Can a home buyer put a lien on a house
I have a house that is up for sale through a relator. We got an offer on it contingent on the buyer selling and closing on theirs that we accepted. As the end of the contract neared we had not heard from the buyer despite many attempts by the realtor, no inspection, no closing date, no finance information. The realtor showed the house to another couple and they made an offer that we accepted contingent on the first deal falling through.
The first buyers are now coming back wanting an extension, saying that they have a new buyer for their house. They want to start from the beginning including getting an inspection. We turned down their request. They are now coming back with the threat of putting a lien on the house.
They are saying that by the contract language that it is still valid, it has specifically: “The Closing of the sale shall be on or before July 29, 2008, or within 2 days after closing of the buyers home whichever is later or this agreement shall terminate unless an extension of time is mutually agreed in writing.”
I look at another line in the contract that states: ” Buyer agrees to make written application for financing necessary to complete this transaction within 5 days after acceptance of this agreement. No more than 30 days after acceptance of the agreement shall be allowed for obtaining favorable written commitments or mortgage assumption approval.”
My questions is can they actually put a lien on the house?
Replies
I doubt it, but you need a lawyer.
Yes, in a sense, they can. They can file a specific performance lawsuit, which may cloud the title. I doubt that they can win if you have stated the facts accurately, and the cost to them will take a few thousand dollars, at least. It isn't the same as a contractor's lien. They will have to actually file the lawsuit and have the court place the hold on the title.
I suggest you consult a lawyer.
I have appointment with a lawyer tomorrow. I just don't want this to tie the house up for months while this is settled. My wife just lost her job and we really need to sell this house.We are the people our parents warned us about. J. Buffett
Seems to me that an extension of time has not been mutually agreed upon in writing. Their time to act has expired. Maybe you will agree to an extension if they agree to an increase in the sales price and an increase in their earnest money... oh, maybe $25,000?
As far as I know, a mechanic's lien would only apply if they had made improvements to the house and not been paid.
I think a lot of Buyers threaten these types of things but the problem is that it "ties them up too"
Your contract states what happens regarding the contingency.
Around here You continue to show your house to other Buyers and when one is found, the first Buyer is given a 48 to 72 hours to "remove the contingency" or they lose the deal.
Thats usually how it happens here as well. The first offer is accepted and the buyer is given the right of first refusal. If another offer comes in, regardless of $$$ amount, you give the first buyer the opportunity to remove their contingency with in a specified (in the sales agreement) period of time. If they remove it, than they have to settle on a date which you both agree on. If not, then you refund their deposit and take the second offer.
We use forms and contracts developed by the State Board of Realtors.We as realtors then just "fill in the blanks".We have a standard real estate purchase contract.For contingency, we have form entitled "Contingency Addendum to Real Estate Purchase Contract"It's fill in the blankWe list purchase price and closing dates and it's up to the Seller if he wants to agree to an extension (if the first Buyer is stuck and can't sell his house)
Seems NJ and Kansas have alot in common. I imagine most of the rest of the country is very similar as well.
A lien for what? Are they having to forfeit their earnest money? Have they incurred financial damages otherwise? They can't just have the court put a lien on it because they want it.
Either way, it seems that they have not met the deadline they agreed to. For you to have another interested party(and therefore no interest in agreeing to an extension for them), is a risk they've taken. The risk you've assumed is letting them have until 7/29 to sell theirs, and potentially losing other buyers-cash in hand.
The only thing in that clause that bothers me is the verbage "whichever is later". That seems to put no time limit on how long they have to sell their home... I think it should have read "whichever is sooner".
Asking for another inspection is just looking for another bargaining chip to knock the price down.
We are not trying to keep the earnest money and they have nothing else invested, no inspection, survey, etc. The clause that has "which ever is later" is what worries me too, and that is what they are basing everything on.We are the people our parents warned us about. J. Buffett
Well, I think the court will very likely interpret the spirit of the agreement. Who drew up the contract?
If they attempt to have a lien put on your house(for whatever amount), that earnest money is yours...and should be for assuming the risk of losing cash buyers, should they not be able to meet that deadline...which they can't.
If you've got another buyer, returning their forfeited earnest money is a gift you can use as a good faith gesture in court.
Of course, speak to your attorney(or 2, 3), but I'd say let them try.
"...or within 2 days after closing of the buyers home whichever is later or this agreement shall terminate..."
That sure sounds odd to me. Makes it sound like the contract doesn't really expire until they buy it.
Or am I missing something?
Basically anyone can file a piece of paper at the courthouse. If I had the legal description of the property I could file one on your house althought we have not had any kind of business relationship.
But that does not mean that it can be enforced.
However, a few years ago there where a number of protest groups that where filing "citizens liens" agains public officials. And stat laws where enacted in many places making those harder. I don't know if those require some kind of proof before filing or have penalties for frivolous files.
But your lawyer would best know your state laws and the penalties that they can liable for. I suspect that a strongly written letter from your attorny will stop them.
Of course all of this is based the bits that you have given.
I don't see any mention of the buyers agent. What do they have to say about this.
And from what you have given the contract is baddly written.
If the buyer had gotten loan approval then you could be tied up for months are years waiting for his house to sell.
Who prepared the contract? Was it a standard, fill in the blanks, contract supplied by your agent? If so I would be having some strong talks with the broker and their attorny.
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Yes! If a problem was caused by wording of the contract the brokerage will have errors & omissions coverage and will send it directly to the insuror's attorney. (or at least that's how it would work in Colorado)
If your realtor drew up this contract maybe they are the ones who should hire the lawyer... but you know how that conversation will go. They might just have their lawyer send the nasty letter at their expense that tells the first buyer to go away in exchange for return of their earnest money by X date, or you will keep the earnest money. But the others are right -- you need your own lawyer.
Document all the times you tried to get in touch in touch with the first buyer and heard no response. Write down only facts. Don't write down you musings about the contract unless it's in a letter to your lawyer, and even then you don't need to do that. He can read it and draw his own conclusions and discuss them with you.
Billy
And when it's over and done go to Margaritaville...
have a third party put a lien on their house. that would stymie the sale of theirs putting them in conflict with your contract
what comes around goes around
The contract was a standard fill in the blanks, that was filled out by their real estate agent. My agent has documented all of the times that he tried to contact their agent. I agree that the contract was written bad, at least that particular bit of wording. I think boss had it right when said that the way that it is written, the contract doesn't expire until they buy the house or they want out of it.
We are thinking about giving them the extension, but they would need to pay the August mortgage that we will now have to pay because it did not sell in July, but I don't think that they will go for it.
Another thing that the contract states is that if there are any legal proceeding that the losing party will pay al reasonable legal fees.We are the people our parents warned us about. J. Buffett
Do not let them scare you into an extension. That is exactly what they are attempting to do, but it's a bluff -they don't have a leg to stand on.
The "legal fees...paid by loser" clause is standard in any civil suit, and is no cause for alarm. They are far more likely to incur this expense than you are.
Give them an extension? And under the threat of lawsuit and another inspection so they can force the price down some more?
I'd give them the bird. And maybe 1/2 their earnest money back as a good faith(civil suit insurance) gesture.
I'll bet they're finding out their own home is selling for less than they thought(explaining why it's taking so long for them to sell it), and now want to buy yours cheaper so they net the same $$$.
that was filled out by their real estate agent
Actually he is not the buyers agent at all. He is your agent because you are the one that will pay him (by paying commission).
Can he put a lein on your house...I would say no, not without a judgement against you. He would have to go to court and win then put on a lein for the court awarded damages.
You get out of life what you put into it......minus taxes.
Marv
Edited 8/1/2008 8:56 am by Marv
"Actually he is not the buyers agent at all. He is your agent because you are the one that will pay him (by paying commission)."No, by law, this whole responsibility is to the seller..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Actually it was the buyers agent that wrote the propsal and submitted it to my agent.
I have an appointment in an hour with the lawyer, so well see what he has to say. I'll let everyone knows what happens.
MikeWe are the people our parents warned us about. J. Buffett
No, by law, this whole responsibility is to the seller.
Bill- not sure what you mean by this. When you are selling a property and paying a commission to the agent who brings you a buyer, he has a fiduciary responsibility to you and not the buyer. You get out of life what you put into it......minus taxes.
Marv
There are TWO agents here.A buyers agent and a sellers agent.While the buyers agent is often paid by spliting the commission that the seller pays the buyer is in fact liable for it (at least in some states) and in rare cases has to pay them.The buyers agent has a fiduciary responsibility to the BUYER.http://www.rebac.net/Content.aspx?Pagename=whyuseABR.htm"
What is a Buyer Representative?
A real estate buyer's representative represents the buyer who is purchasing property in a real estate transaction. Research by the National Association of REALTORS has shown that when a buyer's representative is used, the prospective buyer found a home one week faster and examined three more properties than consumers who did not use a buyer's representative.The buyer's representative works for, and owes fiduciary responsibilities to, the real estate buyer and has buyer's best interests in mind throughout the entire real estate process. A buyer's representative will: * Evaluate the specific needs and wants of the buyer and locate properties that fit those specifications.
* Assist the buyer in determining the amount that they can afford (pre-qualify), and show properties in that price range and locale.
* Assist in viewing properties -- accompany the buyer on the showings, or preview the properties on behalf of the buyer to insure that the identified specifications are met.
* Research the selected properties to identify any problems or issues to help the buyer make an informed decision prior to making an offer to purchase the property.
* Advise the buyer on structuring an appropriate offer to purchase the selected property.
* Present the offer to the seller's agent and the seller on the buyer's behalf.
* Negotiate on behalf of the buyer to help obtain the identified property -- keeping the buyer's best interests in mind.
* Assist in securing appropriate financing for the selected property.
* Provide a list of potential qualified vendors (e.g. movers, attorneys, carpenters, etc.) if these services are needed.
* Most importantly, fully-represent the buyer throughout the real estate transaction. The Buyer Representation AgreementIt is important for the buyer to discuss the buyer's representative's compensation in the initial interview. In many cases it is recommended that the buyer and the buyer's representative agree to the terms of compensation prior to viewing properties, and sign a written agreement based on those terms. The agreement should spell out the responsibilities of both parties throughout the real estate process. In some states, legislation has been enacted to protect the buyer to the point that, absent a written agreement, the buyer's representative represents the buyer throughout the real estate transaction. Consult your REALTOR for complete details when you begin the purchase process. "http://www.exclusivebuyersagents.com/duties.htmhttp://www.lajuett.com/buyers/fiduciaryresp.htmhttp://www.naeba.org/naeba/codeofethics.htmhttp://www.jimmulrooney.com/faq.htmlhttp://www.buyersagents-keywest.com/nytimes.htm
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
It is important for the buyer to discuss the buyer's representative's compensation in the initial interview. In many cases it is recommended that the buyer and the buyer's representative agree to the terms of compensation prior to viewing properties, and sign a written agreement based on those terms. The agreement should spell out the responsibilities of both parties throughout the real estate process.
You are descibing a case where a buyer goes out and hires a real estate agent to help find a property. The buyer pays the realtor a seperate fee. This is not the normal case. Almost always, the seller pays the commission and it is split between the selling agent and the listing agent. There is a big difference.
edit:
These types of agencys can exist:
Sellers agency - The normal situation where the seller pays all commissions
Buyers agnecy - The case where the buyer pays a commission to agent to find property.
Dual agency - The agent receives a commission from the seller and buyer (must be disclosed).
You get out of life what you put into it......minus taxes.
Marv
Edited 8/1/2008 3:53 pm by Marv
"Almost always, the seller pays the commission and it is split between the selling agent and the listing agent. There is a big difference."Yes the buyer agent still has fiducal responsibilty to the BUYER..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
I've heard/read several authorities saying that the "buyer" agent is really working for the seller, and if you want a true buyer's agent you (the buyer) have to contract for one and pay them.
It is an ironic habit of human beings to run faster when we have lost our way. --Rollo May
I understand what you are trying to say,
BUT
I've bought and sold a few pieces of realestate in the last two years. On the PURCHASES? EVERY time I was required to sign a notice that I understood that BOTH agents were paid by the SELLER and as such their PRIMARY responsibilty was to the SELLER. It didn't mean the agent had no repsonsibility to me, I just wasn't in front of the seller priority wise.
Now that may be a state thing here, but I still have copies of the form explaining that the only way the agent was primarily responsible to me was if I agreed to pay a fee to the agent.
They they are trying to void the PA real estate laws.http://www.pacode.com/secure/data/049/chapter35/s35.313.html" 35.313. Duties of buyer’s agent. (a) In addition to the duties required in § 35.292 (relating to duties of licensees generally), a buyer’s agent owes the additional duties of: (1) Loyalty to the buyer/tenant by acting in the buyer’s/tenant’s best interest. ""(c) A buyer’s agent represents the interests of the buyer/tenant even if paid by the seller/landlord."AFAIK all state laws are now similar..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
We got an offer on it contingent on the buyer selling and closing on theirs
The realtor showed the house to another couple and they made an offer that we accepted contingent on the first deal falling through.
Sounds like you have a sale either way.
Possible. If the first buyer holds things up in court for months, I would not hold the second buyer to the contract. It wouldn't be right to them. We are the people our parents warned us about. J. Buffett
Did they write an inspection clause into the contract? Usually has to happen withing a certain timeframe after acceptance of the offer. If not, could they string this out indefinately and put the kabosh on the whole deal with an unacceptible inspection? Just wondering.
It appears you have conflicting things written in the sales contract. Based soley on the first condition, they could tie the house up forever.Your savings grace appears to be the other condition, which it sounds like they haven't met.
I think your lawyer needs to talk to their lawyer and make them dissapear. Poorly written contract from your point of view. The RE agent you have should know better than to have you sign something like that.
They could sue, but, as far as I understand the situation, it sounds like they don't have a leg to stand on. Hopefully your broker has already told you to talk to an attorney.
They may be bluffing, you know.
As for a lien, I don't think so. The proper term if they filed suit would likely be lis pendens.
If the first buyers have requested an extention... they must write an addendum to the contract. When they write, sign and submit an addendum to you for the extension, it opens the contract for both parties and you are free to cancel the contract completely and proceed with a new contract with the second buyers.
At least that's how it works in Michigan. Your agent should be able to coach you through this.
C
maybe they intend to sue for specific performance of the contract and then they would file a lis pendens lien on the subject property.
"Never pick a fight with an old man. If he can't beat you he will just kill you." Steinbeck
Based on the second clause you referenced, the deal is dead.
Here in Ontario, the buyer would have to start a lawsuit claiming an interest in the house and then go to court (which can be done without notice to you) to get a certificate of pending litigation which is then put on title to the property. That bungs up any sale to another buyer.
But the buyer would also have to sue for specific performance if they want to close the deal, meaning that your house is basically one of a kind and another of its kind can't be found. Pretty hard to prove and there are legal costs consequences if the buyer loses.
Good luck - sounds like you'd be best to continue negotiating with the current buyer on a without prejudice basis, making it clear via your lawyer that you consider the deal dead. If they try to bargain you down via the home inspection, then tell them to bugger off. Up here the choice is waive the inspection clause or walk from the deal - a buyer is only in a position to negotiate reductions after an inspection when there are no other buyers. You have another one in the wings, so you are in the driver's seat.
Paul.
Piling on with the others, I'd agree that the verbage is misleading. But it sounds like you've already met one of the conditions for voiding the contract. At this point the original buyers are costing you money through their negligence. A court/deciding power should recognize that.
If you've got other potential suitors, i'd tell the original buyers to go pound sand.
If you give the first buyers an extension, what are you going to do if the second buyers threaten to sue you, since the first deal, in their minds, had fallen through?
Plus, there are no guarantees that the first buyers' potential buyer even makes it to closing. If they think they have your house locked up forever, why would they give in on anything on their home sale.
Sounds like you need to work with the second buyer to me, not the first, and establish a closing date. BTW, are the terms better with the second buyer as far as the sales price? Why does the first buyer need an extension if the contract is rock solid? I don't think it is.
And before you see your attorney, which you should do, tell your realtor that you will send him/her the bill. He/she messed up with the "whichever is later" language. If you end up going with the first buyer, make them increase their good faith money to at least 10% of the sales price, no inspection, certain closing date, etc.--it works both ways when you play hardball. If they balk, go with the second buyer.
Good luck.
" on or before July 29, 2008, or within 2 days after closing of the buyers home whichever is later or this agreement shall terminate unless an extension "
i'm not sure who wrote the word " later" but whoever it is needs their az chewed. if it happens to be a realator, i would be sure to deduct all my lawyers cost out of the sales fee.
the word that should of been used was "whichever occurs first",of course this is hindsight so it don't matter.
i have a opinon but it's not worth nothing. but i would be very interested in hearing what your lawyer has to say. i think if they mess up the second sale they have opened themselves wide open for a damage lawsuit. larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I've got a couple thoughts and I'll be interested in hearing the opinion of the local atty.
If the buyer really believes that "whichever is later" means he can extend the deadline for closing beyond the stated date, he wouldn't need an extension would he? Why extend an unlimited agreement?
I agree with those that have warned about not honoring the backup agreement. Beware of signing an extension to the first and then trying to explain that to the backup offer.
Your goal is to close the deal. I'd do everything to keep both parties interested. I'd say to the first buyer "I'll sign an extension, with better language, that allows you to buy my house if the OTHER deal falls through." I'd leave their earnest money in play and return it if the second buyer closes.
If they didn't graciously accept that offer, I'd start asking for proof that they applied for the mortgage and got accepted. If they are accepted, then they could close...right?
Bob's next test date: 12/10/07
Well after talking to the lawyer here is what we are going to do. The attorney is going to write a letter to the buyer telling them that we void out the contract based on the time that they had to get financing and did not meet the deadline. That he he wants to proceed with filling a lien, we will sue him for interfering with a contract to sell the house to the second buyer. He is also going to call the realtor and talk with him and tell him to proceed with the second buyer. And also inform him of his lack of understanding the language in the contract and that we should not have accepted a second offer without voiding the first as soon as they did not make the financing within 30 days, and not waiting until the last day of the contract.
Well see what happens, I hope it all goes well. The attorney said that his treats were probably just that. For him to prevail he would have to show that he suffered monetary damage, which he would have to show that he had to purchase another house that was not as nice for more money. I can say without a doubt that that is not going to happen around here.
Thanks everyone for al your advice, you all said the same thing that it just cost me $300 to hear.We are the people our parents warned us about. J. Buffett
All contingent offers should state that you have the right to continue to show and market the house. You can also look at another offer. which soulds like this has happened. The contract with the first buyers now have 48 or 78 hours to remove the contingencies. This should be stated in the contract. Rewritting the contact for an extension of time is a new contract and you can refuse to do so.
The ball is in your court and if the contiingency is not removed the first contact is void. I hope this is the stand that Your Realtor understands.
I would move fast on this since the market has produced very fical buyers and prequalified buyers without contingencies is rare,
Good luck.
Nice call name.
From one parrothead to another.
"plowing ahead come what may" jb
What's happening with this deal?
Sold again?
Joe H
As of right now we have the second buyer proceeding with the purchase. We have been notified buy our attorney that the first buyer is going to file a law suite. We have not received the papers yet so I don't know if he is going to try an put a lien on the house or just sue for breach of contract. We will probably know more next week.
It is not like there are hundreds of other houses in this city that are for sale in the same range, and I can't image that I did that good of job on the remodel that he has to have this one. Some people are azzholes...We are the people our parents warned us about. J. Buffett
Did I miss apost, what did your lawyer say about the whole mess?
I wouldn't be worried about a law suit, they didn't get their financing, didn't sell their property and couldn't buy your house.
That's your fault?
There's a judge gonna agree with that?
Joe H
What Happened???
I know these posts are a few years old now but WHAT HAPPENED???!!!! This is like a cliff hanger with no sequel!!!!