Selling a House Without a Contract

[Adverse]

The house in question is DW's deceased grandmother's house, which has been sitting, for sale, for some time. The family next door, or their kids, are buying it. It is being sold as is, as a distressed property, for a price reflecting that.

After the house has sat a long time, BIL got two offers last week, the better one from the family next door, to beat the other offer, to keep next door from them from becoming a problem property.

It is in a very small town where everyone knows everyone.

Last weekend, BIL asked me what he should do next and I suggested he ask the local title company to draw up a contract and handle closing. I was trying to suggest that he make sure he dots all the i's and crosses all the t's.

The report DW got back is that the local banker said a contract would not be necessary. I assume they are going on the word of the local banker because that is where the money is coming from. Everyone in town pretty much does what the local banker says.

Title work will be done and a deed recorded.

I handled the sale of two houses when my parents died and not having a contract is the opposite advice of what I received. In those cases, however, there were attornies for the estates and the prying eyes of disrespectful siblings.

So, what do you think?

 

[jharris352]

I think any time you sell real estate you need a contract. However, at the table, the closing documents work as a de facto contract. That must be what everyone is relying upon. As long as the lender is ok with it all is fine. Its always fine, until it ain't as Yogi would have said.

 

[kushwahavivekk]

you need to do contract.....

 

[dee_dub]

Everyone in town pretty much does what the local banker says.
...
So, what do you think?

I think bankers are not lawyers. If DW wants legal advice on how to draw up a contract and sell a property, they should talk to a lawyer. If they want advice on how to make money, which may or may not be good legal advice, they should talk to their banker.

 

[fredrikklaw]

Statutes of Fraud!

This has got to be a case of miscommunication and of things badly missing in the third-hand translaton of the original story. It is simply impossible for me to even imagine that a banker would consider selling yesterday's left-over meatloaf without some sort of writing, let alone real property.

Contracting for transactions involving real property is not whimsy, or a matter of choice, or something to be considered during the commercial break, but an ABSOLUTE requirement, which is where contract law meets Statutes of Fraud.

Contract Law's Statutes of Fraud provision requires that certain types of contracts be in writing; a few examples of which are Marriage, transactions with a value over $500, contacts that cannot be performed/completed within one year, answering for the debt of another and of course, sale/purchase of real property (amongst a few others).

I am sure the facts would be quite different if you check the story with its original source and publisher; the "banker," if not, then I think we have found the person responsible for selling Brooklyn Bridge, Golden Gate Bridge and the Statue of Liberty.

fredrikklaw

 

[stephdenn]

we have similar situation

My father recently passed away. He has had people in our family home for the last few months. They are supposedly buying the home on a rent to own basis. They paid nothing down and pay 400 monthly to total 45000, a ridiculous price for the property. They did not have a contract of any kind. Both sides of this deal were not very smart. They supposedly have receipts listing monies given as payment and not rent, however some of those receipts were signed by my father's girlfriend, who had nothing to do with the home. Their are 10 kids from my father involved with selling property and dividing all assets. Everyone remarkably are on the same page and in total agreement. The family wants to sell the home and be done with the whole ordeal. We do not want to drag this out for the several years it would take for them to complete this transaction. So, my question is, without a contract, do we have to honor my crazy Dad's original deal with them? We have no way to know the terms for sure, right now, they are saying what they had agreed upon and none of us know any different. What do we do?

 

[fredrikklaw]

You mean $450,000!?

Not only there is nothing here for you to honor, you should not even be giving this ridiculous claim an iota of credibility by giving it a moment's consideration? What you have on your hands is purely and simply a very badly disguised and amateurish shakedown with a price tag of $45,000; negotiable of course.

Their claim of a so-called "rent-to-own" agreement with your father is so badly flawed both conceptually and legally as to the point of comic absurdity and should be treated with nothing but the contempt it deserves. They know that you want to sell the house which would be difficult to do with sit-in tenants (but not impossible) and saw an opportunity to make a buck.

So, the real question here is how to get rid of the people sitting in your family home without incurring their wrath or a lawsuit so you can finally sell the house and divvy it up.

You can safely consider them as being tenants with a month-month tenancy agreement which any party can terminate at any time by giving a 30-Day notice if the tenancy has been for more than one year and a 60-Day notice if tenancy has been for longer than one year. If they refuse to leave, file an unlawful detainer action and have them evicted by the sheriff.

It's a good thing you have not noted your jurisdiction in your post, or there would be a rush to buy property in your state because in California, $45,000 won't even buy you a parking space for a year, let alone a house.

All the best!

fredrikklaw