Being sued for specific performance

Two months ago my wife and I put a contract on a home which was at the top of our limit, price wise but we felt we could handle it because the interest rate was at 6.125. or so we thought we went in the day of my wifes grandmother's funeral just to get locked in little over a month before we signed the contract. turned out the lady at the mortgage company did not lock us in and only had preapproved us so the day that the mortgage company got the contract the rate had jumped up to 7 percent. That made a huge difference in our montly payment plus in the contract it states in black and white that the rate would not exceed 6.125. we tried to get the mortgage company to make up for their mistake but they refused so we had to give up the house. Since we were able to purchase another house for much less and we have been waiting to get back our earnest money from the first house but the seller refused to sign off the money because he felt he deserves it. And now he had a lawyer send us a letter telling us we have one more chance to get the house and if we didnt would take us to court for specific performance. Can he do this? Does he have a case? Can he take away the house we just bought? Im a teacher with 30,000 in college loans and a new mortgage that we havent even made the first payment on. any advice you could give would be appreciated.

[HomeGuru]

What does your Realtor or real estate attorney have to say?

Well according to them we are in the right but yet they cant tell the title company to give us back ourr money unless the other party signs off too. heres the problem both ourselves and the first seller had the same company and agent. I assumed when this all came down that they would say that either we were wrong or right and award money to one of us or the other. Here are some more details immediately after he approved the contract he asked for a 72 hour kickout and relisted his house all over again at a price 14,000 dollars higher then the price we agreed to pay. We refused to allow him to add the 72 hour clause since he tried to do it it after the fact and we really wanted the house. Listen its not that the mortgage company doesnt say we couldnt have handled the payment but as you know they are in business and will give you a payment they know will be hard to handle. Anyway we along with our parents and realator went to meet with the mortgage company the day afte we found out that we werent;t locked in to see if they would give us our rate. The branch manager stood behind his employee called the whole thing a bad case of misscomuniccation but he refused to honor the rate which we had put in our contract. so we told our agent to tell the first buyers that at that interest rate we could not afford to live in that house. Well she did so and immedeatly the seller told the agent he was going to sue us and the realtor, since they wouldnt give him the earnest money. He did not offer to buy down the loan or offer to lower his price of the house he just got nasty and sue happy immediatly. Anyway the same agent and same realestate company never told us that we cold n't buy another house and in fact they sold us the current one we just moved into. Their lawyer is working on the case but is not giving us any info directly since he is representing the company, but we are told he is trying to resolve this matter for us too. Please tell me this we have no money now, there is no equity in the new house and we dont have some huge savings account or stocks and bonds. We do have good jobs and cars but i also have 30,000 in college loans so there is no way we could buy another house. Is he just trying to scare us into giving him the earnest money? I got the letter last Friday when I was moving into my new house and havent been able to relax. So please tellme some good news I need it. Is there anyone else we can tell this guy to bug isnt the realtor at fault here. Shouldnt have she checked the mortgage rate before signing the contract. And since he signed the contract with that rate on their doesnt that save us. look forward to your reply

one last thing havent got a lawyer for ourselves yet because we fell it would just elevate the problem. We don't want to sue for damages or even interest in fact ill even give up the earnest money I just want this all to end and enjoy my new house.

First thing I would suggest is that you obtain an attorney.
Were you served a summons of complaint with 30 days to respond. If so, lawyers like to file for a default judgement if you do dot have someone to represent you. I don't believe the realator is at fault here. I am not clear if you terminated the original contact to buy the first house prior to buying your new home

[JETX]

This is really not all that confusing....

Your first post says, "the contract it states in black and white that the rate would not exceed 6.125". What contract and with who?? If this was in the sales contract, then you would only need to prove that the offered interest exceeds the allowed rate and this would invalidate the sales contract and would be a defense to any action by the seller.

However, it is possible that you are referring to an agreement with the lender. If this is the case, it MIGHT not be a defense. You would have to have an attorney review the ENTIRE case to see if it would apply to the seller.

We did end the contract according to the contract by sending a certified letter to the seller before the laon commitment deadline. The realator helped us write the not but forgot to have us date it but we do have the reciept from the post office for the certified letter and the date is right on it. It is a contract with the seller not the loan company. Infact wen t with the same company for the laon aon my current home. Everyone one I talk to says I shouldnt worry but just in case say he could win we really dont have anyhting of value except for my truck thats paid off so what could he take othe rthean the earnest money or would you say this guy is just tryiong to scare me. Yhe letter we got was not a summons of complaint and said we only have 10 days to to decide to buy the home, it was not handed to us by the attorney or sent certified mail only sent regular mail. thanks for the advice. One last thing our realtor claims that never in the history of colorado has anyone won a case for the full judgement for specific performance do you know if thats true. If you know what is specific performance?once again thanks for the advice and if I need to will go get a lawyer . take care.

[HomeGuru]

You have now confirmed what Halket was alluding to. Your contracted mortgage interest rate was lower than what you got. So if there was a financing contingency in your contract, because you could not get the contracted rate, the contract is null and void. Therefore, there is no specifc performance charge in your case because you have just cause for termination of your contract. In most specific performance cases, all contingenies have been satisfied but either the Seller or Buyer still refuse to close. In that case, one party could file a claim for specific performance, breach of contract etc.

I find it amazing, in that your Realtor could not have told you the above or to at least request that you seek legal counsel.