What If I Dont Perform On Contract?
Took control of a property subject to existing mortgage. Owner signed real estate sales contract (very simple one from office depot) owner signed warranty deed and we went to bank and had it notarized. Possession was to occur on 10-21 I go to the house to meet the former owner and he has not moved hardly anything. He hands me a key and garage door opener and says needs another day fast forward to today 10/26 owner is out but stuff still not out of house. I put up for sale signs and I want to show it. It is filthy and full of his stuff everywhere and therefore "actual" possession cannot occur and house is not really marketable being dirty with stuff everywhere and the note on the stairs he wrote reads just a little more time to get my stuff out please. The trustee sale is in a couple of weeks and I have too much on my plate as it is. Im thinking this guys in breach of contract and that I should send a certified letter telling him Im not going through with the deal and just let the bank foreclose on him. If he were to try and sue for performance by then the house would have foreclosed. His credit history was already shot as he claimed bankruptcy only 6 months ago and did not make payments to bank since then. Also the bankrupcy was a chapter 13 and I read it to say property is to remain vested with debtor so I dont know if this would give me an out or not. I dont have the time to fool with this guy right now I have too much money and other properties in play. Any suggestions on how to back out of this deal. I didnt put any escape clauses in the contract because it was supposed to be a simple one, live and learn!
Suggest you get a real estate attorney and fast. This is just one of the problems with buying subject to existing mortgage. Chances are the seller's lender is in first position which may mean that they're in control or will be in control in a foreclosure.
Interesting situation. Have you tried to speak with the current owner and express your concerns. Sometimes a friendly, but stern, conversation can do wonders. You also mentioned that he filed chapter 13. Am I wrong in thinking that you can't sell the house anyway until the bankruptcy is terminated? Personally I would try to resolve this issue with the owner before any legal action is taken; albeit, it is a smart idea to acquaint your attorney with the particulars. Good Luck.
Matt
You don't clearly say if you took the delivery of the deed and if so, whether it was before Ch 13.
If so, it's your property and you are obligated to perform on whatever written contract you entered.
If you don't understand your obligations under that K, you do need to get to your lawyer post haste.
You might very well get sued on your contract so you'd better understand it.
I planned on getting ahold of my attorney to cover myself completely. I took deed after the bankruptcy so Im pretty sure I have an out now. The pendency of the bankruptcy is 36 months and the bankruptcy was just filed 04/29/03 and again it reads that the estate is to remain vested in the debtor during the pendency of the plan. I only have a couple of hundred bucks into the deal so it would not be a big loss for me to walk away. Im going to call my attorney and possibly the sellers bankruptcy attorney to cover myself. Then I will send a certified letter and try and get my money back but its only a couple hundred bucks either way, I will chalk it up to a learning experience.
Sounds like the property was part of the bankruptcy estate and you and the debtor jointly violated one of the terms of the bankruptcy plan. If the property was part of the bankruptcy estate when you attempted to record the deed, the conveyance may be set aside by the trustee. Otherwise, since you took the deed (and recorded it) you are now the owner of the property. If so, you may be SOL in terms of suing for breach. Not sure what state you are in but the contract may be of no consequence at this point since its terms will most likely have merged with the deed. This is commonly referred to in legal parlance as the doctrine of merger which states in general terms that terms of a contract are merged with the deed conveying its ownership. This doctrine generally bars suits for breach of contract since the contract no longer exists (i.e. it has merged with the deed). Again, different states take different approaches on this. You should speak to an attorney pronto. Be prepared to spend a few bucks.
Quote:
On 2003-10-28 22:43, jorge121 wrote:
Sounds like the property was part of the bankruptcy estate and you and the debtor jointly violated one of the terms of the bankruptcy plan. If the property was part of the bankruptcy estate when you attempted to record the deed, the conveyance may be set aside by the trustee. Otherwise, since you took the deed (and recorded it) you are now the owner of the property. If so, you may be SOL in terms of suing for breach. Not sure what state you are in but the contract may be of no consequence at this point since its terms will most likely have merged with the deed. This is commonly referred to in legal parlance as the doctrine of merger which states in general terms that terms of a contract are merged with the deed conveying its ownership. This doctrine generally bars suits for breach of contract since the contract no longer exists (i.e. it has merged with the deed). Again, different states take different approaches on this. You should speak to an attorney pronto. Be prepared to spend a few bucks.
Im lucky because I do have possession of the deed because I prepared it and went to the bank with the seller to have it notarized but I have not recorded it due to the current situation so he still shows as owner of record. I called a bankruptcy attorney today and he said that property was not to be sold unless authorized by the trustee or judge handling the bankruptcy so Im walking from it and Im sending a certified letter to the seller requesting my couple hundred bucks back but if I dont get it small price to pay for the education and lesson learned. In the future I am interested to find out how I would know if a seller is under bankruptcy protection because nothing showed up on the title report. I guess I will have to probe the seller better for information.
Maybe he has a nice watch or something he hasn't taken yet, that would be a nice repayment. Err... thats wrong.. nevermind.