Simple 4 page executed contract provided for purchase money mortgage (pmm), seller financing $375k @ 4%, repayment monthly amortized 30 year, 15 yr balloon, no pre-payment penalty. Seller's P.O.A. is a non practicing lawyer who claims she was unaware of commitment to ppm. No counter offer or objection to 50% financing was made until 1 hour before closing.

I wired $370k to closing attorney 2 days before closing. My $10k deposit was submitted and cleared at least 3 weeks prior to closing. All Buyer commitments were completed. I am a Georgia Real Estate Broker, representing myself as sole member of the LLC Buyer.

Listing Broker claims contract is unenforcible. My lawyer disagrees. My lawyer canceled the contract because of (intentional?) unresponsiveness from Seller's attorney. The cancellation was rescinded soon after, and the contract was restated. The only document I signed thus far is the simple, standard form, 4 page original offer, which was accepted without modification.

At a minimum, I could choose to make it very difficult for the Seller to close with another buyer. Litigation is time consuming, expensive and without guarantees. I understand it's in everyone's best interest to renegotiate an agreement the Seller will actually follow through on, preferably amicably.

The P.O.A. is my next door neighbor at 2 locations within our small city of 50k residents. I'm trying to move past sheer disbelief that a law school graduate did not read a 4 page contract or consult with her 2 listing agents, her lawyer or her parents (the owners of record) before executing the agreement.

That said, I do have some leverage, and I don't believe there's another legitimate buyer on standby. No one is pressuring me to sign a termination and release.

Objections expressed regarding Seller financing include dissatisfaction with the terms, as well as a 1031 exchange - first brought to my attention an hour before closing. The Seller bought the property for approximately $365k. My contract price is $750k. I'm only superficially aware of 1031 rules, and I'd appreciate guidance as to how it pertains to this deal.

The property suffers from mismanagement. The slate roof is leaking in several places. There's a total of 9 legal apartments, but at least 4 are unoccupied. Two of the occupied units are leased to the Seller's employees or contractors. I think they're bartering services for rent. Per NY law, it will take at least 90 days to remove them. One of them is a hoarder and has been using 2/3 of the 5000 sf basement as his "office", without a lease permitting him to do so. His apartment is on the 2nd floor. The Seller has provided me with an unsigned lease for his unit, which does not include any mention of his rights to occupy the basement.

Because this property is a 9 unit multifamily, financing is challenging. Interest rates will be higher than conventional, as well as for larger mutifamily commercial deals. Its too small for commercial lenders to get excited about. Because of the disrepair and vacancies, DSCR financing is currently virtually impossible.

If the Seller is primarily concerned with reaping the benefits of a 1031 exchange, the purchase price should be adjusted to reflect a 100% cash price. The Seller's broker proposed a price reduction of $50k, which pissed me off. I estimate the value of the ppm in the contract to be approximately $300k, but I don't think the Seller will accept a purchase price of less than $500k. And, if I were to pay $500k in cash, I'd have nothing to prepare the property for DSCR financing.

It's my understanding the Seller is open to bridge financing. I want at least a year, especially since I may very possibly have to evict and turnover the contractor units. Perhaps the Seller can boot their 1031, if I'm able to finance into DSCR in time.

Thanks for your thoughts!

Susan Kelley

Albany, New York

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