Morals of Real Estate

[Mike Hoover]

Hey BP team,

My business partner and I are both 50/50 owners in our real estate company. We recently closed on a commercial and residential unit. The commercial space was previously a doctors office and had several health records (enough to fill a small shed) as we approached closing. We wanted to make sure all files were moved out by the doctor and staff prior to closing because we wanted no responsibility of mishandling these confidential files. However, during our final walk through l, none of the files were removed from the building. We got a killer deal for the place and didn’t want to delay closing further so we created a separate escrow account with a written agreement that all medical records and property would be removed from building within one week of closing or seller would forfeit $2,500. So on the last day of the escrow agreement, a moving crew shows up and removed about 85% of the files. However, several medical records were still left behind and it appeared that the moving company rummaged through a lot of the files and really left the place a mess. We had a dual agent and he was the person designated on the escrow if the agreement was met. One day after expiration the agent determined the agreement wasn’t met and called the seller. The seller told our agent that he was not there during moving but the moving company assured him everything was cleaned out. Upon picture evidence of what the place looked like the seller requested a one day extension and would personally come clear the place out.

Here’s where the conflict came between me and my partner. I thought no big deal and wanted to agree with the request as long as the place is clean and clear in a day. We did the escrow because after closing, we had no leverage for him to move all his junk out and it is doing it’s purpose. However, my partner is adamant about taking the escrow money because that is what the agreement states. Legally he is exactly right. He also said that we gave the seller a full week and it’s not our problem he procrastinated and didn’t meet the deadline. My partner and I grew up together and have very few contentious arguments but he is livid that I would even consider letting this go. He believes this is just business and I’m 1 out of 100 who would actually give an extension. I don’t look at it this way and morally believe giving the seller an extra day is the right thing to do. I need to get back to the agent in the morning but just interested in what the BP community thinks.

Appreciate you guys.

Mike