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Small Claims Suit In Care of Real Estate

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bcmarz

Junior Member
What is the name of your state (only U.S. law)? MI
Hello,

My name is Brandon, and I'm from MI. I'm currently a Marine stationed in Hawaii.

I will be finishing my military contract within the next two months. Once I returned from Iraq earlier this year I began looking for real estate in MI for when I moved home. I ended up finding a place. In order to allow for signatures/addendums my Mother was made my Power of Attorney.

Due to there being several offers on the property, I decided to bid over asking price, and set closing 2 1/2 months later in order to allow the owner time to pack-out and enjoy the summer before I returned home. The offer was accepted, so the inspection process began. Unfortunately there were several things wrong with the property. The furnace was over 25 yrs old, the air conditioner did not work, and the water heater was way past its life span.

I began preparing an addendum for my other to sign, but the seller's realtor explained the house was being sold "as is". This was not in the original purchase agreement. My realtor along with the seller's realtor took a cut in commission to make up for what I was requesting. I decided to go forward.

A few weeks later the seller's conducted a septic tank inspection, which led to negative results. The septic would need to be replaced. Again I offered an addendum stating that I would like $7,000 put in escrow for repairs. The seller did not want that, and they offered in an addendum that they would pay for the septic repairs, and that it would be completed prior to closing, which was August 10th. We accepted, but requested to close on Aug. 8th, as the 10th was a Sunday.

Although my mother had power of attorney, I decided I wanted to be home for closing. I'm a first time home buyer at 22 years of age. I bought a ticket to arrive home by Aug 7th spending $1,100. I also requested leave from my command, which was approved. I would be home for 10 full days. Enough time to close on the house, and enough time to begin cleaning/tearing down wallpaper.

On the 6th of August I was at the airport when my mother called me. She stated that the seller cancelled the septic installation (which was suppose to happen on the 6th). They also requested that closing be set to the 12th, and that they will rent back the property until Aug 30th. I felt this was unreasonable because my loan rate expired on the 11th, and I would have to reapply and go through the rest of the process. I boarded the plane, and headed home hoping to close on time. Again, I asked for money in escrow at closing, but they said no, and that they will only close on the 12th. From there, I said no, and they again proposed that they would install the septic after closing, and asked if I would let them keep a POD in the driveway for a month. I told them that it was possible if we still closed on the 8th, and money was put in to escrow for the septic. They said no, stating that they would pay the septic company $2,500 at closing for the repairs. This was not desirable because any unforeseen issues would come directly out of my pocket. I didn't save all of my money from Afghanistan and Iraq to be hung out to dry.

When I arrived closing never happened. Because he breached the contract due to not installing the septic, the earnest money was to come back to me. From there, the seller starting threatening my mother and real-estate agent. This man is not entirely right in the head. He's jobless, in debt, and near foreclosure on his home. After the threats his real estate agent ended up walking away from him.

The seller went to small claims office and filed a suit against my mother for $1,800. $1,000 being for the earnest money, and $800 for God knows what.

The Magistrate happened over a week ago, with still no decision. I feel that this man is only suing so he can get money to pay his bills. He's in his mid 50's without a job.

Can he even file a suit against my mother? She was only a power of attorney, with all the decisions being made by myself. She's the only individual on the suit. Does anyone have any advice?

I plan to counter-sue if this individual wins the case. Please help.
 


FlyingRon

Senior Member
He can sue someone who isn't a party to the contract, but he's not going to prevail.

Earnest money isn't a claim. He has to specifically enumerate damages.
 

bcmarz

Junior Member
That was my original thought. However, I believe the individual that overheard the case wasn't an actual judge. After over a week no decision has been made.

My belief is that 9 times out of 10 the decision will be made in court, however the woman stated she would have one within 3-4 days.

Is she possibily seeking advice?

What are my best options for a counter suit? In Michigan small claims court is limited at $3,000.

Money lost on my side if he wins:

$1,800 lawsuit
$1,100 for plan ticket
$350 for inspection

Total: $3250

That's not to include the 10 days of leave lost due to wasting of time, and the point increase on a mortage (6.35 to 6.75), which leads to thousands over the life of a 30 yr mortgage.

I'm a very proud individual, and my wish is to not have to go that route. However, I'm 22 years old, and I cannot afford to lose all of this money, as I'm just getting out of the Marine Corps and attempting to start a new chapter in my life.
 

tranquility

Senior Member
You can only sue for the breach and the cost to mitigate your damage. You cannot sue for consequential damages in contract.

One of the first cases every law student hates in contracts class is a very old case which has to do with a mill shaft. A mill needed a shaft and ordered one. They wanted it by the fastest delivery possible and really, really wanted it now and told them why. The company delivered it by paint horse slow poke delivery service, causing the mill to be without a shaft for a time even though they made the manufacutrer promise to send it fast, fast, fast.

The end result was no damages for the mill closure even though fullfilling the contract would have prevented the damage. (There was some minor damage for the difference in cost between the delivery methods and something else which I don't right now recall.)

Same as it is today.
 

bcmarz

Junior Member
I appreciate you sharing that example. It brings things in to prospective.

My only wish is to avoid having to pay this individual $1,800. I could care less about outside costs. I'll just filter the whole situation in to a "lesson learned" chapter in my life.

Currently I'm not in possession of the earnest money. The broker for my real estate agent is still holding on to it. The other $800 is apparently coming from cost of permits for septic repair. The reality is that he will need those permits for whoever he sells the property to. He can not sell the property when the septic is in "condemned" status. In the actual suit he's suing for possession of earnest money along with that $800.

I'm hoping the Magistrate will realize that this individual breached what was agreed in the contact, and I will have the earnest money returned to me by the broker, and I won't haev to fork up an additional $800 sum.

It's a kick in the face because he initiated the suit, and the Magistrate was originally making him look like the victim. We submitted all the paperwork, purchase agreement, addendums, and threats that were e-mailed from this man.

I want him out of my life. He does not intimidate me, but I will not stand by while he threatens my mother and family. That's not how things work.
 

tranquility

Senior Member
Usually "earnest money" is desgnated in the contract as liquidated damages. Was it listed as that here? I don't see you breaching, but him breaching. Defend yourself in court and counter sue for the direct damages.
 

bcmarz

Junior Member
Usually "earnest money" is desgnated in the contract as liquidated damages. Was it listed as that here? I don't see you breaching, but him breaching. Defend yourself in court and counter sue for the direct damages.
It is listed as "Liquidated Damages", however he was the one who breached contract. I'm not understanding how the Magistrate doesn't see this.

I will counter sue for direct damages. I truly only want the earnest money back in my possession, and this man out of my life.

Are there any other things I can bring up while in court in order to make my case more iron clad? I'm trying to make sure all my tools are in the toolbox before I go in there.
 

bcmarz

Junior Member
I received a decision from the court yesterday, nearly 2 weeks after the initial hearing. The seller has won.

I will be appealing this decision, as it will go in front of a judge now.

Everything in the paperwork points to the seller breaching the contract. I'm not sure if the magistrate looked over said documents.

IF this is the real world, I should just stay in the Marine Corps.
 

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