Hey, what can go wrong?

     I don't have a problem or question to ask of the group.  I thought I'd
post this story more to amuse you all.  It's a story of how a seemingly
ordinary and straightforward house sale can go so horribly wrong.  I've now run
the gamut from excitement at selling my house to anger, now to amusement.  It's
turned into a soap opera.
    In late June I put my house on the market.  It's a very nice,
well-kept, superbly maintained 3 bedroom 2 bathroom home in a 40-year old
neighborhood.  It's in the "starter home" market of this area, meaning the
cheapest home you can find that's not a townhouse or condo.  I loved it but it
was too small for me and my new husband.  After about 3 weeks, I got two offers
that were very close and both seemed financially sound, so I chose one almost
at random.  There was very little negotiation, the buyer only wanted to change
the settlement date to August 10th, and no contingencies.  Everything looked
great and about three weeks passed quietly.
    Then we heard that the mortgage company discovered that the buyer was a
"non-resident" alien although she claimed to be a "resident" alien.  I really
have no idea what that means other than some sort of citizenship status.  This
first error was treated like an honest mistake but it required proof of more
assets and more documentation.  The buyer dragged their feet on this and took
several days to get the needed stuff to their mortgage company.
    Then the mortgage company discovered that although they claimed this
was going to be the house they lived in, and not a rental or investment
property, the buyers already own two homes.  This is starting to look pretty
clearly like fraud, but the mortgage company continued to work with them.  The
buyer claimed that the other two properties belonged to her husband and this
would be her house.  (Ph-yeah, right!)  The mortgage company changed the
"rules" to that of an investment property purchase and required the buyer to
come up with more assets, more cash, and more documentation.  Again the buyer
dragged their feet putting us about a week past the August 10th settlement
date.  Voiding our sales contract, but hey we're nice people, we'll work with
them.  We figured if they got what was needed in the next couple days, we'd
close on the transaction much quicker than if we had to put it back on the
market.  Also they kept telling us they'd get the "clear to close" any day
now, basically stringing us along.  And I really don't want to go to court if I
can possibly avoid it.
    The buyer got some of the docs needed, and about 4/5th's of the needed
cash and seemed to think this would appease the mortgage company.  At this
point we're about 2 weeks past "closing" and I'm getting really ticked off.  I
finally lose patience and tell my agent to tell them that the contract is void,
they need to release the earnest money and go away.  I was surprised to learn
that the earnest money, which was supposedly mine to keep if the buyer
defaulted on the contract, was locked in escrow and all parties had to sign an
release to get it out of escrow.  On the one hand this is very fair.  On the
other hand a nasty party can refuse to sign in order to screw the other party,
as is what happened to me.  The buyers refuse to sign.
    Now the earnest money is only $4,000 and by this point I'm getting so
sick of the whole situation I'm ready to forget the money - cut and run.  
Still need them to sign the release, though because apparently this is the legal
way for them to also agree that the contract has been voided.  My agent is
trying to use the carrot rather than the stick at first to induce them to
behave by telling them if they signed the release and then got a new contract
with settlement no later than Tuesday (August 30th), we'd be happy to bring the
$4000 back to the settlement table.  No go, they still refuse to sign and still
drag their feet in getting the last bit of mortgage requirement satisfied.  My
agent writes up a nice clearly-worded letter to them and faxes, emails and
snailmails it to them Friday before that drop-dead date saying the contract is
void and if we're not at the settlement table by Tuesday night the whole deal
is off.  They FINALLY get the last bit of mortgage requirements satisfied.
    Tuesday comes and goes.  Wednesday morning we hear that the mortgage
underwriter found some problem that I didn't quite understand, but if the
buyers do such-and-such we can close by Friday - but it doesn't matter because
we're finished.  My agent escalates her hardball game.  The buyer's agent
either refuses to relay her messages to the buyer or they're clueless twits.  
They keep trying to get the mortgage as if nothing's gone wrong.
    Yesterday my agent heard from their mortgage broker that they
threatened to sue him saying it was all his fault.  He laughed and wanted them
to come to his office and make the threats in person.
    This morning my agent tells me that they were at the mortgage office
until 9:30 last night wrangling a deal and that apparently they found some new
financial backers on the west coast.  The mortgage broker told my agent that
they may actually get the clear to close today, but by now we've heard this at
least 4 times already, don't believe it and don't care either.  She told him
that she wished them luck finding a nice property to spend their new mortgage
on because they weren't getting this one.  When their agent called her at 10pm
last night, she told him we still needed the signed release and a brand new
contract or we would not be at the settlement table no matter what.  She said
that even the settlement lady (title company) called to ask what was going on
with this transaction.  It had been landing on her desk only to be pulled
several times and was clearly bizarre.  After my agent told her what was going
on, the settlement lady commented that it sounds like the buyer doesn't
understand what a contract is.  Understatement of the year.
    So the latest is that my agent is calling up the chain of command at
the buyer's agent's office trying to find someone who can explain what a
contract is to the buyer and who can get them to sign the release and new
contract or buzz off.
    Meanwhile the house is still on the market and awaiting a loving owner.

 - Sharon
"Gravity...  is a harsh mistress!"

  Sharon wrote:
buzz off.

Let the troublesome buyer make you a new offer if they still want the
house.

 [snip!]

Escrow won't release it until they know who it is supposed to go to. You
need to file suit to stake your claim to that money. You'll probably win
if you performed under the terms of the contract. However, you haven't
mentioned whether the buyer's are performing. To me, it sounds like they
are trying very hard to uphold their end of the purchase agreement.


By the way, I was the buyer in a similar transaction once, except that
I was cancelling the purchase agreement under allowed terms of the
contract to purchase. The attorney I hired to help me get my earnest money
back from escrow told me that sellers who sue buyers for non-performance
are more likely to lose, as they can just sell the property to someone
else. It's hard to prove damages. On the other hand, buyers who sue
sellers are much more likely to win as each house can be described as unique.


Keep that in mind if you decide to break the contract for any reason other
than an allowed contingency.


Dimitri

 Gerasimatos) writes:

    Well, after attempting to defraud their mortgage company and being
found out, after dithering until the contract expired, yes they're trying very
hard to keep buying the property.  That's not performing, though.
    In case it's not clear, here's why I say they tried to defraud the
mortgage company.  It was discovered that they claimed the
citizenship/residency status that entitled them to standard U.S citizen rights,
but in reality they're non-residents.  (I'm not sure how they have non-resident
status when they own two homes not far from the house I'm selling, but that's a
legality between them and their mortgage company.)  Also it was discovered that
although they claimed it would be their primary residence, they already owned
two homes and displayed no intent to sell them.  When questioned, the lady
claimed that her husband would live in the other two homes while she lived in
this one.  Isn't that odd?  Not living apart from each other, but how the hubby
planned to live in two homes.  Clearly some one or two of the houses are
investment properties but they refuse to admit that.
    In the U.S, mortgage rates are a bit higher for investment properties
compared to primary residences.  A buyer of an investment property also needs
to pay a higher downpayment and show more credit-worthiness thus the requests
for increased documentation and assets.  The only thing that can be surmised
from all this is that they're trying very hard to pay the smallest downpayment
at the lowest interest rate even if they have to lie to do it.  They
apparently think the mortgage company is too stupid to discover these things.

    The problem is that the contract clearly stated a closing date and
stated that "time was of the essence".  They clearly don't understand what
the contract was all about and what the meaning of non-performance is.


    We allowed them to keep trying long after the terms of the contract had
been violated by them (non-performance).  If we had to go to court, I'd have
the mortgage company and my agent and her whole office on my side.  I don't
want to go to court, as I said, so I'm happy to let them have their stupid
earnest money if they'd only just go away.  Of course the money was supposed to
reimburse me for having to pay an extra 2 months mortgage on the house while
they dithered, but... what the heck.  I'm so sick of this that I can eat that.
I'm not taking them to court to get the $4000.  I just hope they don't take me
to court if I sell the house to someone else!  Even if I win, it's not an
experience I want to have.

 - Sharon
"Gravity...  is a harsh mistress!"

 
What do you mean 'the contract expired'? If it expired then there is no
agreement to do anything. Do as you wish.



Sure, but that's the mortgage company's problem. If they will finance them
then that's all you care about. As for not being a resident, the US has
no residency requirements in order to purchase property.



Again, not your problem.



If they could not close by the given date then the contract is invalid.
Now you can sue them to make them release the earnest money to you, if you
wish, and find another buyer.




So if you don't want the $4000 then what do you want? They can take you to
court, but it sounds like you would win. You can't choose to have that
experience or not. That's up to them. What exactly is your question?


Dimitri