Confusing Lease / Down Payment

[mlb679]

My husband was going to purchase a house in 9/99. He signed a purchase and sale agreement. 2 days before closing, the financing fell through. The seller, also the real estate agent, drew up a 1 year lease for my husband to sign. The lease would end after a year or during the course of the year if we bought the property. We gave a $4000 down payment at the time of the P&S signing. The lease stated that if after a year we were unable to purchase the home, the seller would retain the down payment of $4000. We were due to close in March, and my husband got word from his new employer that there was a residency clause and he had to move closer. My husband called the seller and told her what had happened. She said she would put the house back on the market and would be showing it the very next day. The day after, my husband got word that he could indeed purchase the house and would be exempt from the residency clause. He told the seller, but she said it was too bad because she already had an offer of $15,000 more than we were buying for, and she had signed a P&S agreement with the new buyers. She sent over a release form, terminating the lease. It said that she would sell the property to the new buyers, keep our $4000 down payment and we would vacate the house on or before the closing date of 6/7/00. So, legally do we have a right to the $4000 back? SHE wants to terminate the lease now. My husband never signed a release from the lease, so shouldn't she have waited until he did to sign a new P&S. We still have a valid lease and a valid P&S. The lease gives us 1 year to close on the property, leaving us 6 months to go. We are willing to move out and let her sell the property, but we want her to release the $4000 to us. I am not happy or necessarily proud of the situation, but what is our legal right? Do we have the legal right to buy the property? If she wants to terminate the lease and sell to someone else, do we have the legal right to our money back since she never had a written termination of the lease?

 

[Tracey]

Chances are the P&S and lease both say that the contracts can only be modified in writing. If so, you have an option on the house until you give it up in writing. The seller's new buyer is SOL. Talk to a real estate attorney who knows lease w/ option to buy contracts. You want to sue for specific performence of the purchase option.

Send her written notice that you are exercising your option to purchase the house. Certified mail, return receipt, etc. RECORD THE LEASE/OPTION AGREEMENT AND YOUR INTENT TO EXERCISE IT UNDER THE HOUSE'S PARCEL NUMBER NOW!!! That puts potential buyers on notice that you allege a prior claim to the title and makes the property unsalable until she settles with you.

You, of course, don't release the option until she pays you a chunk of money. You are not limited to the $4000 you gave her. She will pay up to 14,999 for your release, as she is still ahead on the deal, especially since she won't have attorney fees from defending your breach of contract suit or the new buyer's breach of contract suit. Demand at least $10,000. After all, you have to start house hunting and apartment hunting all over again and the real estate market has obviously risen in the last year.

As to the lease, you have a 1 year lease and you can stay in the house until the year has passed. If seller wants you to move, she has to bribe you and/or pay damages for breaking the lease. Fight the eviction to drag it out. Damages could include the downpayment, the extra rent you have to pay in your new house, the extra money you have to pay to buy a comparable house, & the costs of fighting the eviction.

Make sure you comply with all lease terms, so she can't evict you for cause.


You need to hire a real estate lawyer. DO NOT worry about being nice or fair. Worry about getting either the house or double your money back.

Good luck,
Tracey

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.

[This message has been edited by Tracey (edited April 06, 2000).]