Wholesaler wants $10k to remove a Memorandum of Contract!

[Talmadge Billingslea]

I have been working in the real estate industry since 2003, and I must say that I have never encountered the issues with wholesalers that I am currently facing. In March 2022, we entered into a contract to sell one of our properties. Initially, we believed the wholesaler to be the end buyer. However, after signing the contract, the wholesaler began negotiating and insisted on reducing the price. We were not willing to go any lower, but after prolonged negotiations, the wholesaler finally met our price.

Unfortunately, we encountered a problem with the title, as a cloud had been placed on the property by the city. As a result, we were unable to proceed with the closing. In light of this issue, my husband made the decision to repair the house and rent it out instead.

To our surprise, in late April 2022, we received a demand letter from the wholesaler's attorney, requesting the return of the binder and demanding that we sell the property to him. We complied and returned the binder, but the title issue still persists to this day. Now, due to personal circumstances such as a death in the family and funeral costs, we are in urgent need of selling the property.

However, the wholesaler is refusing to release the memorandum of contract unless we pay him $10,000. It's important to note that we never signed a memorandum of contract, nor were we informed in the purchase sale agreement that such a memorandum would be put in place. While I understand the need for protection against unscrupulous investors or other wholesalers, this situation does not fall into that category. I am uncertain of the legality of these actions.

Could you please provide guidance on whether this is a legal course of action?