Posted by Brian - MI on March 04, 2004 at 20:06:00:
If it is a good deal you could force the seller to perform on your contract, but is it worth the legal fight?
Two Buyers for same property - Looking for advice - Posted by TomM
Posted by TomM on March 04, 2004 at 15:55:46:
Here goes; It turns out that the seller of a property I am buying has been dealing with another investor and has signed a sales agreement with both of us.
In order to buy this particular property a local township required that a sewer connection be completed before they would certify the sale. The approximate cost of this project was $6,000 to $10,000 but when the title search showed a cloud on the title I slowed down the process until we resolved the title problem (which took six weeks) and I did not start the project.
During this time the seller entered into an agreement of sale with another investor who already started the sewer work. The seller has relocated and when I discovered the problem I approached the other investor to see if we could work together and clear up this mess.
I am not out very much (maybe $1500) and at this point I would just like to recover my cost. I contacted the other investor (first time we talked) and he claims that he has been in the business for 30 years and while he agrees that I have a case against the seller he was not inclined to work with me to recover my funds. He claims that he already has the deed (althought it has not been recorded from what i can see) and he can’t go to settlement until the sewer work is done.
It seemed to me that he would be anxious to resolve this so that he would wind up with a clear title. I was surprised that he was not inclined to work together on this. Since he agrees the seller was dishonest and since this could effect his title in the future I felt this was an opportunity for him to go after the seller together and that we both could come out ahead. Since this transaction has not gone to settlement it seemed it would be easy for him to negotiate a lower price (maybe $5000 and for us to split the reduction.
I was buying the property “subject to” a small mortgage (20k) and I suspect that he is to.
This is not worth a costly fight but I am wondering if I could create some leverage by suggesting to the other investor that I was going to approach the mortgage company to position myself to buy the mortgage and then call the loan due when it was sold. Does this strategy have any merit or is this just too cute?
The seller has little funds and there is little to be gained by going after him. I feel that unless I can motivate the other buyer to work together on this that I should just move on.
Any advice woud be greatly appreciated.
Re: Two Buyers for same - Posted by blah
Posted by blah on March 06, 2004 at 03:10:36:
Well, I think we know you lost 1500 dollars but you really didn’t. You learned a valuable lesson. CLOUD THE TITLE FROM THE START. Alot of seminars cost more than 1500 dollars. Just don’t let this detour you from moving forward. You won’t make this mistake again, will you?
Looking for advice - Posted by jasonrei
Posted by jasonrei on March 04, 2004 at 17:15:47:
Might consider recording a memorandum to cloud title before the other guy does.
Your idea on buying the note or threatening to may work. Do you know for certain the mortgage even has a due-on-sale clause. Might wanna find out before you make the threat.
Of course, others will advise you to seek advice from an atty.
Re: Two Buyers for same - Posted by TomM
Posted by TomM on March 06, 2004 at 07:39:28:
I am not clear on what your point is.
I was going to record my position when we signed the original agreement of sale but I backed down because there was already a cloud on the title that bothered me.
The cloud on the title apparently didn’t slow the other investor down. I am not even sure if he did a title search. He either didn’t know about the cloud on the title or he ignored the problem with the title (which will probably be cleared up in time but my title company and attorney felt that it could take months to get free title).
The other investor has signed an agreement of sale but he has not recorded a new deed. Until he completes the sewer work the township will not certify the sale.
I filed a LisPendens but the other investor appears to be unimpressed. He sees this as problem between me and the seller … which it really is. The problem is that I don’t have much leverage with this seller who is now out of state and is too unsophisticated to see the problem. As long as the other investor proceeds ahead and agrees to pay him at settlement what does he care.
I am looking for a way to motivate the other investor to work with me to recover my direct cost … without getting my attorney involved further because this is not that big a deal to spend much more.
I am assuming that he is buying the property subject to a 20k mortgage and I am primarily trying to find out if I can create some leverage by THREATENING to work with the mortgage company to either buy the loan at a discount and exercise the Due on Sale provision or just to bring to the attention of the mortgage company that the property has been sold.
Re: Looking for advice - Posted by TomM
Posted by TomM on March 04, 2004 at 17:39:53:
Yes the mortgage has a Due on Sale Clause
I do have my attorney involed to some extent but because we are fightong over $1500 I would rather not get him involved to any signifciant extent. He has confirmed that the seller has committed fraud and that this could be brough to the District Attorney (just in the way of a threat to shake the seller up)
Since the seller has little cash I am trying to find a way to get cooperation from the other buyer and take it our of the proceeds of the sale
Thanks
Re: Looking for advice - Posted by Jim (MD)
Posted by Jim (MD) on March 04, 2004 at 23:56:15:
I would take your attorney’s suggestion and bring the fraud to the district attorney to shake up the seller, get the proceeds out of the sale and be done with it.
Good luck.