Beware of NY Group Buyers, Serious Conversation here

[Christian Beebe]

So you ready for this?  We are in the process of selling some of our portfolio in the Midwest, apt buildings.  Have a couple groups out of NY who place good bids and to which our broker stated they would go with.  This started in July 2021.  They then proceeded to go through the normal process, earnest money, etc and then needed an extension, to which they put in more earnest money.  Then right before closing, they stated they had "issues" with the properties...issues that were never stated before in any of their six inspections NOR written down, nor communicated, nothing.  They then claimed we breached contract and didn't close.  Then after weeks of no return calls to the brokers or lawyers, they come back stating that they have reservations about the properties not being maintained (which of course is false) and that there is a leak on the property (that was fixed, they inspected) that they still don't believe was the cause of the water leak....even though the plumber told them so and showed the videos.  Nothing major, just a bathtub pipe leak behind the wall on a first floor unit on a slab.  They then went silent, of course won't release the escrow money, and even after months of attempted contact to them from everyone, no one, not even their NY lawyer answered anything.  So we sent a termination letter per the agreed contract to them and the title company, Riverside Abstract.  Again, nothing.  Then out of nowhere TWO MONTHS LATER they show up on Jan 2nd from their lawyer stating that "my client is ready to close by Jan 5th for a credit of $20,000 and my client believes the contract is still open and valid and my client has reinspected the property and is satisfied with the condition."  Upon correcting their lawyer from our lawyer, with facts that they can't refute among which are there is not way they could have inspected the property as that would be illegal and violate the contract (even if it was open) and they stated very clearly before the first date of closing that they had issues with property conditions and didn't close due to that BUT now are fine with somehow.  When all this and a ton of other legal facts were presented, to which I won't bore you with here, they simply stated that they had full rights to the sale of the property and will enforce those rights.  And what is slightly interesting is that they just happened to show back up after we had signed a deal with another buyer.

So this went back and forth between lawyers and nothing happened, dead silence again for another month UNTIL 8 days before closing with the other buyer.  They show up with a local attorney in our state claiming the same thing they did before and sent a legal letter to our company claiming they have ownership and then filed an affidavit with our local country to state they have claim to the properties and block anyone else while at the same time claiming they still want to close BUT now they want an additional inspection.  

Come to find out that a good amount of certain NY buyer groups have been doing this and what they are counting on is that no one wants to litigate as evidently they have held people up for months and years on this.  They are counting on someone giving in, stating they can have the earnest money back AND they will release their claim for additional money.  Literal blackmail.  Guess is they are only doing this with certain dollar amount properties as the understanding that they may not have the money to fight money nor want to, guessing they are not doing this with $50mm+ and up deals.  

So one, beware and get the word out.  The truth is, it is only NY groups dealing using money from a certain circle.

Two, what would you do.