Seller problems purchase & lease contracts - long

[readytoscream]

Texas

In November '06 we signed a contract to buy, with an earnest deposit, a home. Seller is a friend.

Worked with mtg broker recommended by realtor. Promised closing by Xmas. Broker was opening satellite office in nearby city, put us off time and again. Lost paperwork, didn't return calls, etc.

We offered to mutually dissolve contract. They told us no, and had told realtor that he was not to show the house.

Contacted new broker, who had helped sellers get financing. Day we were set to sign, lender went bankrupt. This was during all the subprime disaster.

Told seller situation, offered to dissolve the contract, told no again. I began calling lenders directly, TX Lending, said that they could help. J, lending officer, pulled up our credit and told me my options, they could offer 85% financing with 12% interest rate. She then went on that she would prefer to help us get our credit score a little higher, and within a month or two, we would be looking at about of 90% / 9.81%. If we could give her a little longer, it could go up to 100% / 8.1%.

I no sooner was off phone with J, and sellers call saying they would like to meet with us to discuss the house. We agreed to meet them.

When we arrived, the wife told us that they had decided that they wanted to offer us a lease option, on 6 month basis, if financing was not obtained by the first 6 months, they would extend until it was. At that point, told sellers about Texas Lending, and what they could do for us given two to four months. We tried several times to tell them to put it back on the market. At that point, the wife told us, "If it takes 3 weeks, or 3 years for you to get your credit right, then that's what it takes. You forget, we own our own business too, and we know how long it can take to get financing. End of discussion."

My husband went out of town, and during that time (March 15), new contracts were prepared. They were standard Texas contracts. Lease was a standard buyer lease that would terminate upon closing. Faxed to husband, he signed and faxed back. I signed them, and took them to realtor. I was told then that we could move in. I waited until my husband returned. We then waited until weekend of March 24/25 to begin moving in, worried that something would go wrong. We knew our recent luck.

Two days ago, seller came to our business and told me that unless we had money in hand by May 1 he would be offering property for sale. I mentioned that was only a week, he then said he meant June 1st. Seller then walked into office area, and didn't mention a thing to my husband, in fact was telling jokes, etc. When he left, I told my husband what seller had said. He was furious, contacted realtor, who knew nothing of it.

Following day, seller's son calls, saying that we need to get a letter of guarantee from our lender. By this time, I had already spoke to J at lending company, and she told me that my credit had already gone up 12 points and that if I could continue at this rate, in another month, we could qualify for at least 98%/8.3%. Said to not be forced into anything.

I called J back, told her that realtor and seller were trying to add a stipulation that unless we had letter of guarantee from her with a closing date in next 2 weeks, they would be offering house to other buyers. J told me they couldn't. I mentioned that I had been told to file lease and contract with county clerk. J agreed.

30 minutes later, realtor shows up, tells us we need to sign a new 3rd party financing addendum. We refused. He tried to tell us that since 20 days had passed since last addendum, it one was no longer any good. I read through it, and as far as I understand, WE had the option to back out within 20 days, by a written statement to seller. We didn't do this, as with the lease, and new closing date it wasn't necessary.

I had had enough. I told him, in a calm voice, the only reason we had agreed to the lease option was because seller had requested. We wouldn't have entered into the agreement if we had known that a month in, we would be told that seller would sell it out from under us. We did not ask for lease, and had argued against it initially. I went on that with lease, and new contract, we had until September. I then slipped, and made the comment, "I'm sorry sellers have overextended themselves, but we didn't ask for this, in fact several times we have told them to put house back on market. They refused at least four or five times." At this, realtor's jaw dropped, and he said, "I wasn't sure how much you knew about that, and as it was seller's personal business, I couldn't tell you what the sudden rush was. But now that you know, surely you understand, and we can get this moving and done by no later than the end of June."

I told him, "I would normally agree with you, however, as I've told you, we have tried to get them to put the home back on the market several times. We didn't ask for the lease, we had in fact initially worried that something such as this would happen, but had been assure it wouldn't. I have put up with seller and his son calling and stopping in almost daily wanting personal details, wanting to know every day if I have called lender. I have put up with hearing how XXX bought both children - who are grown - new vehicles, and can't make payments. I have heard how much the roof cost to replace (it didn't pass inspection), which by the way, still leaks. Seller was told about this before we moved in, and has done nothing but tell me how to "fix" it myself. I have heard how much the stucco (didnt pass) cost to replace."

Realtor then said, "Then you do understand, so we can definately get this done by the end of June, then?"

I replied, "Do I understand that his grown children have put him in debt that is over half the cost of the home we are leasing to purchase? Yes, I do. Is this my fault? No. I am not the one who is now deciding to inform us that they are 2 to 3 years behind on property taxes on all property EXCEPT the one that we are under contract on. Not that it matters, because when they decide to put a lien on his property, they will most likely include it anyway. Do I understand that he is trying to renege on what HE offered & signed a binding contract on? Yes, I sure do. Do I understand that he is now trying to blame us for his debt? Yes again. Do I understand that he is now trying to breach the contract and strong arm us into something else? Yes."

"Now, my question is, why are you trying to get me to sign another contract, and telling me that it's because the other has expired? I asked you straight out not 10 minutes ago if I was reading it right, that due to the fact we didnt' give WRITTEN notice, it is still binding. Unless I am wrong, this stipulation was OUR way out. According to the new closing date, and the lease addendum, we have until September 14, to secure financing as set out in the 3rd party agreement. That was seller's whole purpose in extending closing, and setting up a lease. IF we hadn't already offered repeatedly to end this, and been refused, I probably wouldn't say a word, and would agree to the end of June. HOWEVER, I'll be damned if after all of that, and just barely moving in, and the lease agreement in effect, that I will be forced to pay for XXX's financial problems."

Realtor just stood there. After a minute or two, he asked if I would give him lender's contact info so that he could assure seller that financing was underway. I told him that seller didn't need to know my personal finance information, that J was sending out a letter of approval, but wouldn't put a guaranteed date as seller wanted. I also told him that I knew that was part of problem. On last two brokers, both he (the realtor) and seller somehow knew about our credit scores, what debts we had, how much they were, what our taxes for the last 3 years reported, etc. With this one, the "boys club" wasn't involved, and they couldn't get info that isn't supposed to be released. I did give him J's # and extension, and told him that I would call her next day to tell her she was allowed to tell him that she was working on our financing, and that she could give a verbal pre-approval.

This morning, I get a call from J wanting to know who the realtor is calling her saying that I've agreed to call and authorize her to release all our financial information, and complete file. J was mad, and told me she couldn't believe he had done that. I told her that she could give basics, and that was all. She agreed, and said she wouldn't have given him more anyway.

I stop by insurance office only to be told by my agent that realtor and seller have contacted him, checking my ccoverage, and mentioned something about the contract wasnt binding due to incorrect information in it. He asked what was going on, I explained only that seller wanted to renege on lease.

Husband tried to contact seller, got his son, told him to have his dad call him to arrange time to meet Monday, to discuss this. He then went to run some errands. Two minutes later seller walks into our business, won't look at me, or respond. Lays a paper on a desk and walks right back out. I pick it up, and it's a note to my husband. This is basic content:

'We need to talk face to face only you and me. I need to sell house. I will be listing it again. I took out 60 day loan which is due may 14 (so the day we signed the lease, he took out a loan??). I can't pay it, and you with YOUR lending company don't seem to be moving on anything. I wouldn't have fixed anything on the house if I wasn't trying to help you (what? it didn't pass the damn inspection!) Let's talk early in the morning, at my business, you and I alone.'


What can we do?

 

[HomeGuru]

Texas

In November '06 we signed a contract to buy, with an earnest deposit, a home. Seller is a friend.

Worked with mtg broker recommended by realtor. Promised closing by Xmas. Broker was opening satellite office in nearby city, put us off time and again. Lost paperwork, didn't return calls, etc.

We offered to mutually dissolve contract. They told us no, and had told realtor that he was not to show the house.

Contacted new broker, who had helped sellers get financing. Day we were set to sign, lender went bankrupt. This was during all the subprime disaster.

Told seller situation, offered to dissolve the contract, told no again. I began calling lenders directly, TX Lending, said that they could help. J, lending officer, pulled up our credit and told me my options, they could offer 85% financing with 12% interest rate. She then went on that she would prefer to help us get our credit score a little higher, and within a month or two, we would be looking at about of 90% / 9.81%. If we could give her a little longer, it could go up to 100% / 8.1%.

I no sooner was off phone with J, and sellers call saying they would like to meet with us to discuss the house. We agreed to meet them.

When we arrived, the wife told us that they had decided that they wanted to offer us a lease option, on 6 month basis, if financing was not obtained by the first 6 months, they would extend until it was. At that point, told sellers about Texas Lending, and what they could do for us given two to four months. We tried several times to tell them to put it back on the market. At that point, the wife told us, "If it takes 3 weeks, or 3 years for you to get your credit right, then that's what it takes. You forget, we own our own business too, and we know how long it can take to get financing. End of discussion."

My husband went out of town, and during that time (March 15), new contracts were prepared. They were standard Texas contracts. Lease was a standard buyer lease that would terminate upon closing. Faxed to husband, he signed and faxed back. I signed them, and took them to realtor. I was told then that we could move in. I waited until my husband returned. We then waited until weekend of March 24/25 to begin moving in, worried that something would go wrong. We knew our recent luck.

Two days ago, seller came to our business and told me that unless we had money in hand by May 1 he would be offering property for sale. I mentioned that was only a week, he then said he meant June 1st. Seller then walked into office area, and didn't mention a thing to my husband, in fact was telling jokes, etc. When he left, I told my husband what seller had said. He was furious, contacted realtor, who knew nothing of it.

Following day, seller's son calls, saying that we need to get a letter of guarantee from our lender. By this time, I had already spoke to J at lending company, and she told me that my credit had already gone up 12 points and that if I could continue at this rate, in another month, we could qualify for at least 98%/8.3%. Said to not be forced into anything.

I called J back, told her that realtor and seller were trying to add a stipulation that unless we had letter of guarantee from her with a closing date in next 2 weeks, they would be offering house to other buyers. J told me they couldn't. I mentioned that I had been told to file lease and contract with county clerk. J agreed.

30 minutes later, realtor shows up, tells us we need to sign a new 3rd party financing addendum. We refused. He tried to tell us that since 20 days had passed since last addendum, it one was no longer any good. I read through it, and as far as I understand, WE had the option to back out within 20 days, by a written statement to seller. We didn't do this, as with the lease, and new closing date it wasn't necessary.

I had had enough. I told him, in a calm voice, the only reason we had agreed to the lease option was because seller had requested. We wouldn't have entered into the agreement if we had known that a month in, we would be told that seller would sell it out from under us. We did not ask for lease, and had argued against it initially. I went on that with lease, and new contract, we had until September. I then slipped, and made the comment, "I'm sorry sellers have overextended themselves, but we didn't ask for this, in fact several times we have told them to put house back on market. They refused at least four or five times." At this, realtor's jaw dropped, and he said, "I wasn't sure how much you knew about that, and as it was seller's personal business, I couldn't tell you what the sudden rush was. But now that you know, surely you understand, and we can get this moving and done by no later than the end of June."

I told him, "I would normally agree with you, however, as I've told you, we have tried to get them to put the home back on the market several times. We didn't ask for the lease, we had in fact initially worried that something such as this would happen, but had been assure it wouldn't. I have put up with seller and his son calling and stopping in almost daily wanting personal details, wanting to know every day if I have called lender. I have put up with hearing how XXX bought both children - who are grown - new vehicles, and can't make payments. I have heard how much the roof cost to replace (it didn't pass inspection), which by the way, still leaks. Seller was told about this before we moved in, and has done nothing but tell me how to "fix" it myself. I have heard how much the stucco (didnt pass) cost to replace."

Realtor then said, "Then you do understand, so we can definately get this done by the end of June, then?"

I replied, "Do I understand that his grown children have put him in debt that is over half the cost of the home we are leasing to purchase? Yes, I do. Is this my fault? No. I am not the one who is now deciding to inform us that they are 2 to 3 years behind on property taxes on all property EXCEPT the one that we are under contract on. Not that it matters, because when they decide to put a lien on his property, they will most likely include it anyway. Do I understand that he is trying to renege on what HE offered & signed a binding contract on? Yes, I sure do. Do I understand that he is now trying to blame us for his debt? Yes again. Do I understand that he is now trying to breach the contract and strong arm us into something else? Yes."

"Now, my question is, why are you trying to get me to sign another contract, and telling me that it's because the other has expired? I asked you straight out not 10 minutes ago if I was reading it right, that due to the fact we didnt' give WRITTEN notice, it is still binding. Unless I am wrong, this stipulation was OUR way out. According to the new closing date, and the lease addendum, we have until September 14, to secure financing as set out in the 3rd party agreement. That was seller's whole purpose in extending closing, and setting up a lease. IF we hadn't already offered repeatedly to end this, and been refused, I probably wouldn't say a word, and would agree to the end of June. HOWEVER, I'll be damned if after all of that, and just barely moving in, and the lease agreement in effect, that I will be forced to pay for XXX's financial problems."

Realtor just stood there. After a minute or two, he asked if I would give him lender's contact info so that he could assure seller that financing was underway. I told him that seller didn't need to know my personal finance information, that J was sending out a letter of approval, but wouldn't put a guaranteed date as seller wanted. I also told him that I knew that was part of problem. On last two brokers, both he (the realtor) and seller somehow knew about our credit scores, what debts we had, how much they were, what our taxes for the last 3 years reported, etc. With this one, the "boys club" wasn't involved, and they couldn't get info that isn't supposed to be released. I did give him J's # and extension, and told him that I would call her next day to tell her she was allowed to tell him that she was working on our financing, and that she could give a verbal pre-approval.

This morning, I get a call from J wanting to know who the realtor is calling her saying that I've agreed to call and authorize her to release all our financial information, and complete file. J was mad, and told me she couldn't believe he had done that. I told her that she could give basics, and that was all. She agreed, and said she wouldn't have given him more anyway.

I stop by insurance office only to be told by my agent that realtor and seller have contacted him, checking my ccoverage, and mentioned something about the contract wasnt binding due to incorrect information in it. He asked what was going on, I explained only that seller wanted to renege on lease.

Husband tried to contact seller, got his son, told him to have his dad call him to arrange time to meet Monday, to discuss this. He then went to run some errands. Two minutes later seller walks into our business, won't look at me, or respond. Lays a paper on a desk and walks right back out. I pick it up, and it's a note to my husband. This is basic content:

'We need to talk face to face only you and me. I need to sell house. I will be listing it again. I took out 60 day loan which is due may 14 (so the day we signed the lease, he took out a loan??). I can't pay it, and you with YOUR lending company don't seem to be moving on anything. I wouldn't have fixed anything on the house if I wasn't trying to help you (what? it didn't pass the damn inspection!) Let's talk early in the morning, at my business, you and I alone.'


What can we do?

**A: I read all the way up to "In November 06......"

 

[readytoscream]

Well, gee.....thanks for the help.....glad I posted to a REAL law forum, also.

 

[readytoscream]

Here you go, simple, short and easy to understand.

At request of seller, we signed 6 month lease option on home we had purchase contract on. We did this March 14.

Seller knew at time we wanted a better interest rate, we have 10% available in cash to put down. Therefore, they offer lease until Sept. 14, with option for us to extend another 6 months.

Seller and buyer sign purchase contract with closing date of Sept. 14 or before. Sign lease option same day.

Seller 5 weeks later, without realtor's knowledge, tells buyer they have until May 1 to close, or he will put house back on market. Lease contract clearly forbids this.

Buyer talks to realtor, who then tries to force buyer to sign new contracts, with closing no later than June 1. Buyer refuses. Realtor then tells buyer that buyer's 20 day option after March 14 to give written notice not to continue is actually for seller. Contract does not mention seller.

No where in any of the documents does seller have option to back out, unless buyer doesn't provide insurance, live in the home, or is late with lease payment by 5 or more days.

Lending officer agrees with buyer that seller can't do this.

Buyer told to file purchase and lease contracts with county clerk.

Buyer needs to know what action to take if seller attempts this, or tries to show home that buyer WITH LEASE OPTION ADDENDUM is living in.

 

[IrishNodak]

Seller is a friend.

Doesn't sound like much of a "friend".

My husband went out of town, and during that time (March 15), new contracts were prepared. They were standard Texas contracts. Lease was a standard buyer lease that would terminate upon closing.

Does the lease simply say "terminates upon closing" or does it have actual dates that you can obtain financing by?

Following day, seller's son calls, saying that we need to get a letter of guarantee from our lender. By this time, I had already spoke to J at lending company, and she told me that my credit had already gone up 12 points and that if I could continue at this rate, in another month, we could qualify for at least 98%/8.3%.

That is still a high rate. Will it be fixed or adjustable? Could you start out qualifying for an ARM at a much lower rate and refi with a fixed after your credit scores improve?

Husband tried to contact seller, got his son, told him to have his dad call him to arrange time to meet Monday, to discuss this. He then went to run some errands. Two minutes later seller walks into our business, won't look at me, or respond. Lays a paper on a desk and walks right back out. I pick it up, and it's a note to my husband. This is basic content:

'We need to talk face to face only you and me. I need to sell house. I will be listing it again. I took out 60 day loan which is due may 14 (so the day we signed the lease, he took out a loan??). I can't pay it, and you with YOUR lending company don't seem to be moving on anything. I wouldn't have fixed anything on the house if I wasn't trying to help you (what? it didn't pass the damn inspection!) Let's talk early in the morning, at my business, you and I alone.'

I would advise your husband to NOT do this!! He cannot insist on this and at the very least you need to be present. It seems like you are seeing thru the bs and he thinks he can strong arm your husband without you there. I would simply refuse to meet with him at all.

What can we do?

I think it's time to get a lawyer involved. At the very least, try to get a free consult with a real estate or contract attorney.

Questions for you: Was there not an "out" in the contract that you could have walked away at YOUR CHOICE?

2. How much was your earnest money? I think I would walk away now if the seller would put in writing that he was releasing me from the lease terms if any. Unless the earnest money is a lot.

3. Did you have the home inspected at your expense? Have the repairs been made? Were they an "out" if not fixed?

Do NOT sign anything else in writing he offers unless you have a lawyer look at it. I hope you can find a way to walk away from this. It doesn't sound like a good situation. If he's screwing you on this then there may be things wrong with the home the inspector didn't find. I can tell you from experience some things show up later.

Good luck and keep us posted!!

 

[readytoscream]

Doesn't sound like much of a "friend".

Exactly our feelings. I originally had "was" in place of "is".

Does the lease simply say "terminates upon closing" or does it have actual dates that you can obtain financing by?

It refers to purchase contract for closing date. Purchase contract says closing is to be September 14.

That is still a high rate. Will it be fixed or adjustable? Could you start out qualifying for an ARM at a much lower rate and refi with a fixed after your credit scores improve?

We are self-employed, so rate will be higher than normal for at least first two years, even though my husband began it in 1993, most lenders consider that in itself high risk. That is why we want lowest rate we can obtain at this time, as it's already going to be 1% to 2% higher than the average rate.

I would advise your husband to NOT do this!! He cannot insist on this and at the very least you need to be present. It seems like you are seeing thru the bs and he thinks he can strong arm your husband without you there. I would simply refuse to meet with him at all.

He did not do this. In fact, he sees through bs also, but seller doesn't seem to realize this.

I think it's time to get a lawyer involved. At the very least, try to get a free consult with a real estate or contract attorney.

Will be trying to do this Monday, need as much help as we can get between now and then.

Questions for you: Was there not an "out" in the contract that you could have walked away at YOUR CHOICE?

Yes, that was in first 20 days of purchase contract being signed, so it would have expired on or about April 6.

This is the part of the contract that realtor later tried to use against us, trying to tell me that we only had 20 days to obtain financing, and that we needed to sign "newer" version. I read through it again, and all it says is that WE had the option within 20 days to give seller written notice that we would be dissolving contract to purchase.

2. How much was your earnest money? I think I would walk away now if the seller would put in writing that he was releasing me from the lease terms if any. Unless the earnest money is a lot.

Seller only asked for $500, so not a lot, no. That's just it, even if we did decide to do this, something tells me that seller wouldn't let us. I think the whole mess the past few days is seller's way of trying to force us to accept lending terms ASAP. This is due to major debt seller suddenly seems to now want to disclose.

3. Did you have the home inspected at your expense? Have the repairs been made? Were they an "out" if not fixed?

No, not by actually inspector. Seller paid that. Inspector wouldn't pass roof. Seller had back half of roof repaired. (the home is adobe, back half of roof is pueblo style flat roof. Front half is terra cotta tile. The leak is in front half.) Inspector also did not pass exterior stucco due to weather damage. i.e. cracks, etc. Seller paid to have that done.

Our insurance agent had it inspected, would not insure if exterior wasn't painted to protect new stucco, and exposed older stucco due to flaking paint. Seller had it painted, though it was definately not "quality" work.

There isn't an out on this in the contract that I have found. Will look again in the morning.

As a side note, we have discovered possible plumbing/drainage problems since moving into home. Had heard rumor of this months ago, asked seller about it, were assured it had been fixed.

Do NOT sign anything else in writing he offers unless you have a lawyer look at it. I hope you can find a way to walk away from this. It doesn't sound like a good situation. If he's screwing you on this then there may be things wrong with the home the inspector didn't find. I can tell you from experience some things show up later.

WE have refused to sign any and all documents relating to the home at this time. Realtor was told that until a lawyer could look at all of it, paperwork would stay as is, no addendums or changes.

Part of the problem is, we gave up a rental home at a fixed monthly amount in order to comply with lease terms that we occupy the property. Housing is at a shortage in the area due to several local plants bringing in contractors. It could take months to even find a rental at this time.

One more question, should I file purchase and lease with county clerk, so that it will show up on any future title search? Or will that really help?

Thank you!!