What should I do?
13 months ago I drove past a vacant lot, saw a "FOR SALE" sign, pulled over, picked up a flyer. The flyer said "Lot for sale, packaged with preapproved city plans for erecting an 1800 sq ft. house (complete with the architectual plans). Lot and completed house was offered for $265,000. I called. And called, and called. Finally got thru, met with the guy. He has owned the lot for over 15 years. He also used to own the adjacent lot, upon which he had built a house and sold 10 years ago (I verified that fact myself). I agreed to purchase. He told me he had an agreement with another person several months ago, but when it was time to "show him the money", the person flaked. This time around, he wanted 10% down (payable to an escrow company of my choice) prior to starting. We drafted a simple agreement. Escrow has all my money. 13 months have passed. No ground has been broken. No plans have made it thru the city yet. He is hard to get ahold of. He keeps asking me if I want to forget it (many people have since offered him way more.... $300,000+) and he told me I got a killer deal. Since real estate here in Southern California has enjoyed a tremendous jump in appreciation in the last 1-2 years, my deal is now better than ever, but its making his deal worse. He is stalling. I know he wants me to back out. Nothing was recorded at the county. Could he sell it to someone else behind my back? Is there any legal recourse for me to obtain the land and hire another general contractor? Is there any way to protect my interests? I have had $26,000 tied up all this time. Ugh! I would really appreciate any help. PS. Our agreement never stated an estimated date of completion. Thanks in advance for any help.
Cindy
If he is a general contractor, could you approach the state licensing board for help in filing a complaint? The "simple" agreement may have you locked in or it may be so straightforward as to create a problem for him if you contact the right party. good luck.
File an action at once, damages file a LisPen
at once and have the escrow check title to see if he really owns the property and is capable of deeding. then start to deal.
Try to get a full picture of costs of construction etc. and then try to buy the land. If his deal is lowball just to get you into escrow, then you may be able to get the land at the reduced price.
I would also try to buy with a great deal of subordination in the Trust Deed he will take back at sale if your negotiations are strong enough. Do not wait on the matter.
Cheers Lucius
Dear Lucius:
Thanks for your response. Could you please clarify something for me? When you stated "try to buy with a great deal of subordination in the Trust Deed he will take back at sale if your negotiations are strong enough" ... what does that mean? I am a beginner with all this stuff, and a lot of that comment went over my head. Thanks so much in advance.
Cindy
Dear Cindy,
The legal threat or action is merely a device to increase your bargaining position. If he has plans and you like them and they can get through plan check. You really can substitute another builder to do the project. The key element is the lot. If you can get it at a price you want, then to remove the lawsuit you now bargain for favorable position in the buy of the lot. Most favorable is to make a small downpayment on the lot, he takes back a Trust Deed and in the trust deed is a subordination clause. He will subordinate the Trust deed to a new trust deed which gives you the funds for construction. He becomes a second TD. A plus is achieved if he gets no payment during period of construction and his first payment on the note begins on date of completion., The normal note of this type has a one to two year due date. But if the property is completed and you sell it, the Buyer will be obtaining a new TD for the purchase. You pay everybody off and you your child and husband go have a vacation to recover from the pressure of visiting the property every day to insure that your new contractor/builder does his thing.
Now that is A plus you can of course give more in the downpayment etc. etc. But from the way your Seller/Contractor is acting he has some kind of a problem. You might check and see if he is buried in another project, cannot obtain construction financing whatever. All these items reflect on what you can bargain him to accept.
As I say it is a war and you need intelligence as to the enemys position, resources, state of mind etc. etc.
Actualy what you are doing right now is what I am doing trying to buy the land for the containers to houses deal. I am dealing with an ex bar'd attorney who got the land from a client's estate is about to face several law actions, his wife has left him and his children do not speak to him. But he drives a new Mercedes, still has the Rolex diamond watch and is rather brusk in his speech. I am dealing direct cause he does not trust the Broker who did represent him. Lots of fun. He is so crooked I have to count my fingers after shaking hands. Wish me well, as I wish you.
Lucius
You may want to ask the seller to provide adequate assurances that he will comply with the terms of the contract. If he refuses to do so then I would speak to an attorney about filing a suit for breach of contract. The relief you are seeking in this case is specific performance. Specific performance will compel the seller to comply with the terms of the purchase contract, ie. do what he said he was going to do.
Also, ff the original contract were notarized or if you had a separate instrument evidencing the prior agreement which were notarized, you could record that document in the public record for purposes of creating a cloud on the title.
If you have any paper work on your deal, go file it at the court house.
(not sure what needs to be filed in your state to inform others that you have a signed contract on the property. CHECK WITH LAWYER)
it will cloud the deed and make it almost imposible for him to sell to another.
then if you like you can go file charges on him if you have any paper work.
I would firstly switch the escrow account to an interest bearing escrow if possible. Then get your lawyer to file a civil suit for damages to get his attention. Then get his contractors license number and file complaints with the city, state and BBB (for kicks and giggles). While doing that get the numbers and addresses of the local Channel on your side nes media, fax them over to him and ask him which one he would like to meet with first. After a year of waiting its time to play hardball and play it fast. You need to hit him with all barrels to take you seriously. Even if he complies by building the house I would still seek punitive damages for the amount of time it has taken.
Good Luck