Can the seller sue?

[firstTimeBuyer2007]

Hi, I have a situation and I'd like some advice. Around the first of the year we put an offer on a building and the offer was accepted. The contract was signed and everything was ok.

After the usual process of signing all the papers and showing proof of everything under the sun, the mortgage broker I was working with declined my application two days before we were to close. Their reason was "Limited Marketability". So, we moved on and were in the process of finding alternate financing. Of course this ruled out the original closing date.

About two weeks later I get a call from the seller's husband (she had bought the place before they were married). This was someone I had never met and I didn't even know his name. He explained to me that his agent told him he could not call us directly and that they should go through our broker if they had questions, but that that route was taking too long. He was extremely impatient and kept asking me "what's taking so long?"

I explained to him that the original financing had been rejected and that we were in the process of applying with a different mortgage company, etc. He said he did not think it should take that long, and told me the story of the person he was buying their next house from and that they needed the closing to happen right away. I did not like his tone and told him I had to hang up because I was busy at the moment. He then told me I should call him the next day with a closing date or "we should call the whole thing off and get on with our lives."

Needless to say my husband and I were not happy about this and felt we were being pressured at a used car lot. Anyway we did not call back the next day and did indeed call the whole thing off. Now they want to keep our deposit and are threatening to sue.

We are in Texas. Does anyone out there know if it is possible for them to sue and force us to buy their home?

[REbuyersgroup]

Very complex. Contracts all have conditions and dates. Time is always of the essence.
Your contract likely had a finance contingency to obtain a loan commitment within a certain period of time. If that time passes (Breach), either party can cancel and penalties are described in the contract. An extension can be agreed and signed, but if there is no agreement, the contract is null and void.

Dates, and Contingencies in contracts are there for reasons. If you fail to meet the obligation there are consequenses, which may be monetary.

Without having your contract in front of me, if you do not close by the date agreed, you are in breach and your deposit is damages to the seller for keeping their home off the market.

The seller was likely pressering you because you had an obligation you were not meeting. Your mortgage broker failed you. You should have kept in very close contact and established a good relationship with the seller. If the seller knows there is a problem, you can likely work out the issue, if you wait till the last minute and then avoid them, they have no alternative but to seek damages.

Let us know what the outcome was.

[firstTimeBuyer2007]

The seller was likely pressering you because you had an obligation you were not meeting. Your mortgage broker failed you. You should have kept in very close contact and established a good relationship with the seller. If the seller knows there is a problem, you can likely work out the issue, if you wait till the last minute and then avoid them, they have no alternative but to seek damages.

Indeed I did attempt to establish a good relationship with the 'seller'. The only 'seller' I knew was the owner of the home. The person who called me in a huff was her husband. Also, I did not avoid them and I did not wait until the last minute either. Once the original mortgage fell through two days before original closing date, there was no alternative closing date set up.

Also, I kept the seller informed by keeping my agent informed, who relayed all messages to their agent, who then should have relayed to them. That is the whole point of having an agent, is it not? They represent you so as to protect your interests. They are the ones with experience to represent the interests of their clients. As far as I'm concerned this guy had no right to call me out of the blue and take the tone he took. By cutting out my agent, contacting me directly, and prying me for information he cancelled out of the deal himself as far as I'm concerned. It came literally out of the blue for me. His statement to me was "call me tomorrow or we should call the whole thing off and get on with our lives". His attitude soured the deal for me completely.

I was looking for information on a seller suing a BUYER for specific performance in Texas. Anyone out there have a clue?

[TJ2007]

Sueing for performance in this situation would surely be a long shot & extremely unlikely it would go anywhere.

Make sure you have a 'Denial Letter' from the mortgage company and preferably direct from the Lender, make sure this gets to your agent, this should also help disuade them from any action.

Generally you would be entitled to your deposit back if you get denied for financing, however contracts can vary widely.

Bad news is whether the seller really has a case or not they could probably tie up your deposit money for a couple years and your attorneys costs could exceed your deposit if you try to get it back...

Your agent really needs to go to bat (preferably with a big spiky one) and get your deposit back asap, especially if they want your business for any other property...

[Ten Lakes Realty]

Hi, I have a situation and I'd like some advice. Around the first of the year we put an offer on a building and the offer was accepted. The contract was signed and everything was ok.

After the usual process of signing all the papers and showing proof of everything under the sun, the mortgage broker I was working with declined my application two days before we were to close. Their reason was "Limited Marketability". So, we moved on and were in the process of finding alternate financing. Of course this ruled out the original closing date.

About two weeks later I get a call from the seller's husband (she had bought the place before they were married). This was someone I had never met and I didn't even know his name. He explained to me that his agent told him he could not call us directly and that they should go through our broker if they had questions, but that that route was taking too long. He was extremely impatient and kept asking me "what's taking so long?"

I explained to him that the original financing had been rejected and that we were in the process of applying with a different mortgage company, etc. He said he did not think it should take that long, and told me the story of the person he was buying their next house from and that they needed the closing to happen right away. I did not like his tone and told him I had to hang up because I was busy at the moment. He then told me I should call him the next day with a closing date or "we should call the whole thing off and get on with our lives."

Needless to say my husband and I were not happy about this and felt we were being pressured at a used car lot. Anyway we did not call back the next day and did indeed call the whole thing off. Now they want to keep our deposit and are threatening to sue.

We are in Texas. Does anyone out there know if it is possible for them to sue and force us to buy their home?

just my opinion of course. I am a Broker Owner in Montana. My opinion is that if your real estate agent protected you, than the offer was contingent on financing and if you did not release this contigency than your earnest money is safe. If you did release the contingency based on what the mortgage broker said than the Mortgage Broker should be held accountable to the Seller or to reimburse your earnest money. Now if there was no contingency than the seller can sue you to perform on the contract you signed. But hey, if I was you I would call their bluff. It will cost them a lot of time, money and stress to try and sue you and If you could not get the loan than you couldn't. Most of the US is a Buyers market now anyway so they are just desperate. If the property was worth the price your offering they would have no problem not extending the deal because they would know that lots of people are in line to buy it. Sound fishy to me. Just step off the line of fire, Its not meant to be.

Crystal L. Cox
Broker Owner
Ten Lakes Realty

[usakos]

Talking to a legal expert in your area might be the best thing to do.

[JChristin]

Your story minds me of the defendent in a court trial who is contacted by the plainiffs attorneys, who then proceeds to squeeze information out of the opposing party and who...willfully talks, without the benefit of contacting their own counsel first.

I'd suggest not wippering about the cost of a good real estate attorney and go see one. It's the price a client pays, oftentime, for speaking out of turn, and not through the proper channels. The cost of an attorney at this stage may save you a lot of money and grief now and later down the line.

If you want to know: It's all in the contract.

Good luck!

[gjtrafl]

Keep in mind the "Time of the Essence" statement. Our contracts do not state TOE unless it is written in. In NC, as long as you are using your best efforts to secure financing, the deal continues on. We have a form called the an "agreement to amend" which could be signed so that everyone knew the situation.