Seller Signed Two Contracts

What is the name of your state? New York

My Mother signed two contracts to sell her house. The buyers of the first signed contract were turned down for a mortgage****************************so the agent presented my mother (80 years old) with a contract from a different buyer. My Mother signed the contract with Buyer B.

Now, Buyer A has found financing and thinks their contract should be honored.

What should my Mother do? These contracts were both signed within the same week.

[Souix]

Originally posted by DBrealestate
What is the name of your state? New York

My Mother signed two contracts to sell her house. The buyers of the first signed contract were turned down for a mortgage****************************so the agent presented my mother (80 years old) with a contract from a different buyer. My Mother signed the contract with Buyer B.

Now, Buyer A has found financing and thinks their contract should be honored.

What should my Mother do? These contracts were both signed within the same week.

**Did your mother and the buyers sign a release of earnest money and cancellation of escrow on the first transaction?**

My Mother has not signed a release of contract & earnest money for Buyer A (first buyer).

The real esate agent for Buyer A presented a new contract to break the transaction into two pieces - one for the house and one for the land. My Mother never signed this contract. Buyer A and their real esate agent are saying ....it's a continuation of the first contract....but, it's a total different contract. Buyer A can get financing from 2 different financial institutions by breaking the deal into two pieces My Mother does not like this idea which is why she signed the contract from Buyer B (different buyer) when information was presented to her that Buyer A has having trouble getting financing.

BuyerA has 8 days to get financing on the original contract which will expire in a day or two. BuyerA wants the property so bad that they slipped in a different contract (deal in two parts).

My Mother's lawyer wrote a letter disclaiming the first contract from BuyerA because the contract has a clause 'upon Seller's approval' and their attorney said that my Mother has no grounds to get out of the contract(s) with BuyerA.

Now, BuyerB is really mad and my poor Mother is in the middle of trying to sell the family farm. She has already moved into a condo.

[Souix]

Originally posted by DBrealestate
My Mother has not signed a release of contract & earnest money for Buyer A (first buyer).

The real esate agent for Buyer A presented a new contract to break the transaction into two pieces - one for the house and one for the land. My Mother never signed this contract. Buyer A and their real esate agent are saying ....it's a continuation of the first contract....but, it's a total different contract. Buyer A can get financing from 2 different financial institutions by breaking the deal into two pieces My Mother does not like this idea which is why she signed the contract from Buyer B (different buyer) when information was presented to her that Buyer A has having trouble getting financing.


**Doesn't make any difference, a cancellation and release of earnest money must be signed by all parties in order to accept an offer from someone else**


BuyerA has 8 days to get financing on the original contract which will expire in a day or two. BuyerA wants the property so bad that they slipped in a different contract (deal in two parts).


**Still, see above**


My Mother's lawyer wrote a letter disclaiming the first contract from BuyerA because the contract has a clause 'upon Seller's approval' and their attorney said that my Mother has no grounds to get out of the contract(s) with BuyerA.


**So if she has no grounds to get out of the contract with buyer A why is she trying to**


Now, BuyerB is really mad and my poor Mother is in the middle of trying to sell the family farm. She has already moved into a condo.

**Your mother is using a Realtor and Attorney? They should know how to handle this. It does not sound like Buyer B will get this property unless Buyer A and your mother sign a mutual release and cancellation of this transaction. Perhaps Buyer B can be in backup positon in case Buyer A has more trouble completing the transaction**

My Mother is using a real estate agent and an attorney. Her real estate agent presented the contract from Buyer B to sign. We question the competency of the attorney.

I have several questions regarding Buyer A's original contract and modified contract.

1) The modified contract which separates the transaction into two pieces was never signed by my Mother. Is this a binding contract because the original contract was signed by her and they have 8 days to get financing? It sounds to me like Buyer A is changing the terms of the contract.

2) Buyer A was originally going to get a conventional mortgage. Now, Buyer A is going to get a FHA mortgage. Is this a breach of contract? I'm concerned that obtaining an FHA mortgage requires a much more strict house inspection than a conventional mortgage. Is this true? The house is an old farm house which does need repair. The original contract stated the property would be purchased 'as is'.

3) Can Buyer B sue my Mother for signing the Contract? If so, how is this settled. Would my Mother have to dish out thousands of dollars to Buyer B to release their contract. Isn't the real estate agent also liable for presenting this contract from Buyer B to my Mother knowing the entire story with Buyer A? I understand that Buyer B really wants the property.

Thanks for your help!

[Souix]

Originally posted by DBrealestate
My Mother is using a real estate agent and an attorney. Her real estate agent presented the contract from Buyer B to sign. We question the competency of the attorney.

I have several questions regarding Buyer A's original contract and modified contract.

1) The modified contract which separates the transaction into two pieces was never signed by my Mother. Is this a binding contract because the original contract was signed by her and they have 8 days to get financing? It sounds to me like Buyer A is changing the terms of the contract.


**Its ok to modify a contract. But, if your mother did not accept the modification and nothing was signed by both parties, then if your mother wanted to cancel the transaction a mutual release would need to be signed in order to put Buyer B's offer in first position**


2) Buyer A was originally going to get a conventional mortgage. Now, Buyer A is going to get a FHA mortgage. Is this a breach of contract?


***No as long as they are still within their contingency period. However, for paper trail purposes, it would have been wise to do an Addendum changing the type of financing. There are certain FHA Disclosure forms that a seller needs to sign if the buyer is getting an FHA loan. At that time your mother could have refused to sign the Addendum and the Release would have to be signed by all parties**


I'm concerned that obtaining an FHA mortgage requires a much more strict house inspection than a conventional mortgage. Is this true?


**Not only that, there are certain fees a seller MUST pay on an FHA loan as opposed to a conventional loan. The fees vary with each lender. Your mom's Realtor should have done a net sheet for your mother with the amount of those FHA fees deducted from her proceeds**


The house is an old farm house which does need repair. The original contract stated the property would be purchased 'as is'.


**Then the buyer usually pays for the repairs, if your mother did not agree to make repairs, to bring it up to an FHA appraiser's conditions**


3) Can Buyer B sue my Mother for signing the Contract? If so, how is this settled. Would my Mother have to dish out thousands of dollars to Buyer B to release their contract. Isn't the real estate agent also liable for presenting this contract from Buyer B to my Mother knowing the entire story with Buyer A? I understand that Buyer B really wants the property.


**You are missing the point and I'll restate it again. In order for your mother to accept Buyer B's offer to purchase, a mutual release of Buyer A's transaction has to be signed by all parties. Since nothing was ever signed, then Buyer A is still in first position. A way to remedy this, and your mom's realtor should know to do this, is to put Buyer B's offer in "backup" position with the provision that once the mutual release is signed on Buyer A's transaction, then Buyer B shall move into 1st position.**


***Is Buyer B threatening a lawsuit?***

Thanks for your help!

[HomeGuru]

The writer needs to have an attorney review the contract because of the confusion over if there was one contract or two, and the financing contingencies in each.