On Market Deal, Buyer Backs Out

[Calvin Schmeling]

I was planning on Wholesaling this on market deal that I had locked in contract. In the contract it states Im buying it as is and attaining tennants. I was completely aware of both. I didn't find out from my agent how long of a lease they were on until a couple of days after signing the agreement. (Thats definitely my fault) But they happen to be on a 3-year lease. And long story short, I wouldn't be able to find out if the tenants would be able to leave the property until after COE. Also, it took the seller about a week in a half of following up to send the leases, and there is nothing in there of leaving early or buying out. Because of how long it takes to get answers I just had a gut feeling I need to back out and I know none of my buyers want to wait out the lease. The agent sent me a cancellation to sign and the buyers refused it. The agent came back to me and said they would keep the EMD which im not worried about, or they can sue for damages after as well. I don't have the time and money to go through a lawsuit right now. I wrote a letter to the seller to try to come to an understanding. But what is the best way to go about it? How I have my LLC structure set up is my Wyoming LLC owns my wholesale company in my state. Would that do anything against a damages lawsuit?

[Jerry W.]

@Calvin Schmeling, too few facts to be able to give much advice. How much EMD did you put down? Have you considered selling toa buy and hold buyer instead of a flipper? It is unusual for a court to force someone to go through with a deal they only award damages if proven. If the lease is still in effect then what is there damages? They have just as much money coming in now as they did a year ago. Maybe had another deal pending they lost their EMD on for not closing, if so make them produce their claims now. It is rarely productive to sue over these things but some folks do. As to your LLC it is likely that any potential damages would come out of that if you have been running it correctly. If it has no assets then there is nothing to get, however it is possible to pierce the corporate veil and go after the owner, but again I have no idea of the facts to guess about it.