Seller already signed another purchase agreement. What can I do?

Question

Hello everyone this is my first post here in bigger pockets. I have a question for the wholesalers who are more experience than I am. I’m working on my first deal and the seller that I got to sign the purchase agreement with had already signed a purchase agreement with another real estate investor a couple months back in July. It’s currently December and they signed with the other investor back in July 2019. The previous investor that the seller previously signed a purchase agreement with currently has rights to the title. I actually only found out that the seller had signed another purchase agreement because the previous investor is on my cash buyers list and they got the marketing I sent out for the property. The seller doesn’t want to sell with the other investor and is adamant in going forth with our purchase agreement.

What strategies or regulations are there for me to be able to help the seller break away from the previous agreement and make our agreement to legally valid? Or how can I go about partnering with the current investor with rights to the title and have them work with me in solving this issue without the seller knowing that I’m working with them?

Thank you!

What strategies or regulations are there for me to be able to help the seller break away from the previous agreement and make our agreement to legally valid? Or how can I go about partnering with the current investor with rights to the title and have them work with me in solving this issue without the seller knowing that I’m working with them?

Thank you!

Marcus Maloney · Answer

Let me explain clearly as I went through a similar situation. I received a call from a seller and we signed an agreement. I marketed the contract to my buyers list and one of my buyers contacted the seller and discussed a prior contract they had. The seller told me about the other contract after receiving a call from the buyer. So happen I knew the buyer very well actually another wholesaler. The buyer/wholesaler called me and we talked and I told him to send a copy of the contract he has with the seller. I told him if its legit I have no problem dissolving my agreement but a property can not be sold twice. After receiving the contract and reviewing it the contract expired as the buyer did not perform and neither buyer or seller elected to extend the contract. So the contract void for non performance. I explained this to both the wholesaler/buyer and the seller. IMMEDIATELY I went to the county recorder and recorded a memorandum on the property as I knew the previous wholesaler was savvy and would try something similar.

To shorten this story, the wholesaler attempted to negotiate with me to split the deal 50/50 but I knew they had no rights to property. After 3 months and 4k to an attorney I was able to close the deal and walk away with nearly 30k.

Check the validity of the contract as far as the dates.

To shorten this story, the wholesaler attempted to negotiate with me to split the deal 50/50 but I knew they had no rights to property. After 3 months and 4k to an attorney I was able to close the deal and walk away with nearly 30k.

Check the validity of the contract as far as the dates.

Account Closed · Answer

Hmmm, didn't know a property could be sold to two people at the same time. Seems to be a breach of contract somewhere in there. It's only about $25,000 and a year to litigate it and you'd have to prove damages. How much money are you "out of pocket"? That is the amount you would be awarded. So, if you gave the seller $1,000 you'd probably get that back.

And, you wouldn't be able to warrant clear title to whomever you sold it, so you would be in breach of your contract with them.

I'd walk.

Account Closed · Answer

The other investor tied up the property for a long time not to close:(

The seller could give the other investor grief that could cause the other investor to agree to cancel the one sided contract or close. If the other wholesalers that has more cash buyers than you can’t sell the house not sure it is worth pursuing anyway.

It’s stuff like this that gives wholesalers a bad name.

Tamara Deering · Answer

Sorry without seeing the signed agreement I can't tell you what your rights are.  Even if I could see the agreement this is probably one of those times that I would advise taking a copy of the signed agreement to your real estate attorney for advice. But...do you really want to get involved with a seller who did not follow through on their initial agreement?  How do you know you won't end up in the exact same place as the other investor that was unable to close in July?

Theresa Harris · Answer

@Jeremiah Roberts  The first person must have got a great deal if the owner wants to take your wholesaling deal over a regular offer.  Since you know the first buyer, why not talk to them and find out what happened?  If it is a legal contract, they both signed it in good faith and the seller is risking a lawsuit that would quickly use up and profit that they might have.  I wouldn't get involved.

John Barrows · Answer

WHAT? So, how does the buyer have access to the title as you say? "The previous investor that the seller previously signed a purchase agreement with currently has rights to the title".

NOBODY has rights to a property (title) accept the seller, unless the seller signed off the title and put that person on the title...... and recorded it!

Also, if the sellers property has a MORTGAGE on the house, the seller only has possession rights to the title. The new buyer would have to be  approved by the original mortgage company and be put on the loan that manner, rather then just being added to any title. So, with that said, by adding someone else to the title would make the original loan (DUE ON DEMAND) once this is found out by the bank or mortgage company that made the original loan.

Read the original loan agreement if the seller has a loan on the house. Every bank has a DUE ON SALE CLAUSE (demand payment) once the title changes without their approval! Read the paperwork.

DJ M. · Answer

Ha! A wholesaler looking for ways to circumvent a legally binding and signed PA.  Color me surprised!!!

Aaron K. · Answer

@Jeremiah Roberts well that other investor has the property under contract, without seeing that contract and it's details you can't do much.  Ideally it would expire or require performance from the buyer by x date but not necessarily.

Seller already signed another purchase agreement. What can I do?

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