, I have not tried to enforce the late fee or increase in payments. Lesson learned.

Prior to entering into the deal, we discussed the possibility of foreclosure and the cost/time associated with such. In fact, when he finally responded, he asked if I wanted him to initiate foreclosure proceedings or just send a letter. I opted for the letter, as I would like to give the buyers the chance to catch up and I think they will. I just don't want to constantly beg them for every payment and I thought his involvement (and the fee associated with such) may encourage them to make timely payments.

Dale, you bring up an interesting point. While they did not recommend him, I was surprised that one of the mortgage payments was made by someone else on their behalf and the name on the personal check was the same last name as the attorney. It's likely a coincidence though, as this is a small Southern town and everyone seems to be shirttail relatives. (I'm an outsider- a Yankee - but I don't think that plays a part here.)

Thanks,
Cindy

Dave M. · Answer

When you asked the attorney to draft the August 20 letter, what agreement did you make on timing? If he has not complied as agreed simply ask another attorney to do so.

Also, what criteria are you using to approve your buyers? After 2 borrowers (July 2011 & June 2012) being late in their first year you may benefit from changing your process.

Dale Osborn · Answer

Sounds like you have given him plenty of time to take care of this situation. Time to fire him and get another attorney to clean up the mess. From you retelling of the events, it almost sounds like he is working for the other side. Did they refer this person to you??

Attorney Response Time - Is This Reasonable?

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