Posted by David Alexander on November 16, 2000 at 12:23:43:
In some wierd way I think It has something to do with the guy that renigged on his contract.
Wierd folks what can you do?
David Alexander
Deal Gone Bad… (Any thoughts?) - Posted by David Alexander
Posted by David Alexander on November 12, 2000 at 21:47:08:
I have a property under contract to buy for 70k (35k Now, 35k 2 years). Property is worth 130-140k, somewhere in the neighborhood of 20k in repairs, plus the needed eviction of current tenants.
I have been dealing with the son in law. He had called me for 3 days straight to come see him to talk about the property. I finally went out there and sat down and talked to him, his wife, and mother (property is in Mom’s name) and found the best they had been offered 60k cash. We came to our agreement because the Son in law was was tired of dealing with the tenants (had literally got into physical altercations). The mom was even crying that she was selling her property and I told her that she didnt have to sell. She said she knew it was best but that she wanted to go by and see it once before we closed, and I said no Problem.
We all came to an agreement, I went to my car to get a contract and we put the deal down on paper and everyone signed (hadnt checked title yet, so I got everyone’s signature).
Two days later the son in law is calling me saying he doesnt want to sell and I say we have a contract.
He says that his mom isn’t going to sell, so sue him.
I said well if he didnt want to sell then give me an option to buy (thanks Bud for the idea) the property under the same terms later. I figure he had another offer, one with more cash now… but he says there just not going to sell.
He said they weren’t signing any more papers… to sue him if I had to.
I’m not normally into suing folks and also usually focus on the positive, but this guy really burned me up.
So what would you do? What is involved in suing for specific performance? Any thoughts.
David Alexander
Next… (Any thoughts?) - Posted by David Alexander
Posted by David Alexander on November 13, 2000 at 13:21:13:
Thanks…
Everyone for the help… guess it just irritated the H*LL out me when he said “So Sue Me”.
But, everyone’s right it ain’t worth the headache, I’ll have a memorandum of Contract filed and go from there.
David Alexander
Time To Skin Another Bear - Posted by Randy M
Posted by Randy M on November 13, 2000 at 10:06:09:
They’re right. Cloud it and move on. You could make ten times more money doing what you do rather than fighting with that jerk. It’s time to “skin another bear,” as LeGrand would say…
Re: Deal Gone Bad - Posted by JPiper
Posted by JPiper on November 13, 2000 at 09:45:40:
David:
What?s involved in a lawsuit for specific performance is time and money. Assuming the seller hires an attorney, and allowing for differences in state law (if any), my guess is you?re looking at 1-2 years and thousands in legal fees on both sides.
The problem is that the conclusion is unknown. I had a recent indirect involvement in a specific performance suit. The seller balked when the appraisal came in higher than the purchase price?and refused to close. The buyer ultimately sued for performance. The contract used was the approved Realtor contract for the area. When the buyer?s attorney read the contract and looked at the details, he claimed it was a laydown. So the suit was filed along with a lis pendens which blocked the sale of the property later by the seller.
The next thing though was that the seller?s attorney found a small glitch in the BUYER?S performance in the contract?.this after approximately 2 years and just before it went to court. This loophole looked to be a major problem for the buyer?.so the buyer dropped the suit rather than spend any more money. In dropping the suit the seller agreed not to file suit against the seller for HIS damages (he had tried to sell the property to someone else but had failed because of the recording of the lis pendens).
The point of this little story is that when the lawyers get involved these things can take twists and turns like you wouldn?t believe. Meanwhile, the legal bills pile up on both sides. Important considerations will be the contract itself (the contract is going to be under a microscope on both sides), how the buyer performed his end of the contract, and probably who the judge is. You can count on the BIG LIE. Whatever took place will not be the seller?s memory of it.
You have the option of recording a memorandum of your contract. That may or may not work. Closings sometimes proceed despite this. A lis pendens probably will work to stop a subsequent sale, but to record a lis pendens probably would require the filing of a lawsuit.
I?d probably record the memorandum. I?d then probably try to contact the mother?not the son-in-law. Discuss the situation with her including the lawsuit portion of it. If this doesn?t work then I?d have my attorney send a threatening letter. I might even consider filing a ?bare bones? type of lawsuit so that I could record the lis pendens. But that?s as far as I would go. If you go any further then bring your money and your lunch?.it?s going to get time-consuming and expensive. And again, the result is going to hinge on your contract, your performance under the contract, and the judge.
JPiper
Re: Deal Gone Bad… NEXT! - Posted by Chicago Steve
Posted by Chicago Steve on November 13, 2000 at 09:42:41:
I’m with him… or her??
Cloud the title and get on with life. They can’t close without considering you.
Don’t waste time and energy…NEXT!
Hope your well David!
Re: Deal Gone Bad… (Any thoughts?) - Posted by Dee-Texas
Posted by Dee-Texas on November 13, 2000 at 08:51:23:
Hello David,
I would be nice tell them that we have a contract and record it. Tell them to call you if the deal doesn’t close and then go do deals. Your great at that, don’t let this thing eat you.
Is it doesn’t close and they come back, guess what I bet your offer is lower.
My friend do what you do best rock n roll with those deals and put this one behind you.
Dee-Texas
You can lead a horse to water! - Posted by Terry Vaughan
Posted by Terry Vaughan on November 13, 2000 at 01:02:51:
David:
The long and short of it is, if they think they have a better deal they won’t work with you.
It may very well cost you too much time and money to push from a legal point of view. Before you draw your legal sword, find out the real reason the deal went south. If you can match the deal with a little sweatner, you may be able to turn this around, but not until you find out the real reason for the blow up!
They may “THINK” they have a better deal from someone else. That has happened to me and I just back off! “Great!”, I say, “I don’t want to get in your way, let me know if the deal doesn’t close, I may still be interested.” Then I wait for the deal to come back to me. (remember the Alaska deal in “Cashing In”?) Often the other offer is “air”. Be patient.
If you do sue (you certainly have the right to, for non-performance) and they are able to prove they could get a better deal, but lost it because of you, it may make you look greedy to the judge. Remember, courts sometimes tend to look at investors as opportunists who take advantage of slow and ignorant folks. If your attorney says you have a solid case and the costs still make that approach pencil out then SUE!
Other wise, find out the REAL reasons behind the scene, then re-work your deal. If that doesn’t work, find a new deal!
Re: Deal Gone Bad… (Any thoughts?) - Posted by JD
Posted by JD on November 12, 2000 at 23:06:44:
If someone tells me to sue them I am happy to comply. But it doesnt seem as if you will be taking action against him, but his mother. It would seem a lot would depend on the mom. Is she sweet 90 year old lady, or a 55 year old witch?
Re: Deal Gone Bad… (Any thoughts?) - Posted by Beldorian
Posted by Beldorian on November 12, 2000 at 21:55:33:
Hey dude…
Here is what I would do… I’m sure that you will get a variety of opinions, from sue him to let it go. This is more of a middle of the road approach.
No matter what emotions you have going on, it is not worth letting this thing eat more time than it is worth. I would not sue. However, I would not just let it go.
Simply go and record the offer, cloud the title. This accomplishes two things. First, if they have a new offer for more cash, that deal won’t be able to close without you receiving whatever you think your time is worth. Second, it is a passive action. In other words, you will not need to spend hours on the phone, in court etc.
I’m new in this game, but that is what I would do, and, in fact, what I have done.
Best regards.
Interesting topic… - Posted by Nate Tyler
Posted by Nate Tyler on November 16, 2000 at 24:40:21:
Hey Davie…
I’m going throught the exact same thing right now. Remember the 7 plex? In the contract, I had a contingency that all units be filled prior to close.
To make a long story short, the deal has been dragging for 6 months due to vacancies. At last, when I was finally so tired of waiting for the thing to fill, I decided to take it with the vacancy.
About that time, I found out that the seller had stopped making his payments on the note that I was buying the property subject to (it’s a private note). He stopped making the payments about the time we originally put the deal on contract. The updated prelim showed the notice of Trustees Sale, and that’s when it all hit the fan.
I was buying the thing for 143k, taking over a 140k note with the prorata rents and deposits eating up the 3k I would have paid the seller. Basically nothing down. At a 10 cap, it would have sold for 185k. That’s without raising rents, based on 1999 numbers. My plan was to take it over, and then owner finance it at a 9 or 10 cap with 15-20% down. The first is at a measly 8%, so I could have sold it at 10% and got most of my equity out of the down. Then wrap it and basically own the paper.
It was all a sweet deal, but I got too greedy, too picky, and too lazy.
So at the last minute, I think the bonehead realizes that he’s going to have to come out of pocket quite a bit to sell this thing…and he goes and gets an attorney specializing in foreclosure situations.
So after months of calling eachother every week for updates on vacancies, refreshing the purchase agreement a couple of times, we’re down to the wire and he pulls out.
He calls me up and says, “My attorney told me I shouldn’t sell for that much, so I’m not gonna be able to sell it to ya.” I say, “Does your attorney know you have it under contract to sell…because if he does that doesn’t sound like great advice!”
He replies…“Uh, I dunno…but I’m sorry I can’t sell it to ya anymore.”
So I finally got tired of being nice and fuzzy and I pulled out the ol “specific performance” line on him.
His final words, with a strong sense of anxiety, were “let me call my attorney and get back to you.”
So that’s where I let it lie.
That was about 3 weeks ago.
My thoughts were the same as many have replied to you…cloud the title, and see what happens.
I still haven’t done it…mainly because I haven’t had to deal with this before, and…well…I think I’ve just been too lazy.
The further I get into this post, however, the more I realize what a good deal that was.
I think I might have to go record that soon. (Notice the open endness of “soon”)
Come on, Dave…I’ll jump if you do…
Bare bones lawsuit - Posted by osirus
Posted by osirus on November 13, 2000 at 21:50:54:
What is a “bare bones” type of lawsuit? How does one go about filing one?
Re: Interesting topic… - Posted by David Alexander
Posted by David Alexander on November 16, 2000 at 01:02:41:
My Story has gotten more interesting…
Yesterday I get a call from a guy saying he is a friend of the seller and that they want my address… “I say it’s on the contract”… and he says do you have another one… “No” What about your home address? “You dont need that” and he promptly hangs up.
Today get a wierd call… guys calls my cell phone and says you buy houses… I say “yes” Well I have a house for sale… “Ok” Well will you come down and look at it?.. “What are you asking for it?” I dont know? “I then say by the way, How’d ya hear about me?” (My Ads dont run with any of my numbers, so referral would be the only asnwer) I got you ad out of the greensheet… “REALLY??”
I let him keep talking, tell me more about your house, he says I just want to sell it. I say “Whats the address so I can get an idea of the value?” I dont know the address he says, I just inherited it. I say “I’ve got an appointment coming up do you have a number where I can reach you”… he says I’ll call you back. He says can you just come look at my house… I say " I dont go look at houses unless I know the numbers and there is a potential for a profit." Again I say “so what do you think the house is worth?” I dont know… I just want you come down and meet me and make a bid. “Sorry I dont do that” “I havent ran any ads in the greensheet… how’d you get my number”… well the paper I have is a little yellowed.
I’ve never ran an ad in the greensheet with my cell or voicemail number… Wierd.
David Alexander
p.s. I’m going to file the memorandum tommorrow.
My only question about the Memorandum is… - Posted by Nate Tyler
Posted by Nate Tyler on November 16, 2000 at 17:45:53:
how do the dates on the Purchase contract affect the ability of the Memorandum to successfully cloud the title?
Let’s assume they don’t pull a new Title Report for another 2 months (when he finds his new buyer). At the time they see the memorandum and realize that there is a purchase agreement on the house, I would assume they would ask to see a copy so they could verify the validity of the memorandum. At that point, the timeframe for closing on the purchase agreement, as stated in the contract itself, would have long since expired.
How would you attempt to enforce a contract which would then be null and void?
Would it depend on the wording of the contract and whether or not you had a clause on specific performance??
Re: Interesting topic… - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on November 16, 2000 at 10:11:52:
Hi David,
Let me get this straight. The caller wants you to come look at the house he just inherited but he doesn’t know the address. How exactly did he plan on having you go look at it if he couldn’t give you the address to go to? I wonder what he would have said if you had agreed to go look at it.
Hypothetical continuation of the conversation:
David: “So what do you think the house is worth?”
Weird Caller: “I don’t know … I just want you come down and meet me and make a bid.”
David: “Sorry, I don’t do that. … I haven’t ran any ads in the Greensheet … how’d you get my number.”
Weird Caller: “… Well the paper I have is a little yellowed.”
David: “Well, I’ll tell you what, normally I don’t go look at houses until I’ve done some research first and have a rough idea of what they’re worth, but since you’re so insistent, I’ll make an exception just this once. When do you want to meet me at the house, how about 2 o’clock this afternoon or would 4 o’clock be better for you?”
Weird Caller: “2 o’clock is okay.”
David: “Fine, just in case something comes up and you get delayed, you’ve got my number, right? … Good, let me have a number where you can be reached, in case I’m delayed.”
Weird Caller: “Uh, umm (stutter, stammer, stall) uh, 512-555-1234.”
David: “Okay, that’s 512-555-1234, right? Good. Okay, and the address of the property you want me to meet you at?”
Weird Caller: " Uh, umm (more stutter, stammer, stall) uh, 123 Main St."
David: “Fine, I’ll meet you at the house at 2 o’clock this afternoon. Good-bye.”
After you hang up, you immediately call back the phone number he gave you. If he didn’t give you a bogus number and he actually answers the phone, you say something like: “Gee, I’m sorry, I forgot to ask you what the nearest major cross street is so it’ll be easier for me to find the house?” or some other equally plausible excuse for calling back.
It would have been interesting to see what he would have done had you actually agreed to go look at the house.
BTW, got your note about missing one another in Dallas. Maybe next time. Give me a shout if you’re ever in the Houston area.
Best of Success!!
Jim Kennedy,
Houston, TX
Thought of that today… - Posted by David Alexander
Posted by David Alexander on November 16, 2000 at 17:58:32:
What I’m actually going to do is go to my title company in the morning while I’m closing on another deal, and have them document that they have called him to come and close, and then see if I can get them to file it for me.
I expect that way if the property is sold I can then become sue happy if a title company goes around me, and also figure there must be some statute of limitations where you have to file a suit after the fact within a certain period of time.
I think a suit would have after the fact would have a better chance of sticking.
David