Verbal agreement to sign a contract gone bad

[pauldidit]

What is the name of your state (only U.S. law)? Maryland

Hello all you lawyers and others. I have a situation.
I visited a local new home builder two weeks ago and ultimately put a down payment to hold a lot until we could get together and sign a contract. I gave the agent a $1000 check to hold the property for 5 days. During those 5 days, we tried desperately to schedule an appointment at a time when me, my wife, and the builder's agent could be in the same place and time for 5 hours. But we were unable. Nevertheless, the agent said she would hold it until we firmed up the appointment. We decided to schedule the signing for Monday the 18th- and that will be 6 days after the signed "hold the property" paper expired. At no time did the agent say "If you do not sign the contract before the end of the hold period on the written agreement, you may lose the house" and she continued to proceed until this morning assuming we had an appointment to sign the contract. In addition she continued to keep our $1,000 good faith deposit during the entire time.

It went bad when the agent called me this morning and notified me that a colleague of hers put the property under contract two days after the "hold" period expired without notifying her. She told me she was very upset, apologised, but that doesn't get me the lot. I really am upset right now as that was the last great lot in the development. I know I win the moral argument in this but do I have a legal case for contract fraud?

[FlyingRon]

Nothing means anything in a real estate sales contract until everybody signs it.
There's no necessity that everybody sign it at the same time (and that is typically NOT the way it goes down). As a matter of fact, getting all the signatures is one of the things that the realtor is supposed to be doing to make their money. The realtor should immediately return the deposit check. I'm not even sure that such "hold deposits" have any propriety. "Ernest money" shouldn't be cashed/deposited until the contracts are signed.

[HUD-1]

"contract fraud" ? It doesn't appear that you have either a contract or fraud. Are they not giving the $1k back??

[tranquility]

Just from the words and not the reality, it is possible the OP signed an option contract on the house and the "deposit" could be considered consideration for that contract. When the contract was over, the principal was no longer bound and the money is gone.

However, if the owner did not make a good faith effort to meet with the OP when the OP was ready willing and able to, the Option contract may have been breached.

A lot more facts would be needed, but the OP should sit down and consider his goals and if the company does not return the money "deposited", the OP might mention the potential claim of breach of contract.

[FlyingRon]

He didn't sign anything. He had a "verbal agreement to sign" according to his original statement.

There aren't any fewer signatures needed for an option contract to be valid as for a regular purchase contract.

Even closings don't require all the parties to be simoultaneously present. I can count on one finger the number of real estate contract signings that all the parties were present at. I did it once when I was selling a property to a tenant and no broker was involved.

[tranquility]

He didn't sign anything. He had a "verbal agreement to sign" according to his original statement

. That was regarding the sales contract. As to the potential option contract on the property:

We decided to schedule the signing for Monday the 18th- and that will be 6 days after the signed "hold the property" paper expired.

But, thanks for playing.

Did it expire? Can a signed option contract which of and concerns land be extended by verbal agreement? (What is required to take such a contract out of the statute of frauds?) Are there issues here regarding the option contract? Was there even a contract with consideration or was the money a "deposit"?

We need more facts. It is unlikey we will help the OP if we remove some of the facts we do have and base our answers on that.

[pauldidit]

OK I will clarify the best I can. The paper we signed clearly states that it expires after 5 days. It is called a "homesite reservation". The deposit is the thing that reserved the property. The deposit's purpose was to hold the property for 5 days. If the contract had not been signed by the end of the 5 days (and it wasn't), the document states that the seller would refund the 1K deposit. However, due to our verbal understanding, neither the sales manager nor I made any attempt to cancel the homesite reservation even though the 5 days had passed. I didn't expect the 1K back and she didn't expect to give it back. I think that is proof that both parties had a clear understanding of our verbal agreement that we would sign the contract at a later date with the assumption that the 1K deposit would continue to serve the purpose for which it was originally used. And I think this passes the verbal agreement test of "offer, acceptance, and consideration". But I may be hosed because this is a real estate thing.

The only thread of hope (no pun intended) I see in the document states "seller can cancel this reservation at any time by refunding deposit". But by NOT refunding the deposit (them) and by NOT expecting the deposit to be refunded (us) does that keep the homesite reservation in force? Meanwhile, the 1K has now been refunded to me, but after the fact.
I think I am hosed but I welcome any inputs if only for educational reasons.

[Zigner]

The document expired.

[tranquility]

While the "document" expired, did the option contract? Even if it did, was the option exercised before the expiration?

What type of partial performance would be required to keep an option contract open? Would not returning the money be enough when the contract used the language quoted by the OP? How about the verbal representations of the *agent*? How about if the OP was ready willing and able to deal within the option and the builder unreasonably delayed meeting with the him before the deadline? Was there a breach of the covenant of good faith and fair dealing? What if the OP STATED HIS GOAL WAS TO EXERCISE THE OPTION, but couldn't sign before the expiration? What are the terms of the option contract's acceptance?

See an attorney. Lots of issues here you can make an argument upon depending on the facts.

[VeronicaLodge]

why do you even think you would win the "moral argument" on this one? your deal expired and you knew it.

[tranquility]

Just for fun, let's say there was an option on the house for $100. During the time of the option, the builder got another offer for $200 on the same house. The holder of the option attempts to exercise the option but the builder avoids meeting with the holder until the option expires. Who has the moral argument now?

[pauldidit]

VeronicaLodge,
I win the moral argument because although the "hold" document expired, both parties (us and the sales manager) continued to act in a way that understood the lot was still being held and BTW the sales manager continued to hold my consideration. That's proves a verbal agreement which MORALLY, should be honored. I just found out that in MD real estate transactions, verbal agreements are not accepted as proof in the court- shocking. My moral argument also wins because it assumes that the company will deal with me truthfully, fairly and equitably during a business process, regardless of the document's expiration or EVEN the document's existence. Businesses do have a responsibility in that respect. She had my money, I had a lot reservation, and we both understood that fact.

Tranquility above presents the "justforfun" scenario. I think tranquility has figured why it went down the way it did. Yesterday I discovered that during the time my "hold" document was in force, the lot prices were raised. Things I know: I have my deposit back. The prices of the lots were raised while my "hold" document was in force. A contract for the same lot was written the morning after my "hold" document expired. Connect the dots- I am hosed as I cannot prove losses or provide written anythings.

My lesson today is 1- morals don't count in RE and 2- don't trust the smiling real estate jackass who assures you verbally that everything is on track.

[Zigner]

Originally Posted by pauldidit

My lesson today is 1- morals don't count in RE and 2- don't trust the smiling real estate jackass who assures you verbally that everything is on track.

And you DIDN'T learn the most important lesson. In RE, it's what's WRITTEN that counts!

[pauldidit]

Zigner,
Good point. Well, I learned it, OK now it is written.

Thanks to all posters for the constructive advice, feedback, opinions, and answers. Much appreciated.

[HomeGuru]

A simple statute of frauds issue.