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Last minute surprise in closing,

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Andrew55

Member
What is the name of your state? Georgia

My old boss bought a condo for me from an auction for 105k. He had the cash to buy it, and he wanted to do a favor for me. I was supposed to buy it back from him right after. It took 3 months for the bank to send him the deed of the property and it took another 2 months for my mortgage application to be approved.

At the closing day, he said I lost money in that time period so I owe him $10,000. I said I am okay paying him interest which would be less than 2k but he denied it. He asked for 10k. I already made renovations to the condo so I signed a paper that says I will pay him 2k for the next 5 months.

-I have a sales agreement on a property for 105k right after the auction.

-I bought the property for 105k at the closing. That 10k extra is not mentioned in the closing documents.

-He only has a paper that says, I owe him 10k for the condo and my signature.

Is that paper I signed legally binding ?


Thanks
 


Mass_Shyster

Senior Member
If the paper is a valid promissory note, you may be stuck paying. I'd refrain from doing any further business with your loan shark. $10,000 on a $105000 loan over five months is about 22% interest.
 

Zigner

Senior Member, Non-Attorney
What is the name of your state? Georgia

My old boss bought a condo for me from an auction for 105k. He had the cash to buy it, and he wanted to do a favor for me. I was supposed to buy it back from him right after. It took 3 months for the bank to send him the deed of the property and it took another 2 months for my mortgage application to be approved.

At the closing day, he said I lost money in that time period so I owe him $10,000. I said I am okay paying him interest which would be less than 2k but he denied it. He asked for 10k. I already made renovations to the condo so I signed a paper that says I will pay him 2k for the next 5 months.

-I have a sales agreement on a property for 105k right after the auction.

-I bought the property for 105k at the closing. That 10k extra is not mentioned in the closing documents.

-He only has a paper that says, I owe him 10k for the condo and my signature.

Is that paper I signed legally binding ?


Thanks
You need to take any and all documents you have related to this and meet with a local real estate attorney.
 

Andrew55

Member
If the paper is a valid promissory note, you may be stuck paying. I'd refrain from doing any further business with your loan shark. $10,000 on a $105000 loan over five months is about 22% interest.
I am not sure if its a valid promissory note. I says I will pay 2k for the next 5 months. There is a date on it and my signature.

The paper is not notarized

There is no witness signatures.

There is no loan transaction between him and I.

No indication of an interest rate.
 

Zigner

Senior Member, Non-Attorney
Many moons ago in the UK one of the major house builders was offering the incentive that if you bought one of their houses they would pay your mortgage for the first 6 months. They were hoping that you would use their prefered mortgage company so they would get a kickback
A potential buyer got the estate agent (UK Realtor equivalent) to clarify that this was 100% accurate and he didn't have to use their preferred mortgage company. He then got the estate agent to sign a simple piece of paper confirming that this was correct. No witnesses, no notary, just a signature.
The buyer then took out a 6 month mortgage with a different mortgage company and told the house builder to pay, from memory, about 20,000 pounds a month. It of course ended up in court, and that simple piece of paper with the signature was enough for the buyer to win the case and get what was essentially a free house.
 

Andrew55

Member
I talked to a local lawyer today. He said his argument would be `there is no consideration` in the letter. He didn`t tell me if that paper would be valid without consideration or not.

I am still confused, but I am happy to that at least I stand a chance.

Does anyone have knowledge about the necessity of `consideration` ?
 

Taxing Matters

Overtaxed Member
Does anyone have knowledge about the necessity of 'consideration'?
Consideration is a requirement for a contract to be valid. Basically the principle is that each party to the contract is giving up something of value (not necessarily money value, could be time, holding back on enforcing some right the party has or something else) in exchange for whatever it is the other side is giving up. The consideration doesn't have to be much — the classic phrase from the case law that every law student learns is that a peppercorn is enough to meet the requirement of consideration. Without consideration from both sides there is no contract.

However, while the lawyer said the argument he'd make is that there was no consideration provided by the other side to support the contract (the promissory note) understand that in the context of this deal that is not exactly a slam dunk argument.

In addition to that, there is another potential problem. If what you gave him was a good promissory note and he sells that note to a third party, that third party may be a holder in due course of the note and entitled to enforce that note against you free from any of the defenses (like lack of consideration) that you would be able to assert against the seller himself.
 

Andrew55

Member
Consideration is a requirement for a contract to be valid. Basically the principle is that each party to the contract is giving up something of value (not necessarily money value, could be time, holding back on enforcing some right the party has or something else) in exchange for whatever it is the other side is giving up. The consideration doesn't have to be much — the classic phrase from the case law that every law student learns is that a peppercorn is enough to meet the requirement of consideration. Without consideration from both sides there is no contract.

However, while the lawyer said the argument he'd make is that there was no consideration provided by the other side to support the contract (the promissory note) understand that in the context of this deal that is not exactly a slam dunk argument.

In addition to that, there is another potential problem. If what you gave him was a good promissory note and he sells that note to a third party, that third party may be a holder in due course of the note and entitled to enforce that note against you free from any of the defenses (like lack of consideration) that you would be able to assert against the seller himself.

This website is amazing. I didn`t think I would get this much response this quick. Thank you very much.

I didn`t give him a good promissory note, plus he does not have any supporting documents. Also I know that he didn`t sell that note to a third party and I don`t think any third party would buy that.

After this point, If he sues me, I am thinking of suing him for extortion.
 

Taxing Matters

Overtaxed Member
After this point, If he sues me, I am thinking of suing him for extortion.
That you could not successfully do. Extortion is a theft crime, not a civil claim. In Georgia, the crime of extortion is the following:

(a) A person commits the offense of theft by extortion when he unlawfully obtains property of or from another person by threatening to:
(1) Inflict bodily injury on anyone or commit any other criminal offense;
(2) Accuse anyone of a criminal offense;
(3) Disseminate any information tending to subject any person to hatred, contempt, or ridicule or to impair his credit or business repute;
(4) Take or withhold action as a public official or cause an official to take or withhold action;
(5) Bring about or continue a strike, boycott, or other collective unofficial action if the property is not demanded or received for the benefit of the group in whose interest the actor purports to act; or
(6) Testify or provide information or withhold testimony or information with respect to another's legal claim or defense.

Georgia Code § 16-8-16(a). Nothing in your post suggests that he threatened to do any of the six things listed in that statute. And even if he had, you'd report that to the police and it would be the prosecutor who would ultimately determine whether to pursue charges for the alleged extortion.

So far, you boss has not gotten any of the $10,000 he asked for. There has been no theft and no loss suffered by you as a result. Thus there is nothing for you to sue for. You may well have a good defense to his claim and if you successfully defend that claim then you don't have to pay him. But you can't win money from him when you have not suffered any financial loss by either a breach of contract or some negligent/wrongful act.
 

Andrew55

Member
That you could not successfully do. Extortion is a theft crime, not a civil claim. In Georgia, the crime of extortion is the following:

(a) A person commits the offense of theft by extortion when he unlawfully obtains property of or from another person by threatening to:
(1) Inflict bodily injury on anyone or commit any other criminal offense;
(2) Accuse anyone of a criminal offense;
(3) Disseminate any information tending to subject any person to hatred, contempt, or ridicule or to impair his credit or business repute;
(4) Take or withhold action as a public official or cause an official to take or withhold action;
(5) Bring about or continue a strike, boycott, or other collective unofficial action if the property is not demanded or received for the benefit of the group in whose interest the actor purports to act; or
(6) Testify or provide information or withhold testimony or information with respect to another's legal claim or defense.

Georgia Code § 16-8-16(a). Nothing in your post suggests that he threatened to do any of the six things listed in that statute. And even if he had, you'd report that to the police and it would be the prosecutor who would ultimately determine whether to pursue charges for the alleged extortion.

So far, you boss has not gotten any of the $10,000 he asked for. There has been no theft and no loss suffered by you as a result. Thus there is nothing for you to sue for. You may well have a good defense to his claim and if you successfully defend that claim then you don't have to pay him. But you can't win money from him when you have not suffered any financial loss by either a breach of contract or some negligent/wrongful act.

You're right. I haven't suffered any loss yet. It is just an attempt for now.

The thing he did was not ethical. We had a sales agreement and I had his word. I made renovations worth of 30k while waiting for the closing.

If I didn`t make any expense, I wouldn`t sign that paper. He took advantage of the situation.

Also, 10k is not a big amount for him... I wouldn't think he would get this ugly for this amount of money...

Anyways, it doesn`t seem like an extortion or a blackmail. If you think this situation involves any kind of crime, please let me know.

Thanks for your help.
 

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