Hard Ball Betrween Sellar And Buyer
I own a large muti-unit in the chicago area, that I acquired through a tax deed. We have had much interest amoung many developers and others in the area. For the last year, our realestate agent has been getting 25 calls a week on the property. Back 6 monthes ago, we had a contract with a certain buyer on the building. In the contract, there was a 7 day attorney approval period written into the contract. Their attorney stipulates that we signed the contract on the 12th of that month, and our attorney approval period ended on the 19th. Our attorney did not get the contract til the 15th, and their attorney sent an addendum to the contract on the 16th. Anyway, their was dispute to when the attorney approval period ended. Nevertheless, since our attorney never approved, we moved on a different offer. The first buyer, angry to what transpired, filed a Les Pendens on the title, thus holding up the closing. They wanted us to perform on the contract. We decided to sell to the first buyers, but feel they do not have the financing, and are stalling with a pending law suit to get their financing together. At this point, we have had many solid offers come in, due to the time of the season. However, no title company will touch us with a Lis Pendens on the Title. When, they (the title company) look and see that the lis pendens is for a pending law suit, they will not close us. Does anyone know of a creative way, or a savvy title company that will close this deal. We just want to close. We are willing to pay an insurance premium to get this thing to close. There are building violations on the building, and the city has put it on the fast tract for Demolition. null 
Presumably, the right to keep the lis pendens on your property requires that the agreement of sale between you and the first buyer (equitable owner) be in full force and effect.
If the buyer defaults under the AOS, I would think that the default would cause the AOS to be terminated (depending on how the default and remedy provisions were written). Once the AOS is dead on its face because of the buyer's default, couldn't you then have the lis pendens removed?
I don't know that there's a way to convey insurable title to another buyer so long as the lis pendens is in place. Buyer #1 default may be the only way out.
If you have a good case, why don't you sue the Offending party for Maliciously clouding your title? Thus preventing you from reaping the gain you deserve from the later, 'Better' offers.
Don't sit there and 'Take it', go on Offense!
gregstec,
Glad to meet you.
In many states real estate transactions take a priority in the courts. So check with your attorney and see how long it would take you to get on the docket to request a release of the Lis Pendens.
I find the courts very favorable to releasing Lis Pendens actions, they tend to rule favor of the owner of the property, unless there is really just cause, which from what you have described doesn't sound very just.
See if you can ask for a Performance Bond to be posted, your attorney should be familiar with this.
John $Cash$ Locke[ Edited by JohnLocke on Date 02/13/2004 ]
One problem with challenging the validity of the lis pendens is, I assume, it's fuzzy on whether the addendum of the 16th triggered the running of a new 7 day attorney approval period.
Also, if they litigate it, what's it going to cost?
pmatheson1,
I was pondering your idea about suing someone, here are my thoughts on that issue.
You want to put your fate in the hands of 12 people who were not smart enough to get out of jury duty.
If you have the right attorney who understands how to arm wrestle the opposing attorney and win, you will save yourself much grief and money, which is what a law suit tends to wind up being.
John $Cash$ Locke
You all have good comments. But, their is a time issue at hand. The taxes on this particular parcel are $20,000 a year, and the county is cook (in Illinois). Getting an emergengy court hearing is only done in divorce cases. Plus, going on the offensive and sueing this party would tie up the property in court, and the Tax bill clock just keeps on ticking. In addition, the property is on the fast tract for DEMO. The one comment about a performance Bond has caught my interest? What is it exactly, and how can I use it to Fast Forward a closing? Greg
gregstec,
There is no fast forward in what you are trying to accomplish, even requiring the other party to post a bond or you to post a performance bond requires I believe the courts approval.
You can get very creative with bonds, if you posted a bond for the amount of money in question, then this could possibly be acceptable to the title company where they would be gauranteed that they could issue a clear title.
I am not familiar with Illinois requirements, but owning a Bail Bond Company and holding a State Surety License I have written Performance Bonds thereby stating the party holding the bond gaurantees to perform regardless of the outcome in your case a Lis Pendens.
I am just looking to help you with a fast way to resolve your problem, because it sounds like you are on a short fuse.
John $Cash$ Locke [ Edited by JohnLocke on Date 02/13/2004 ]
You indicated that the structure on the property is on the verge of being demolished by the city. Do you know if the buyer would still be interested in the property if the structure were demolished?
If the answer is "no", that buyer's on the hook with paying you the original purchase price for a property that will be minus substantial improvements if demolition takes place. Why would he shoot himself in the foot?
Doesn't the agreement of sale contain a date certain for settlement?
Can't your attorney get on track with the city and postpone the demolition (I assume that's what John meant by his suggestion of posting a performance bond)?
John, as an owner of a bond company, how much would you charge on writing a performance bond on a selling price of $685,ooo? And, what is the difference or value in buying a performance bond, to getting an insurance wrap on the title. Or, are they one of the same? Nancy, as for the Demo, this is a high profile property in which the top politicians in Chicago are inquistive to what is going on with the property. These are the same politicians that help the judges in the Demo court get their jobs. This is why time is of the essence. However, we are moving forward on Tuesday and pulling permit to prolong the Demo for at least 6 monthes, or the length of the permit. Greg
Do you know if the buyer would still be interested in the property if the structure were demolished? Does the buyer know that demolition is imminent?
If you own the property. How can the city demolish it? Is that who you are trying to sell it to?
Nancy, no I do not think the buyer would want the property. However, they (the buyers) feel that they have been in this position before, and there expertise would allow them to prolong the Demo. Apparently, they had a meeting with two people on the Coporation Counsel concerning the Demo. They feel this course of action will allow them to prolong the Demo. However, what they fail to realize,is that the Judge in the Demo court, is the sole decision maker in the case. Yes, he does get advice from the Corp. Counsel. But, he has the ultimate decision in the fate of the parcel. With all that said, the contract is "as is". It behooves them to take care of this, or they might be buying a vacant parcel for what there paying us now. However, It does not benefit us for the building to get knocked down. Because, the buyers will not come up with the money. And then we would have to sue, and it might be five years and a lot of legal cost to get it resovled. Greg
Quote:
On 2004-02-13 20:51, gregstec wrote:
Nancy, no I do not think the buyer would want the property. However, they (the buyers) feel that they have been in this position before, and there expertise would allow them to prolong the Demo. Apparently, they had a meeting with two people on the Coporation Counsel concerning the Demo. They feel this course of action will allow them to prolong the Demo. However, what they fail to realize,is that the Judge in the Demo court, is the sole decision maker in the case. Yes, he does get advice from the Corp. Counsel. But, he has the ultimate decision in the fate of the parcel. With all that said, the contract is "as is". It behooves them to take care of this, or they might be buying a vacant parcel for what there paying us now. However, It does not benefit us for the building to get knocked down. Because, the buyers will not come up with the money. And then we would have to sue, and it might be five years and a lot of legal cost to get it resovled. Greg
gregstec,
That's my point -- the buyer won't come up with the money, thus defaulting under the agreement. He defaults and the agreement with you is dead. Dead agreement means he no longer has the right to lis pendens. The lis pendens gets removed and you can close with someone else. Nothing to be gained by suing him. You want him to close with you or voluntarily remove the lis pendens or default.
Greg,
You are looking at a 10% premium, so you would have to decide if this worth getting the property sold.
I am only licensed in Nevada so you will need to talk so someone in Illinois. As far as the insurance question I don't believe this is the same thing, but maybe in Illinois this could be the proper terminology.
My thinking on this is just as we get creative in our investing, you need to find the proper person to talk with. I have given you an idea see if you can follow through with someone knowledgable in this area.
I have seen this done elsewhere so I know it is possible.
John $Cash$ Locke
Nancy,
I believe the Lis Pendens was a stall tactic used by the buyers, they know that it has to go to court to get it removed, thus giving them additional time.
In Nevada as I can only speak about there, real estate takes a priority in the courts, there is a very short time limit before it must heard in court.
Maybe I should have moved this post into the Legal Forum. I have thrown out an idea that might work for Greg. I find that unless attorneys are familiar in certain areas there is a slight learning curve on their part and sometimes to long.
John $Cash$ Locke