Can a seller get away with this?

General Real Estate Investing
1

I signed a contract to purchase this property with nearly 20% equity (price 140k; value 180k). The property has a listing agent while I represent myself (I am NOT an agent or lawyer).

The closing is scheduled for June 15th. I had asked for a closing date extension till the 25th. Suddenly, I get a fax from the seller’s agent stating that they want to terminate the contract and refund my earnest money. Additionally, they want me to sign something to the effect of “… buyer’s unrestricted right to terminate this contract…”

I did not pay any option money and do not have an unrestricted right to terminate the contract for any period of time. Anyway, I intend to close and buy this property. My feeling is that the sellers are having second thoughts about the price (maybe they got some higher backup offers) and want out.

Their excuse for the termination is this: The wife did not sign the contract! I go back and look at my copy of the contract and she has initialed all the pages along with the husband. However, on the last page of the standard TREC contract, only the husband signed!

However, both of them did sign the addenda - Information about brokerage services and Third party financing addendum. So, the dilemma is whether I can hold them contractually obligated to sell. I am also trying to get answers from my lawyer, but just want to see if anybody has any opinions.

By the way, I live and invest in Austin, Texas.

The choice is: do I cut and run and get my earnest money back or do I risk losing my earnest money if they don’t grant me a closing date extension and I am unable to close.

2

Howdy SRB:

You will not get an extension if they want to sell to someone else. The attorney fees will probably be more than the profit you could have made. The judge probably will not force them to sell if they changed their minds and decided to stay and not sell. If you do lose you will lose the earnest money and attorney fees plus the time and aggrivation. I hate to give up myself but you may want to chose another battle.

LOL

3

SRB,

With six days to go to close and a possible $40k profit I would recommend scraping together the money from friends and family for a short term loan to close the deal and pay them back when you get financed.

I don’t think there is an issue with the wife’s signature since she initialed everything and signed the other documents the evidence is clear she had the intent. Your lawyer should verify that for you.

The real issue in this deal is you need more time and the seller does not want to grant you more time.

If you have an appraisal on the property showing a $180k value you may need to beg a little but you may have some luck in getting friends and family to spot you the money for sixty days while you get financed. Especially if you offer them 15% annual return. That is better than they are getting anywhere else, is secured by the property and only cost you $3500 of your equity. ($140k*15% / 12 months * the 2 months you have the money out)

John