Buyer threatening to sue - Posted by Robert

Posted by Jim Locker on June 30, 2001 at 17:00:54:

Presumably your LO deal has some specific performance requirements for the T/B in it, above and beyond what is called for in the lease.

Suppose, for instance, that the T/B is under obligation to complete certain repairs/upgrades to the property. Then, under the terms of your agreement, you can perform an inspection to determine that all the terms are being satisfied. If there are no specific requirements of that sort, there will still be requirements in the lease pertaining to sanitation. If there are no such requirements in your lease, then there are bound to be in state and local laws.

So perform an inspection, and write the tenant up for any and all breaches of the lease - even the most trivial breach. Then, since he is in breach, give him the minimum statutory time to cure the defect(s) or be subject to eviction proceedings.

Presuming your paper trail is complete, clear, and legally done, you hold the whip. Use it.

Buyer threatening to sue - Posted by Robert

Posted by Robert on June 30, 2001 at 08:04:08:

I have a buyer, who met the seller, who found out that I was selling the house for $20,000 more than I optioned it for.
The loan is an FHA/IHA loan. The lender also called the seller saying that they are thinking about calling the loan due. They (lender) are okay with the buyer being in the house, but not with the profit I am making.

Anyway the seller and buyer have become friends, and they want me to assign my contract from the the seller to the buyer. I told them that I would walk away, if the lender was going to call the loan due. The lender has yet to give an answer to the seller whether they are going to call it due. They said that they have never had this situation before, and are not sure what to do.
The buyer is now threatening to take me to small claims if I don’t assign him the contract. He say’s I have three days in order to comply or I will be assimulated or something to that nature.

What would you do?


Re: Buyer threatening to sue - Posted by Alicia

Posted by Alicia on July 01, 2001 at 19:56:27:


I wouldnt take this seller to heart. It sounds like he is just mad as ---- because you are going to make a buck. I would defiently talk to an attorney (most have free consultations) and see if this guy can really do anything to you. I highly dought it. Here is what I do when I do any type of transaction with any seller - - right in the contract I write that I intend to make an unconscionable profit. That way if I am ever sued, the judge will throw it out. I dislclosed to the seller that my intention was to make lots of money.
I hope things work out for you! Keep us updated and best of luck!


Re: Buyer threatening to sue - Posted by Bryan H (ny)

Posted by Bryan H (ny) on July 01, 2001 at 15:03:38:

I was just thinking… do leases survive a forclosure?
Why not contact the seller’s lender to make sure that they call the loan due? Gets the seller out of the picture, gives them a well deserved kick in the butt, and you still have the option to buy. The only difference is that the bank is the owner of the prop. Of course, thats only if your lease would survive a forclosure.

Question for the experts:
When a lender calls a loan due and you can’t pay up, will/can they forclose or is some other method used to cure the situation?

Re: Buyer threatening to sue - Posted by B.L.Renfrow

Posted by B.L.Renfrow on July 01, 2001 at 12:42:00:

“The lender also called the seller saying that they are thinking about calling the loan due. They (lender) are okay with the buyer being in the house, but not with the profit I am making.”

Who told you this? Let me guess…maybe the seller? Hmmmm…think you can believe ANYTHING he tells you?

Now, it IS possible that the seller, or the T/Ber, in trying to cut you out of the deal, did notify the lender that the property is leased by you with the option to purchase. The existence of a purchase option probably does violate the due-on-sale clause on the existing loan. But would the lender realistically call due a performing loan for NO OTHER REASON than the seller entering into a purchase option? Highly unlikely. And the lender most certainly wouldn’t give a hoot about any profit anyone else might make on sale of the property, as long as their loan was paid off.

“The buyer is now threatening to take me to small claims if I don’t assign him the contract.”

Take you to court for what? Making too much profit? I wouldn’t give that argument more than 30 seconds in front of the judge.

"He say’s I have three days in order to comply or I will be assimulated or something to that nature.

What would you do?"

Well, if I thought assimilation was a possibility, I’d be calling Starfleet Command to request some of those nanoprobes to use against the Borg. Or maybe Species 572, or whoever it was, that was able to defeat the Borg and prevent assimilation. I most definitely wouldn’t want to be running around the galaxy with those nasty Borg implants.

In all seriousness, these clowns are working in cahoots to steal your profit. They are no better than con artists who prey on the elderly or weak. This is no time to be kind or weak. It’s time to draw the line in the sand and arm your weapon.

As the others have suggested, I’d do this…first thing tomorrow:

  1. Go record a memorandum of option as soon as the clerk’s office opens (if you have not already done so). It may or may not have much effect, but it certainly can’t hurt anything.

  2. Serve notice to terminate the T/Ber’s tenancy immediately for the multiple lease violations. I would not give them the opportunity to correct it, unless required by law. This guy has demonstrated already beyond a shadow of a doubt that he’s trouble. This is not someone you want to be dealing with.

  3. Send (or have your lawyer send) the cease and desist letter to the seller as outlined below.

  4. Make absolutely certain you are in compliance with every letter of your lease and option agreements with the seller, so he can’t claim YOU are in default.

  5. Document and record EVERYTHING. Make notes describing phone calls, conversations, hang-ups, etc.

If you are unsure of your ability to handle this yourself, it might be time to turn it over to your attorney, or find one, if you don’t already have one lined up. It would be money well spent, when you’re talking about a $20k profit.

When you are able to get this T/Ber evicted, I’d try very hard to find a CASH buyer, or even consider getting a loan myself in order to get the lying, cheating, untrustworthy seller out of the picture for good. You don’t want to be dealing with this jerk any longer than necessary.

If either of these bozos do file suit, be sure to show up and defend yourself. From what you’ve presented, their arguments will get laughed out of court faster than they can say, “But…yer honor…” Again, if you’re uncomfortable with any part of this, hire an attorney to represent you.

Unfortunately, dealing with scumbags like this is part of the business. I myself have a tendency to trust people, and give them the benefit of the doubt when I should probably be reaching for the ammunition, so to speak. But my tolerance for sorry canned excuses is growing thinner all the time…sad to say, at the expense of MY profits. Don’t let these morons intimidate you out of what is rightfully yours.

Brian (NY)

Re: Buyer threatening to sue - Posted by Robert

Posted by Robert on June 30, 2001 at 15:49:37:

Thank you everyone for your advice and support.
I will fight him on this, I think I do have enough to evict him, tell me what you think.

Lease says, no pets without written permission, he has a dog.
Also, he built a room in the garage, again without permission or written permission. He said he talked to the owner who said it was okay. I didn’t give him the ok.

He has called several times today, I haven’t answered. I don’t want to talk to him until I have all my ducks in a row.

Thanks again,

Re: Buyer threatening to sue - Posted by JohnBoy

Posted by JohnBoy on June 30, 2001 at 14:29:01:

Let me get this straight. You’re saying the seller’s LENDER is okay with your buyer being in the house, but the seller’s LENDER is not happy with the profit you’re making??? LOL That is NONE of the seller’s lender’s business! Why would the seller’s lender care about the profit you or anyone else is making??? Is this lender considering approving your buyer for a new loan so they can exercise their option and buy the house from you? Unless that is the case here, then the seller’s lender has nothing to do with any future profits being made off a house they previously gave a loan on! LOL

These people are just trying to play you for a fool by scaring you with frivolous lawsuits and threats of being sued!

You enter into a L/O with a seller that gives you the right to sublet. Perfectly legal. You sublet the property to someone at a higher rental rate than you have to pay and give them an option to buy from you at a higher price you have to pay. Perfectly legal! Nothing they can do about it! Sure, they cry about it, make frivolous threats to sue you over it, but that’s about all they can do…cry!

Is your tenant/buyer current on paying their rent? If not, serve notice and if they don’t pay, file for eviction.

If this bozo files in small claims I would also file a counter suit for frivolous and tortious interference of a contract. After the Judge dismisses his claim you might just prevail on your counter suit and walk out of court with a judgement against this clown.

The bottom line is this. YOU have a legally binding option on this property. That means YOU have legal control over this property until YOUR option expires. YOU can, at any time exercise YOUR option and buy the property. Even if you have a tenant leasing the property from you with an option to buy from you. YOU can still exercise your option at any time. YOU just have to honor your lease and option with your tenant until it expires or they exercise their option from YOU.

Worst case, YOU can exercise your option now if you choose. You can take your lease down to a bank and show them that you have a tenant already in place paying x amount in rent. That lease will show proof of income to support the debt service on your loan. You don’t HAVE to do this, but it is an option you have if you wanted to do it.

I wouldn’t lose any sleep over this one!

Re: Buyer threatening to sue - Posted by dave

Posted by dave on June 30, 2001 at 11:28:27:

You could assign your option to the buyer … for $20,000.


Re: Buyer threatening to sue - Posted by BillW.

Posted by BillW. on June 30, 2001 at 09:22:10:

Seems to me like they are working together to steal your profit. File a memorandum of option at the courthouse to cloud the title. If they want to play hardball, you can decide if you want to play. I never heard of a lender calling the loan simply because someone had an option on a property. You have not even closed yet. Are you sure that it’s not just some friend of the seller or potential buyer posing as the lender? I would bet that the seller and the potential buyer are working together to rip you off.
I think that any judge would laugh such a claim out of small claims court and dismiss it. You have done nothing wrong. They are simply trying to steal food out of your children’s mouths.
Call your attorney or get one and threaten to countersue. Sue the seller for specific performance and the buyer for tortious interference in your deal. Otherwise you will have nothing and they will be laughing all the way to the bank.
By the way, you could also tell the buyer that you have decided not to sell him the property. Use some legal reason. After all, if you do sell it to him and make the profit, he will hound you incessantly about things you “failed to disclose” and attempt to make your life miserable. Just tell the seller that you are wise to his attempt to steal your profit, that you will be exercising your option and that if he fails to deliver, he will be sued. If you let these thieves rip you off, you’ll never forget it and it will always nag at you.
Just my opinion.

Re: Buyer threatening to sue - Posted by Jim Locker

Posted by Jim Locker on June 30, 2001 at 17:09:28:

:Lease says, no pets without written permission, he has a dog.
Also, he built a room in the garage, again without permission or written permission. He said he talked to the owner who said it was okay. I didn’t give him the ok.

Commence eviction proceedings IMMEDIATELY. Run - do not walk - over to that house to deliver the statutory notice to vacate for breach of lease agreement TODAY. IF your state law permits, DO NOT accept a remedy of the defect. If your state law requires that you accept a remedy of the defect, then permit the remedy only in the statutory minimum time. In this case, the defect(s) are a pet and unauthorized modification of the property. Require the pet to be gone and the modifications to be undone.

File a lawsuit againt the seller for tortious interference. Agree to settle out for a reduction in sales price.

Re: Buyer threatening to sue - Posted by JohnBoy

Posted by JohnBoy on June 30, 2001 at 16:16:09:

I would send the seller a certified letter demanding that he stops and desist from ANY further contact with YOUR tenant. Failure to comply will result in a suit filed against him for tortious intereference with your contract between you and the tenant. I would also advise that he DOES NOT grant YOUR tenant any permission to make ANY alterations to the property. It would be a breach of your lease with the tenant and that would also affect YOUR option you have with him to buy the property. Your option is based on the property in the condition it was originally in when you entered into your agreement with him. ANY structual alterations done to the property by your tenant because of HIS actions by granting YOUR tenant permission without YOUR written consent will result in HIM having to reimburse you for ALL financial costs involved to restore the property back to its original condition and/or will hold him liable for any loss in the properties value resulting from HIS unauthorized actions!

I would also send a certified letter to the tenant informing them they are in breach of their lease agreement. The lease specifically states NO PETS ALLOWED and they are to get rid of the pet IMMEDIATELY or you will take legal action to have them evicted from the property. Unless they comply immediately you will also have the pet removed from the property by the proper authority since the lease prohibits any pets and any pets on the premises will be considered strays!

Here is one of my favorite clauses in my lease agreement I use pertaining to pets. You might want to add it to your future leases.

No Pets Allowed. All pets on the property not registered under this lease shall be presumed to be strays and will be disposed of by the appropriate agency as prescribe by law. Any pets kept on the property without the permission of the Landlord in writing shall be a complete and material breach of the lease. Absolutely NO Dogs OR Cats OR Pets of ANY KIND allowed on the premises. Pets will not and shall not be allowed for even a short term basis I.E., not even one or two days. There shall be a $20.00 per day fine for any Tenant that allows or has any pet(s) residing at or on the premises. This shall include, but not limited to, visiting pets. ?PETS? shall include, but is not limited to, both, warm and cold blooded animals, such as dogs, cats, fish, hamsters, rats, mice, birds, snakes, lizards, and insects. This lease states; ?NO PETS ALLOWED.? If, at ANY TIME, it is found that ANY PET(S) are being kept or have been kept on the premises, a Non-refundable charge shall be demanded immediately to cover carpet replacement in the amount of what ever the cost is and could cost $3,500.00 or more, in addition to the $20.00 per day. NO PETS shall be kept within or about the premises. If it is found by the Landlord that any Tenant had kept a pet within or on the premises after Tenant vacates, Tenant?s security deposit shall be non-refundable and the above will be in effect. This can and shall put the Tenant in Default and/or in breach of this lease agreement. Any fines, fees, and/or costs paid by Tenant as result of having kept any pet within or on the premises shall not constitute any waiver of this lease by allowing Tenant to keep any pets of any kind.

Re: Buyer threatening to sue - Posted by Robert

Posted by Robert on June 30, 2001 at 09:39:24:

Thanks Bill,

I forgot (big oops) to mention that the house is under a L/O and the buyer is the tenant?

What legal reason can I give for not selling to the buyer? What about the Option agreement? He has been paying the rent on time every month?


Re: Buyer threatening to sue - Posted by Carolfl

Posted by Carolfl on July 01, 2001 at 14:26:34:

FYI, where I live, I have to give a tenant 7 days to cure this kind of breach of lease… I CANNOT not give him that option.

Bummer, I know. But you might want to check on your local landlord/tenant laws.


Re: Buyer threatening to sue - Posted by phil fernandez

Posted by phil fernandez on June 30, 2001 at 18:28:52:

Hi JB,

That no pets clause certainly makes things very clear. I am going to incorporate most of it into my leases.

Where do I send the royalties.

Holy Cow! - Posted by Terry (Houston)

Posted by Terry (Houston) on June 30, 2001 at 16:26:53:

Wow, Do you think you could be a little more clearer?

I would be afraid to put up deer antlers over the fireplace with that one.

If I had one that is. (Deer Antlers, not a fire place, I have one of those) {A fire place, not the antlers}

You get the idea.

Re: Buyer threatening to sue - Posted by BillW.

Posted by BillW. on June 30, 2001 at 15:22:58:

I agree with the other posts also. They are attempting to rip you off, plain and simple.
As for a legal reason to cancel the deal to the new buyer, how about this:
In your sublease/option agreement to him, you probably have a clause that says he is not allowed to do anything illegal. Well, this is illegal. After you STOMP him in court, file and win a countersuit. Then get a judgement against him and then file an eviction on him for doing illegal actions and evict this thief.
You don’t really want this person buying from you anyway. If he does, you can count on a long list of complaints and problems from him due to your “alleged” lack of disclosure, etc. If you get any problems from the original seller, or from the mother, sue them as well.
If it was me, I’d gladly spend $5000 of the $20,000 profits to protect the remaining money, and I’d get that $5000 back with interest from every party that tried to steal from me.

What Legal Reason ??? - Posted by JT - IN

Posted by JT - IN on June 30, 2001 at 10:33:29:


Your question is, “What legal reason do you have not to sell the house to the T/B”? Your question should be, “What legal reason, does the T/B have to(even think about), change your agreement in the L/O”?

You MUST, for the sake of every investor who has ever bought a property, or ever will buy a property, using creative financing methods, stand your ground here. Bill W, has hit the nail on the head. DO NOT let these people intimidate you, or find an investor to assign your position to, that is willing to shove that deal, where they will have a hard time reading the fine print.

Get your bearings here, before you say something else to either party, like “I will just walk away”. Assuming you have all your documentation ducks in a row, you will prevail in this case.

One last question, Does the principle of this deal, or the profit that you have earned, not mean that much to you, to consider walking? Or are you just not sure about the legalities, or trying to avoid the hassle? Just trying to understand your thinking. I think maybe you are having a weak moment, and you need to get over that ASAP, and defend what is rightfully yours.

Just the way that I view things…


Extortion - Posted by Tom

Posted by Tom on June 30, 2001 at 10:06:42:


Heck Phil - Posted by Terry (Houston)

Posted by Terry (Houston) on June 30, 2001 at 20:42:53:

I don’t even think you could mount your Bass or Salmon or whatever with that clause.

Hope all is well my friend.


Re: What Legal Reason ??? - Posted by Robert

Posted by Robert on June 30, 2001 at 11:07:01:

Thanks JT,

yes, I am having a weak moment. I am not sure of the legalities and I guess I am trying to avoid the hassel.

But,I am also tired of the buyer hasseling me and I want to be able to tell him the contract is valid as is and to go ahead and take me to court.

He left me a message on my voice mail saying that he wants $5,000 dollars $4,000 is for the excess rent over what I am paying the seller and the $3,000 option consideration and the $1,000 is for personal anguish.
He says that the house is unsaleable! If he could qualify for a loan it would be saleable.

Did I mention that his mother is a realtor! Gee, we had this conversation at the house, where his mother told him that he had to pay more because of his credit. “That is the price you have to pay for having poor credit” is what she said. (The mother and I did not get along) but she did tell him that the contracts were legal, and realtors do it all the time.

He also left a message with my answering service saying that: “you have three days to back out of the contract or you will be appearing in court” This was faxed to me this morning.

He thinks that he should only have to pay what I am paying. (give me a break)

Thanks again,