Closing Disputes
I hope this is in the right forum.
Yesterday I got a call from a guy, lets call him Tom, who wanted to quickly sell his 4-plex for cheap. 2 units are occupied and his small family is in a third. This morning I did a quick title search (found a few judgments against the property), checked for past due taxes (there were some), and checked to see if the water bill was paid up (it wasn’t they owed $1200 and were scheduled to shut it off today). Basically the guy, Tom, wasn’t budgeting his money to pay the water bill. Also, they wanted to get on welfare and they couldn’t do that while owning the property. The property was a gifted to them from an aunt a few years ago.
So that’s the background. Today I went over with a purchase agreement with the terms. I would pay him half of the purchase price in cash and he would finance the rest over the next six months. From the cash I gave him he would pay the judgments, taxes, and past due water bill. We signed the purchase agreement, paid the water bill (to avoid shutoff), paid the taxes, and started the process to get the judgments off the property. He then signed over the deed to me with a court notary present and we filed it to be recorded at the county court house.
I’m thinking yeppie! I just got a great deal. Then several hours later I get a call from a RE agent that says that Tom sign a purchase agreement with him several months ago. Tom had given up on the RE agent’s buyer to fund the deal. Tom’s water was being turned off today. Tom had to do something. The RE agent is telling me that my purchase of the property is void and that I need to “undue” what we did today so that his purchase agreement can go forward. My understanding is that nothing is final until it has been recorded at the county clerk’s office. Since I (unknowing of the other purchase agreement), already recorded the deed does the RE agent and his buyer have a leg to stand on.
The only penalty that I understand that anyone would be liable for would be that Tom would be liable to pay the same amount as the earnest money put up by the buyer because he broke his first purchase agreement.
My question is, does the other RE agent or his buyer have any recourse against my newly acquired property or me? Also, do they have any more recourse against Tom other than the amount of the earnest money put up by the buyer? In case it matters this property is located in New York State.
Thanks for any responses!
did you get title insurance? if not then you are going to have to handle this yourself. since you did not know of the first pending deal, you are the legitimate purchaser. the agreement was between the real estate agent his buyer and the seller. you were not involved in that transaction and you are an innocent third party. your deed is recorded....too bad. they may put a lis pendens on the property, but ultimately you would win and the seller would probably be liable for the down payment, the agents commission, and all other fees associated in the failed purchase. What were the exact terms in the original purchase agreement..who knows they may not have a leg to stand on. perhaps their time period to get a mortgage commitment may have passed thus voiding the contract. I would suggest to you seller to consult an attorney to review all of the documentation signed. or perhaps this whole thing can be resolved by simply paying the real estate agents commission...since the seller may have limited funds to do so you may want to step in and pay it . a new purchase money mortgage would be written to reflect the advance you made for the commission.
Thanks lp1.
I did not get title insurance. The judgments against the previous owner (Tom) and the property would have probably drawn out the process to get title insurance. In the my purchase agreement and in the note that the seller holds for me, I made allowances for this by stating that any costs that I incur to clear the judgments will be deducted from the note that the seller holds.
The RE agent was going to fax me a copy of his purchase agreement last night after I talked with him. He has not done so yet. I wanted to check to see if their time period had elapsed and check the terms of their agreement.
I appreciate your comments lp1
Any other comments from anyone would be appreciated as well.