Seller changes their mind on a subject to deal?

Question

Hello Everyone,

I need some major advice. I recently purchased a property subject to the existing mortgage. The home was going to auction but I was able to stop the auction and help pull the home out of foreclosure and get the owner a loan modification(she hadn’t made a payment in 3 years). I had the seller sign a few contracts and we verbally agreed on a price of $15k for the home and taking the property over subject to. She received $5k upfront when she signed the deed and the other $10k when the loan modification documents came in the mail. Well we’ve had a few disagreements while waiting on the loan documents to come in the mail and she stopped letting my workers come in to fix up on the house. I agreed to let her stay until October 1st but we needed to go half on the mortgage payments. She agreed but couldn’t come up with her half of the money and she also removed me as a 3rd party authorizer so I couldn’t make the payments either. She also told me that she is not comfortable moving out of the home with her name still attached to the house. So at this point I told her that I am going to sell the property and that her $10k will be held in escrow for her until she is out of the home on October 1st like we agreed. She is now saying that she wants her house back and that I misled her.......she was not misled and is just upset because I couldn’t afford to give her another cash advance. The deed is in my name and the mortgage is in Hers. Do I stand a chance in court? What could I do? My contracts are pretty solid. I’m not sure if she sent the loan modification documents back in or not, Nor do I know if she made the mortgage payment. Any advice would help. Thanks.

Mike Cumbie · Answer

@Rojo Lewis

Your contracts will dictate (and local law/regulations). But If you offer the payoff to her or them, it doesn't mean you have the house. It means "She no longer owes them for their interest in the property". If you pay them off (and contracts are all tight) you can take over their position and now have a person who hasn't paid in 3 years now owing you instead of the bank. You may end up starting where they left off.

Sometimes cut and run is cheaper.

DISCLAIMER: Not legal or legal advice, just the mindless ramblings of some dolt on the internet.

Wayne Brooks · Answer

@Rojo Lewis Did you have her sign the state required disclosures for FL concerning sub2 purchases? I’d not, you’re likely better off letting her keep the $5k, deed the house back to her, and buy her a house warming gift.
You need to talk to a FL attorney if haven’t already, and got the proper disclosures signed.

Jay Hinrichs · Answer

this is always the risk in these deals.. and its why OR WA and CA have pretty clear cut laws on how this stuff is handled when your dealing with sellers in foreclosure..  my other thought was when the OP said he could not afford to give her another ( what would amount ) to a small advance.. how can he afford to payoff the mortgage ?  sub too with not enough capital is risky for the seller  buyer we dont care about if they go into deals underutilized that's there fault or problem.  Thats my thought on it..  not saying this OP is overcapitalized etc.. just reading what he posted.

Darius Ogloza · Answer

I would urge you to cut your losses.  Game this out:

You pay off the mortgage.  She refuses to move.  You file eviction.  Judge decides you "tricked" her into deeding the property over to you for $5,000 and rules your contract unconscionable.  At this point how much are you out of pocket?  Let's say the judge takes pity on you and orders her to pay restitution for the cost of the mortgage debt.  You are now trying to squeeze blood out of a turnip.   You take an appeal.  Twelve to eighteen months later, an appellate panel rules that the trial judge did not abuse his discretion.  You are out another $50,000 minimum for the cost of the initial trial and appeal (assuming you find a lawyer willing to work on a ridiculously cheap hourly).

Jay Hinrichs · Answer

Also will be interesting to see if you can get title insurance.. but yes paying off the mortgage then proceed to evict is probably what you need to do.

Rojo Lewis · Answer

@Jay Hinrichs I’ve researched high and low and it’s legal. The problem comes with the mortgage company. I’m thinking it’s best to pay the mortgage off and get them out of the way.

Jay Hinrichs · Answer

she is smarter than the average sub to victim..  cheap lesson..  for you to litigate this is probably more money than you have invested.. and a judge could very well look to you as a predator trying to take this ladies equity .  Out west this is strictly illegal the way you set that up.

Theresa Harris · Answer

What did she do with the $5K you gave her?  Surely that could be used to pay her half of the mortgage, then again someone who hasn't bothered to pay her mortgage in 3 years probably did something silly with it.

Tell her you will sue her for the $5K, the money you already invested in repairs and the other costs you've incurred, plus your lawyer's fees.

Peter Walther · Answer

I agree with Wayne Brooks' advice, get thee to a very good real estate attorney in Sarasota for some informed advice ASAP.  If you're lucky she won't go to the local news with her story about a predator trying to throw her out of her house and plaster your name all over the place.  Bad actors in Tampa will soon be called Rojos

Joe S. · Answer

You got the docs to get a payoff.

Seller changes their mind on a subject to deal?

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