Real estate sale cash buyer contract

[Tbonesteel01]

Jurisdiction

Connecticut

In Connecticut is it even legal for a buyer after the purchase and sale agreement is signed to a week later send the seller an addendum to try to force the seller to set aside 33k of seller proceeds for a guarantee that the seller will be out In a certain amount of time

 

[adjusterjack]

"Legal"?

Likely either a breach of contract or just plain unenforceable depending on the terms and conditions of the contract.

Something like that should have been addressed in the contract when it was first signed.

The way I have bought houses is to address it in the Close of Escrow details, stating that my final walkthrough will occur on the morning of the Close of Escrow with the home and property unoccupied, all of seller's belongings removed, and all utilities on.

If the seller doesn't comply, I don't close and the seller doesn't get any money until the seller is completely out.

Do you have some reason to suspect that the seller won't be out by Close of Escrow?

What you propose to demand isn't likely to happen if both parties are already in contract.

 

[Tbonesteel01]

I'm the seller and the buyer has not made the earnest deposit to my attorney and has given me a addendum basically saying that I need to put $30,000 of my proceeds in escrow with my attorney at closing and pay them 1500 a month for 2 months upfront at closing and to guarantee that I leave if I need to hold over to find my new home but this seems like extortion or strong arming to me not paying the earnest money and then a week later sending me an addendum that was never mentioned I told him that is ridiculous and in no way would I sign something so ridiculous

 

[adjusterjack]

if I need to hold over to find my new home

There's the problem. If you can't guarantee to be out by Close of Escrow then I can't fault the buyer for demanding a financial guarantee. Though that's not the way I would do it.

this seems like extortion or strong arming to me not paying the earnest money

It's not extortion. It's negotiating. Without earnest money I don't think there's a binding contract (ask your lawyer) so you are free to decline the buyer's demand and put your home back on the market.

Is there some reason that you can't be out by Close of Escrow?

 

[Tbonesteel01]

I understand my options what I don't Understand why they waited a week after the deal was signed before ever giving me an addendum and $30,000 of my proceeds in escrow for 2 months who would ever sign such a rediculous thing like that maybe it the way they worded it I don't really know

 

[Tbonesteel01]

There's the problem. If you can't guarantee to be out by Close of Escrow then I can't fault the buyer for demanding a financial guarantee. Though that's not the way I would do it.



It's not extortion. It's negotiating. Without earnest money I don't think there's a binding contract (ask your lawyer) so you are free to decline the buyer's demand and put your home back on the market.

Is there some reason that you can't be out by Close of Escrow?

I'm in the middle of finding a place to go now but I'm not sure yet where I'm going so as we had a talk during our conversation before the contract was signed he agreed verbally that a month or two would be ok for some rent and after everything is signed and done he purposely neglected to make the earnest deposit with my attorney then pulled out the addendum a week later it's a strong arm tactic is what it is because the way I read it I won't get any of that $30,000 back how can that be legal at all because he breached the contract by not depositing the earnest money when we signed I'm not confused believe me I'm pissed off

 

[zddoodah]

In Connecticut is it even legal for a buyer after the purchase and sale agreement is signed to a week later send the seller an addendum to try to force the seller to set aside 33k of seller proceeds for a guarantee that the seller will be out In a certain amount of time

What does "try to force" mean? The buyer is asking for something. Why would you think that might be illegal? If you're the seller and you don't want this, just say no. Since you have an attorney, you should be discussing this with him/her.

the buyer has not made the earnest deposit to my attorney and has given me a addendum basically saying that I need to put $30,000 of my proceeds in escrow with my attorney at closing and pay them 1500 a month for 2 months upfront at closing and to guarantee that I leave if I need to hold over to find my new home but this seems like extortion

It's not. If the buyer breaches the contract, your remedy is to sue for damages.

 

[Red Kayak]

what I don't Understand why they waited a week after the deal was signed before ever giving me an addendum and $30,000 of my proceeds in escrow for 2 months who would ever sign such a rediculous thing like that maybe it the way they worded it I don't really know

Maybe the buyer suddenly had the epiphany that there was nothing in writing guaranteeing that they would get to use the house any time soon.

It would be kind of redicilous [sic] to buy a property, pay a mortgage, and not be able to actually move in.

I'm in the middle of finding a place to go now but I'm not sure yet where I'm going so as we had a talk during our conversation before the contract was signed he agreed verbally that a month or two would be ok for some rent and after everything is signed and done he purposely neglected to make the earnest deposit with my attorney then pulled out the addendum a week later it's a strong arm tactic is what it is because the way I read it I won't get any of that $30,000 back how can that be legal at all because he breached the contract by not depositing the earnest money when we signed

That's your problem. The buyer is having second thoughts, that your "month or two" could extend to much longer, and wants to renegotiate.

Your choice is to negotiate or not negotiate.

Until closing, all sorts of things can happen.

 

[Red Kayak]

Is your other thread referring to the same property?

Oh, you've been busy - transfer of ownership

You have someone interested paying cash for your property. Not a mortgage. They don't want to pay cash until they're sure that they'll actually get what they are paying for.

 

[adjusterjack]

I'm in the middle of finding a place to go now but I'm not sure yet where I'm going so as we had a talk during our conversation before the contract was signed he agreed verbally that a month or two would be ok for some rent

Read my lips: THERE IS NO SUCH THING AS A VERBAL (aka ORAL) AGREEMENT OUTSIDE OF A REAL ESTATE PURCHASE CONTRACT.

Did you include specific details of that agreement within the pages of the contract?

he breached the contract by not depositing the earnest money when we signed

As far as I can tell from several CT real estate and legal websites, a real estate contract can be binding when both parties have signed, even before earnest money is tendered.

Whether the delay in tendering the earnest money is a breach of contract depends on the EXACT wording of any terms relating to the earnest money.

You really do need to talk to your lawyer about all this.

 

[Tax Counsel]

In Connecticut is it even legal for a buyer after the purchase and sale agreement is signed to a week later send the seller an addendum to try to force the seller to set aside 33k of seller proceeds for a guarantee that the seller will be out In a certain amount of time

It's legal because there is no law that makes it illegal. The real question is what effect does that have on the contract? What the buyer is asking for would not meet the requirement of an enforceable contract or contract addendum because the buyer isn't offering anything in exchange for the agreement for the early move out. Instead, she's simply trying to impose a new burden on the seller without giving anything new in return. That won't meet the requirement of a contract.

The buyer has to offer something new (in legal terms she has to offer additional consideration) to the seller for in exchange for the agreement for the early move out. So instead of trying to force the move out by the buyer withholding some of the purchase price she has to offer the seller something beneficial to the seller to do it. That usually means offering some extra money. In short, instead of the buyer attempting to hold back part of the purchase to get what she wants, she instead has to offer something MORE to the buyer to get the agreement for the early move out to form an enforceable contract.

The buyer can't force the seller to accept the addendum and if the seller chooses not to do as the buyer wants, the buyer is out of luck. The buyer still has to carry out his/her end of the bargain or be in breach of contract. That means the buyer can't withhold some of the price to pressure the seller to get out early. If the buyer does that, the buyer will be in breach of contract that can get very expensive for the buyer.

The best way for the buyer to get what she wanted would have been to put the requirement in the original purchase agreement. She didn't do that so her next best option is to offer some more money, perhaps several thousand dollars more, to motivate the seller to agree to do that and then get that agreement in writing. At that point there would be an enforceable contract for the seller to get out by the date the buyer wants. If the buyer isn't willing to cough up some extra money or something else of value to the seller the buyer won't get an enforceable contract.

The idea of having the buyer hold back part of the money she has already agreed to pay at closing is a loser and reflects a certain amount of arrogance to expect the seller to not only agree to the move out date but also agree to receive a third of the sales proceeds late as well. That's an offer that only benefits the buyer and actually costs the seller more. If the buyer thought about it, she'd realize what a bad deal she's proposing and that no seller who has any common sense will agree to that.

If the buyer isn't willing to offer more to get the move out date she wants she'll just have to wait until the sellers move out on their own time schedule. Coming to closing and telling the seller that that she's going to withhold one third of sales price to be paid only when the seller moves out on the date the buyer wants will breach the contract and might not even possible because for the seller to give clear title to the buyer that money the buyer wants to hold on to may be needed at closing to pay off the seller's mortgage and any other liens that the seller may have. That would completely blow up the whole deal and at that point, if I were the attorney for the seller, I'd tell them to inform they buyer they won't sell the property to the buyer because the seller doesn't want to risk another blow up at the rescheduled closing date. Instead, I'd tell the seller we are are relisting the property and filing a lawsuit for damages for the breach of contract. I'm pretty sure that would get the buyer's attention and get her to see just how badly she screwed things up by the power of move she pulled. This is one of several reasons why a buyer should have an attorney advising her throughout the purchase process. The attorney would give her advice that would have her avoid making that kind of very expensive mistake.

 

[Tbonesteel01]

Read my lips: THERE IS NO SUCH THING AS A VERBAL (aka ORAL) AGREEMENT OUTSIDE OF A REAL ESTATE PURCHASE CONTRACT.

Did you include specific details of that agreement within the pages of the contract?



As far as I can tell from several CT real estate and legal websites, a real estate contract can be binding when both parties have signed, even before earnest money is tendered.

Whether the delay in tendering the earnest money is a breach of contract depends on the EXACT wording of any terms relating to the earnest money.

You really do need to talk to your lawyer about all this.

My attorney was involved

 

[Tbonesteel01]

It's legal because there is no law that makes it illegal. The real question is what effect does that have on the contract? What the buyer is asking for would not meet the requirement of an enforceable contract or contract addendum because the buyer isn't offering anything in exchange for the agreement for the early move out. Instead, she's simply trying to impose a new burden on the seller without giving anything new in return. That won't meet the requirement of a contract.

The buyer has to offer something new (in legal terms she has to offer additional consideration) to the seller for in exchange for the agreement for the early move out. So instead of trying to force the move out by the buyer withholding some of the purchase price she has to offer the seller something beneficial to the seller to do it. That usually means offering some extra money. In short, instead of the buyer attempting to hold back part of the purchase to get what she wants, she instead has to offer something MORE to the buyer to get the agreement for the early move out to form an enforceable contract.

The buyer can't force the seller to accept the addendum and if the seller chooses not to do as the buyer wants, the buyer is out of luck. The buyer still has to carry out his/her end of the bargain or be in breach of contract. That means the buyer can't withhold some of the price to pressure the seller to get out early. If the buyer does that, the buyer will be in breach of contract that can get very expensive for the buyer.

The best way for the buyer to get what she wanted would have been to put the requirement in the original purchase agreement. She didn't do that so her next best option is to offer some more money, perhaps several thousand dollars more, to motivate the seller to agree to do that and then get that agreement in writing. At that point there would be an enforceable contract for the seller to get out by the date the buyer wants. If the buyer isn't willing to cough up some extra money or something else of value to the seller the buyer won't get an enforceable contract.

The idea of having the buyer hold back part of the money she has already agreed to pay at closing is a loser and reflects a certain amount of arrogance to expect the seller to not only agree to the move out date but also agree to receive a third of the sales proceeds late as well. That's an offer that only benefits the buyer and actually costs the seller more. If the buyer thought about it, she'd realize what a bad deal she's proposing and that no seller who has any common sense will agree to that.

If the buyer isn't willing to offer more to get the move out date she wants she'll just have to wait until the sellers move out on their own time schedule. Coming to closing and telling the seller that that she's going to withhold one third of sales price to be paid only when the seller moves out on the date the buyer wants will breach the contract and might not even possible because for the seller to give clear title to the buyer that money the buyer wants to hold on to may be needed at closing to pay off the seller's mortgage and any other liens that the seller may have. That would completely blow up the whole deal and at that point, if I were the attorney for the seller, I'd tell them to inform they buyer they won't sell the property to the buyer because the seller doesn't want to risk another blow up at the rescheduled closing date. Instead, I'd tell the seller we are are relisting the property and filing a lawsuit for damages for the breach of contract. I'm pretty sure that would get the buyer's attention and get her to see just how badly she screwed things up by the power of move she pulled. This is one of several reasons why a buyer should have an attorney advising her throughout the purchase process. The attorney would give her advice that would have her avoid making that kind of very expensive mistake.

Thank you for listening to my side for the buyer to give me an addendum that is basically me handing him over $30,000 bucks is rediculous document to give to me a week after the contract was signed and closing date set without ever mentioning it to me in the original contract in some way and I refuse to sign such stupid shit honestly this buyer had some kind of.gall to do that when he knows better why would I sign it. Basically he was shotting his shot so to speak thinking I was a dummy or I had no choice but to sign it like I'm desperate or something I told him the negotiations ended when we signed the contract and put a closing date on it so what he was doing was strong arming me as tho he was in control of this deal and I had to agree to his demands I called it extortion so with all that being said yesterday I put it in writing that I was canceling the contract as one of the options he gave me he said either I sign tho a addendum with him holding up my sale proceeds or I give him a cancellation so I took that option and I'll take my chances with a new buyer. And get this above all that he was the buyer in the transaction for his LLC which he vaguely mentioned but as a licensee he has a moral and ethical obligation to me as an unrepresented seller to disclose that according to the new real estate agent law that recently passed there is ℹ specific form he was supposed to give me to explain his position and let me know formally basically he as a realtor was obligated by law to do that which he never did which tells me this person operates like this all the time unethical should know how to write a contract properly and know he was holding back the 5 grand deposit so that I would never get it because he knew he wasn't going to honor the original contract from day one. Now told him I'm canceling the contract and he owed me 5 grand for his breach of the contract. He just laughed a little. This person as an LLC owner and being a realtor and not properly disclosing that to the unrepresented seller (me) knew the whole time he was playing me for a fool and borderline predatory tactics. Needless to say I've been really pissed off the last few days I'm feeling like something needs to be done weather it's a complaint to the real estate associations or consumer protection agency or the realtor licensing department because he Crossed a lot of lines when he knew better. He is now holding me up and costing me money which was likely his plan anyway. So what does anyone think I should do here if anything at all. Real talk I know there will be another buyer soon maybe just cut my losses and move on what do you guys think on here..

 

[Tbonesteel01]

Maybe the buyer suddenly had the epiphany that there was nothing in writing guaranteeing that they would get to use the house any time soon.

It would be kind of redicilous [sic] to buy a property, pay a mortgage, and not be able to actually move in.



That's your problem. The buyer is having second thoughts, that your "month or two" could extend to much longer, and wants to renegotiate.

Your choice is to negotiate or not negotiate.

Until closing, all sorts of things can happen.

This buyer is a all cash buyer he would have no mortgage and yes he wanted to hold my money ransom for a guarantee that I do what I say I will do and be out on time he is a paranoid person really freaked out thinking I wasn't going to leave. And made so crazy statement to me like it expensive to get a squatter out I'm going to shut up now and just move on and just say next please

 

[Red Kayak]

This buyer is a all cash buyer he would have no mortgage and yes he wanted to hold my money ransom for a guarantee that I do what I say I will do and be out on time he is a paranoid person really freaked out thinking I wasn't going to leave. And made so crazy statement to me like it expensive to get a squatter out I'm going to shut up now and just move on and just say next please

If you do not like the addendum the buyer wants to add, you don't have to agree to it. It is not illegal for the buyer to request an addendum. It is not illegal for the seller to reject the addendum.

If the buyer has not paid as agreed upon in the written contract, then the buyer is in breach of the contract. You can pursue enforcing the terms of the contract. However, that can have consequences. One consequence may be that you no longer have a buyer and you have to relist the house. This may be a good thing for. Or it may not be a good thing for you.

Note: There are advantages and disadvantages to a cash buyer. What you are currently experiencing might be due to the buyer lacking experience. However, it could also be that the buyer just wants to pay less.

A thought: Adjusterjack pointed out in post #2 that when he has bought real estate these sort of details have been covered in the Close of Escrow details of the contract. Since you had an attorney involved, it is likely that there is some standard boiler plate language addressing the issue. Have you looked at the paperwork that you signed? An appropriate response could be, "This issue was addressed in [relevant Section] of the contract we signed." And just continue to cite the terms agreed upon in writing, pointing out where the buyer has not yet met them.

 

[adjusterjack]

The following is from the Real Estate Purchase Contract provided by the CT Bar:

The SELLER agrees to deliver, at the time of the Closing, exclusive possession of the Property (except as may be otherwise provided herein), broom-clean, free of all debris, litter and furnishings and shall deliver all keys in the SELLER'S possession to the BUYER. The BUYER shall have the right to make a final inspection of the Property prior to the time of the Closing. "Broom clean" shall mean that the Property shall be empty of all personal property, except as may be included in the sale, free of all trash, garbage, junk, building materials, litter, cans of paint or stain, broken or discarded items, and vacuumed or swept.

https://www.ctbar.org/docs/default-source/section---real-property-(public-documents/model_residential_contract_j.pdf?sfvrsn=76cfa95_2

There is also this:

ENTIRE AGREEMENT. All prior understandings, agreements, representations and warranties, oral and written, between the SELLER and the BUYER are merged in this Agreement. This Agreement completely expresses the agreement of the Parties, neither Party relying upon any statement made by anyone else that is not set forth in this Agreement. Neither this Agreement nor any provision hereof may be waived, changed or cancelled except by a written instrument signed by both Parties.

I think that the seller brought the problem upon himself by discussing the possible need to remain in the home after close of escrow (lease back). Can't say as I blame the buyer for offering terms that will adequately compensate him for that possibility.

As for the earnest money, there is a section of the contract specifying when payments are to be made.

PURCHASE PRICE. The purchase price (the "Purchase Price") is $ payable as follows:
(a) By Initial Deposit upon execution of this Agreement: $
(b) By Additional Deposit to be paid on or before:________________ $
(c) By mortgage financing described in Section 5 below $
(d) By funds due at Closing as described in Section 15 below: $
TOTAL (Purchase Price) $

We don't know how that was completed.