Real Estate Law - Seller Backing Out - Now What?

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We put an offer on a house this past Sunday. The seller accepted our offer Sunday night and the Purchase and Sales agreement was to be signed next Thursday after inspection, etc.

I gave the broker a $1000 good faith deposit (as requested) and we will have the 5% at time of P & S. However, my agent called me yesterday afternoon to inform me that the seller is having emotional difficulties over the sale of the house and is under a doctor's care. She is putting the sale "on hold" for now. I am waiting to hear from my agent so she can let me know if the seller is still going to sell me the house or if she is backing out. She and her husband have already purchased another house from people who are purchasing another house etc...so it's quite a domino effect.

The boy called a lawyer who informed him that we could sue if she backs out of the offer. It seems to me that this would be possible only if we already signed P&S and if she backed out before that we'd just get our $1000 check back. I told him not to call the broker with his bright ideas - I may get a good phone call today and even if I could take legal action, I really don't have the time or the money. I also don't want to start breathing down this woman's neck as she is obviously prone to panic attacks.

I'm pretty upset (OK - I'm pi$$ed), but for the moment I have to 'wait and see'. Do I have any legal options if she backs out? Has anyone else gone through this? I'm willing to give her extra time to close, which I told my agent before as we have no huge pressure to move in right away.

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Look this entire site over. It is interesting. Real Estate Advice.

I'm in a somewhat similar situation, Sugar, except that, while the purchase agreement has been signed, the seller seems to be having difficulties meeting the conditions it is subject to.

I doubt you have any legal recourse if the seller's acceptance was oral. Does your offer have a time limit in it. If so, you can at least compell them to fish or cut bait.

In view of Anon's earlier comments on the real estate market, withdrawing your offer, based on nonperformance of the seller might not be all that bad, but you don't want to be stuck with the current offer two months from now if the marked really does suffer a reverse.

If the seller does sign the agreement and then backs out, you would probably only have a cause of action if the offer accepted were below market, in which case, your potiential benefits would be limited to the difference between your offer and market value.

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PS: You are in a good position by not being desparate to close, but be wary of closing if the seller is still occupying the home. There is unlimited potential for problems.

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She actually countersigned a offer agreement, so it is a binding contract. However, I don't think it has the same legal ramifications as a P&S.

The limits are - offer accepted by 8/17 (it was) P&S on 8/28 (now it won't be) mortgage secured by 9/15, and closing 9/30. If she comes around, the remaining dates will be adjusted to reflect our lost time for inspection and such.

Thanks for the link roger. I saw the site earlier, but it only mentions legal issues if the buyer backs out after offer agreement and doesn't mention issues if the seller does.

I'm guessing she might still have to sell - they've purchased another home and I believe the P&S for that was already done. I'd rather not retract the offer if I can help it. Here in Mass real estate is incredible unaffordable. The house is a bit more than we can afford, but it's an incredible piece of property. In my opinion, it is worth far more than her asking price, which is what we offered and what she accepted. We've been looking for 7 months and this house is perfect.

If things fall through, I'll get over it. I'm just trying to educate myself because the boy is quick to call lawyers and such (it hasn't even been 24 hours!) - which isn't my style and irritates the hell out of me.

I have found this article, in case anyone else with the same worries pops in, but again it seems to reference teh P&S, not just an accepted offer.

http://realtytimes.com/rtcpages/20000403_salebackout.htm

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Yes it does, but it seems that the seller's liability is to the broker for commission, rather than to the buyer.

Hmmm. Based on one community college semester of business law, it seems that the most essential element to a contract is "offer and acceptance". There are others of coursee, but you have the offer and acceptance in writing. Maybe there are special laws dealing with real estate. I wouldn't know.

In my case, I am supposed to wait on a legal division of the lot, which involves a zoning variance taking two months. After which, we can see what else can go wrong. Don't know if I can stand the suspense, and just may back out.

If you think the home is a bit more than you can afford, have you considered getting pre-approved for the loan, if you haven't already dealt with the financing? It may save time for all parties, though I hope not.

Lot'sa luck

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I am pre-approved. We can swing the mortgage, but it's a bit more than we were planning on spending. We don't have any furniture to speak of and some of that will have to go on hold for a while. We're trying deal in as much cash as possible so even though the mortgage will be almost the max we're approved for, we really won't have any debt. We're getting married next year so that's even more money, but I'm trying to keep it simple and hopefully some wedding gifts will give us some money to put into the household.

Good luck to you. Anything dealing with town hall is usually a pain in the patookus. Hope it works out for you.

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Sugar wrote:

She actually countersigned a offer agreement, so it is a binding contract. However, I don't think it has the same legal ramifications as a P&S.

Don't be to hasty there! Smile

I poked around a bit Sugar and it looks like you could sue since you do have a written offer that has been accepted.

http://www.state.ma.us/consumer/Pubs/buysell.htm

under "LEGAL REQUIREMENTS FOR TRANSACTION"
it lists:

Quote:

Contract Requirements

Agreements for the purchase of real property generally must be in writing and be signed to be enforceable. An offer signed by the buyer that includes all essential terms and which is accepted and signed by the seller can constitute a binding contract. A written counteroffer made by the seller that is accepted in writing by the buyer can also constitute a binding agreement. Many real estate agents have forms of such agreements for use by clients and customers. Often a more detailed agreement known as a "Purchase And Sale Agreement" ("P&S") will be signed by the buyer and seller after an offer has been accepted. The P&S will then replace the earlier agreement. If you are unsure of your risks and responsibilities under any proposed agreement you should contact a qualified attorney to assist you.

It looks like the P&S is (legally) just a more detailed replacement of the agreement you already have. If that's true than you have a valid contract to purchase that has been accepted by the seller and you could sue them to force them to sell you the house at the agreed upon price.

Just a guess but if I were a seller and you sued me I'd make sure the place failed any requirements you might stipluate in any later P&S agreement. It might not be worth the hassle of going after the seller. Sad

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My agent left me a message this morning and confessed that they never signed the offer. She pestered me to make sure I was setting up inspection appointments so I was sure to fulfill my obligations and then tells me on THURSDAY that she doesn't actually have a copy of the agreement because they didn't actually sign it. This woman backed out of signing the P&S on the other home she was buying as well.

I am keeping my hands away from pointy objects. When I call the boy and tell him this, all hell is truly going to break lose.

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Your broker was negligent - at best. If you attempt another deal with this broker, the outcome will be your fault.

Inspection is for your benefit, and at your choice. Where does she get off, suggesting this is an obligation which you need to fullfill?

By the way, I let my own deal get away. The latest round of delays and complexity were just more than I needed. Maybe my sense of when to walk away is over developed, but I do have an idea of what I'm willing to put up with.

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I won't be attempting another deal with this broker. I can't even fathom that she did not get a signed agreement from the seller's broker before telling me the offer was accepted.

She called and said that she is calling the other broker again to find out what exactly is going on - if the house is off the market, etc.. There was another offer that was higher than ours when we put our offer in, but that they did not accept it. If he turns around and now pushes them to accept that offer after telling my broker that our offer was accepted, I'm pursuing legal action against him.

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Whoa.

Good luck, Sugar. I pity the fool that messes with you.

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Egad.

Was this a seller's broker that was negligent, or a buyer's broker? 'Cause if it was the buyer's broker - whoa, Mama, you have got quite a case. Buyer's brokers work for the buyer and have a duty to them. Seller's brokers really just have a duty to not be negligent or reckless but a buyer's broker has a clearly defined duty to his/her client. That would be you, the buyer.

Best to you - argh, this has got to stink.

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It was the seller's broker. He decided that it was more convenient for him to go over there with the actual paperwork on Tuesday, 2 days AFTER she accepted the offer, instead of having her sign it Sunday night when she accepted it. She was supposed to sign P&S on Tuesday for another house, so he brought it over there together, and she backed out of everything. I was called Sunday night, told my offer was accepted. He then said it wasn't signed to my broker on Tuesday afternoon when she called him to tell him about the home inspection appointment.

Problem is, my broker isn't under contract to me. We've been working with her to find a house but there's no written contract. We actually found this listing in the paper, it's not her's. She just called the listing broker to see if we could go look at with her.

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Hmmm. I don't think even the seller's broker is permitted to lie about having a signed agreement, or anything else. Yet, it is for Sugar to prove the lie was made.

Soz, I have neither pity nor sympathy for that poor fool. She and a handfull like her are helping to keep these people honest for the rest of us. Go Sugar!

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Well, I'll keep everyone updated. I'm po'd and theboy is po'd. My last phone call with him ended with him saying "I'm going to string him (the broker) up". They don't call the boy 'The Shield' for nuthin'.

Actually, it's because of his bald head, but he gets nasty when he's mad.

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Id keep all soft object away from both of ya's at the moment..but, thats just me Wink

Good Luck gal

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The seller's broker is obligated to the seller, as the seller is his/her client. But, like roger says, that doesn't mean out-and-out deceit is permitted.

Next time (and I know this is annoying because it's too late for this), get a buyer's broker to look after your interests. They do exist and it'll save you this kind of agita. Now, when we bought, we didn't have a buyer's broker, but that was just before the real estate boom began. Given the amazing amounts of $$ that can be made by sellers these days, it's beginning to look like buyer's brokers are turning into a necessity.

<hugs> and feh on the broker in your case - s/he has what's coming, that's for sure.

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I think there is now the option of having the buyer's broker from the same firm as the seller's. Are you comfortable with this, Jespah.

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It can be done but I think it's ethically touchy. I'd rather see the 2 brokers from different firms, or both independent or one independent and the other from a firm. I think otherwise it can get a bit incestuous. There are a lot fewer buyer brokers than there are seller brokers, but with the seller broker they are nearly always wedded to the house. Hmmm, I know Sugar lives in an area where there are choices for buyer brokers (pretty much throughout Mass. or even go into RI if necessary to get an independent one) but in small towns you won't have as many choices.

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Real Estate Law - Seller Backing Out - Now What?

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