Speculative Damages in Small Claims

[mo42186]

but how did they even know the house was in a development that had an HOA and that there were fees? Are they psychic? Could they psychically divine that there was a $2k lien on the property?


Hey, look at that; magic numbers. They are seeking the exact same amount of money to them as before; $57k. Who'ld a thunk?

Ya think maybe they wouldn't accept the sale if they were paid anything less than $57k? I'm not a betting man but I would consider putting money on that one. While you want to argue they somehow, in the second price, snuck the charge onto you, in reality, they did no such thing. The put their bottom line at $57k and stuck with that. Just because you negotiated a lower price doesn't mean they have to reduce what they will accept as a payoff.

LOL. You think they don't know the property that they made a loan on didn't have HOA fees? You think they don't do due diligence when they issue a mortgage? Have you ever taken out a mortgage? Give me a break. It's clear that you don't know how it works.

Your sarcasm ironically hits on the misrepresentation. The fact that they receive less proceeds yet have the same bottom line means it's an acceptance NOT MADE IN GOOD FAITH!!!

 

[OHRoadwarrior]

LOL. You think they don't know the property that they made a loan on didn't have HOA fees? You think they don't do due diligence when they issue a mortgage? Have you ever taken out a mortgage? Give me a break. It's clear that you don't know how it works.

Your sarcasm ironically hits on the misrepresentation. The fact that they receive less proceeds yet have the same bottom line means it's an acceptance NOT MADE IN GOOD FAITH!!!

Good luck with that.

 

[mo42186]

The fallacy in your argument is that for the preexisting duty rule to apply, the change must be going to them. That is not the case in this situation. They are benefiting no more than they were, before the lien was disclosed. The difference is going to someone else. The legal duty rule does not apply if the parties mutually agree to change the terms of the contract.

We're on the same page here Roadwarrior. The pre-existing duty rule DOES apply though. That's why banks are generally able to retract a short sale offer they've accepted at any time. Our offer of $64k doesn't constitute an enforceable agreement that binds both parties because our offer to pay the bank sums already owed does not qualify as consideration of any sort. And of course, without consideration, there's no contract. As I've already stated though, we're not basing the claim on any sort of contract breach. It's based on misrepresentation and deceptive practices.

 

[justalayman]

mo42186;3092670]LOL. You think they don't know the property that they made a loan on didn't have HOA fees? You think they don't do due diligence when they issue a mortgage? Have you ever taken out a mortgage? Give me a break. It's clear that you don't know how it works.

Yes, I have taken out a mortgage. Additionally, when I was a RE agent, I assisted hundreds of people through their sale or purchase of homes. I know it has never been asked on any mortgage application I have made. I do not recall it ever being a requirement of any of the clients I had when I was a RE agent.

Your sarcasm ironically hits on the misrepresentation. The fact that they receive less proceeds yet have the same bottom line means it's an acceptance NOT MADE IN GOOD FAITH!!!

You are missing the point; they are not receiving less proceeds. That is the point; they are requiring they receive at least $57k in proceeds or they most likely would not have approved the sale. They didn't change a thing.

You are the one misconstruing the situation. They are demanding the same bottom line. All they are requiring is that whomever is involved in the deal pick up any added costs so their bottom line remains at $57k. I suspect they don't care who pays the money they were going to cover but they have put it that they will require $57k to sign off on the sale.

 

[mo42186]

I know it has never been asked on any mortgage application I have made. I do not recall it ever being a requirement of any of the clients I had when I was a RE agent.



You are missing the point; they are not receiving less proceeds. That is the point; they are requiring the receive at least $57k in proceeds or they most likely would not have approved the sale. They didn't change a thing.

The diligence documents lenders use include this sort of information.


Right, why'd they lead us into believing they'd accept a $64k price then? When we had our offer for $66k, we did our due diligence and found mold in the house. We dropped our offer to $64k and they said No. 3 weeks later they called us back and said the offer for $64k was acceptable. In the end, they wanted us to pay $66k. I don't believe I'm missing any point here. It's an acceptance made in bad faith.

 

[justalayman]

Ok, let's go backwards a bit on this. When you discovered mold,. what did your contract allow you to do?

I suspect it allowed you to terminate the contract, right? So, unless it also allowed you to negotiate the terms of the contract, what you negotiated is a brand new contract. Which is it? If it is the latter, the new contract is a new contract. Nothing carries over. If it is an amended contract, then you need to look into what can be altered with the amended contract. If it is unlimited (in other words, the entire contract is open), it becomes essentially a new contract as anything can be changed. If you do not agree with the newly negotiated contract, your right is to refuse to accept it.

Then, look to the section that states what the SELLER is to deliver to you in exchange of your $64k. I suspect it is something along the line of a clear title with no encumbrances other than those available via public record or any specified within the contract. Am I close? If so, that means, unless there is something putting the responsibility for the lien on the bank, it is on the seller. So, you argue with the seller about the lien. If they have to take money out of their pocket to close this, this is their problem, not the banks.

 

[mo42186]

Ok, let's go backwards a bit on this. When you discovered mold,. what did your contract allow you to do?

I suspect it allowed you to terminate the contract, right? So, unless it also allowed you to negotiate the terms of the contract, what you negotiated is a brand new contract. Which is it? If it is the latter, the new contract is a new contract. Nothing carries over. If it is an amended contract, then you need to look into what can be altered with the amended contract. If it is unlimited (in other words, the entire contract is open), it becomes essentially a new contract as anything can be changed. If you do not agree with the newly negotiated contract, your right is to refuse to accept it.

Then, look to the section that states what the SELLER is to deliver to you in exchange of your $64k. I suspect it is something along the line of a clear title with no encumbrances other than those available via public record or any specified within the contract. Am I close? If so, that means, unless there is something putting the responsibility for the lien on the bank, it is on the seller. So, you argue with the seller about the lien. If they have to take money out of their pocket to close this, this is their problem, not the banks.

Yes, the contract was terminable upon discovery of mold. We reoffered and they refused. They came back to us and we came up with a new purchase agreement with the price to be set at $64k. This is a new contract with the seller, not the lender. The lender just gives its blessing with a Lender Addendum. At this point, the lender creates a smaller allowance for its closing costs. What used to be a $9k allowance (66-57) is now a $7k allowance (64-7). When they calculate their allowances, they deduct everything to the cent... not a penny more or less. Now all the sudden they have $7k allowance because of what? (hint: "Hey guys, let's disguise the cost of the $2k lien and pass it to the buyer at the end!")

You're absolutely right that the seller should be responsible for the costs *in theory*. However, reality is contrary to this because of the nature of a short sale. The sellers are completely insolvent. Why would the sellers pay off the lien? They have 0 skin left in the game. They've defaulted, they're out of the house (in California at this point - the house is empty), and their credit is already shot. They have no incentive to pay anything. It's the lender who's controlling the show. That's how these short sales work. So although we technically have a contract with the seller, they're gone and the Lender is calling the shots on how big of a hit they're willing to take.

 

[tranquility]

For the first time in the years I've been here, what am I, chopped liver?

My theory, is no contract as no privity. No tort as no damages.

The rest is just folderal based on trying to make a suit out of nothing.

 

[mo42186]

For the first time in the years I've been here, what am I, chopped liver?

My theory, is no contract as no privity. No tort as no damages.

The rest is just folderal based on trying to make a suit out of nothing.

Hi - I appreciate your input, but my position is that the pre-existing duty rule is not meant to be abused in such a way. It has its limits in shielding parties not privy to the contract. Loss of profits is not inconsistent with damages, either... I believe there is a chance that loss of profits in some circumstances could satisfy the 4th prong of fraudulent damages.

 

[justalayman]

mo42186;3092687]Yes, the contract was terminable upon discovery of mold. We reoffered and they refused. They came back to us and we came up with a new purchase agreement with the price to be set at $64k. This is a new contract with the seller, not the lender. The lender just gives its blessing with a Lender Addendum. At this point, the lender creates a smaller allowance for its closing costs. What used to be a $9k allowance (66-57) is now a $7k allowance (64-7). When they calculate their allowances, they deduct everything to the cent... not a penny more or less. Now all the sudden they have $7k allowance because of what? (hint: "Hey guys, let's disguise the cost of the $2k lien and pass it to the buyer at the end!")

there ya go. It was a totally new negotiation. They could have done anything they wanted at that time so, unless you can somehow put the liability for the lien on the bank, it is either yours or the sellers to pay and unless it was disclosed or available via public records, I would see it as the sellers.

and yes, I am quite aware with whom your contact is. The lender has no right to sell something that isn't theirs. They do have the right to determine what they will accept to sign off of the security lien they have on the home.

The sellers are completely insolvent.

that is not the banks problem. That is your problem.

Why would the sellers pay off the lien? They have 0 skin left in the game.

because they still own the house and apparently want to short sell it. That is something you need to speak with their agent about. Maybe they would rather let is go to foreclosure than to pony up the $2k. It's up to them. If you want it, maybe you'll accept the lien and pay it. It's up to you but the bottom line is; if the bank does not want to pay the lien, they are not obligated to.

I suspect the sellers agent will do whatever he can to make this work. He won't get a commission if the sale fails. I bet he likes to get paid. That is who I would push the issue with, not the bank who has the ability to say; nope, sorry but we told you what we would accept. Take it or leave it.

 

[mo42186]

because they still own the house and apparently want to short sell it. That is something you need to speak with their agent about. Maybe they would rather let is go to foreclosure than to pony up the $2k. It's up to them. If you want it, maybe you'll accept the lien and pay it. It's up to you but the bottom line is; if the bank does not want to pay the lien, they are not obligated to.

I suspect the sellers agent will do whatever he can to make this work. He won't get a commission if the sale fails. I bet he likes to get paid. That is who I would push the issue with, not the bank who has the ability to say; nope, sorry but we told you what we would accept. Take it or leave it.

I can absolutely guarantee you that a seller would never pay a dime out of pocket in this circumstance. The lender originally allocated for it but tried to pull a fast one on us. The listing agent is actually a party to the suit, but for a different reason. We already got the NV Real Estate Division to sanction the agent b/c she was in violation of NRS 645.633.

 

[tranquility]

Well, good luck with your theory. I suggest an attorney so you don't get sued for malicious prosecution. Your theory is rubbish. Quite frankly, where did you discover your theory? Was it at a bull session with buddies or when you were studying and found some facts that might fit? I can provide any number of cases on how the bank approval is not actionable by you, please provide one, from any state, where it is. Well where it is by the buyer in such a situation. (a couple by the seller)

One.

Any state.

Heck, any country.

 

[justalayman]

I can absolutely guarantee you that a seller would never pay a dime out of pocket in this circumstance. The lender originally allocated for it but tried to pull a fast one on us. The listing agent is actually a party to the suit, but for a different reason. We already got the NV Real Estate Division to sanction the agent b/c she was in violation of NRS 645.633.

You would have to cite about the wordiest statute out there. There are a lot of issues within that statute.

The bank is not liable for the lien. It's that simple. They had no obligation to disclose it to you as they are not the seller and they are not liable for the lien. There is nothing certain that they even knew of the lien. That was the obligation of the seller to disclose. If the mold wasn't discovered, how do you know they wouldn't have walked up and said: btw, has your agent told you there is a $2k lien that is yours to pay or accept? Then what would you have said?

How do you know they were not aware of the lien, or at least the amount of the lien, until the closing agent started calling around getting figures for closing?

bottom line; unless the bank contractually agreed to pay that lien, it was not theirs to pay. While you argue they had that $2k in the original purchase agreement, it doesn't appear you have anything other than speculation to support that. Even it is was, since it was not their obligation to pay, they simply decided they weren't going to cover it in the new contract.

where is your agent in all of this? or are you going it alone?

 

[mo42186]

Well, good luck with your theory. I suggest an attorney so you don't get sued for malicious prosecution. Your theory is rubbish. Quite frankly, where did you discover your theory? Was it at a bull session with buddies or when you were studying and found some facts that might fit? I can provide any number of cases on how the bank approval is not actionable by you, please provide one, from any state, where it is. Well where it is by the buyer in such a situation. (a couple by the seller)

One.

Any state.

Heck, any country.

This is my own rubbish theory... but when it comes down to it, it was plain and simple fraud to the lay person. That's why this claim is brought in Small Claims and not district court. I strongly doubt they have a malicious prosecution counterclaim.

I'll keep this thread updated for anyone curious.

 

[TheGeekess]

This is my own rubbish theory... but when it comes down to it, it was plain and simple fraud to the lay person. That's why this claim is brought in Small Claims and not district court. I strongly doubt they have a malicious prosecution counterclaim.

I'll keep this thread updated for anyone curious.

Alrighty then.