Do the search. Don't get screwed!

In mid 2005, one of my Investors had a contract to purchase a vacant lot that he was going to build a 10 unit condominium on. At the time, we negotiated a deal for $64,000 that was accepted and we also negotiated a 90 day "due diligence" period. The lot is owned by a REALTOR®.

Once the contract was accepted we spent the next 75 days or so doing due diligence and we were satisfied that the lot would work for what my Investor wanted to do. So like a good little Broker I sent the owner over an addendum releasing our contingency and to let her know we were ready to close.

Well, during this time, values sky rocketed and a similar lot sold for $245,000!! Needless to say, my Investor was ecstatic. The owner wasn't so ecstatic and decided NOT to honor the contract and refused to close. Well OK then. She can do that but my Investor can also sue and he did. His Attorney immediately filed suit and was given a "lis pendens" on the property.

A year later, we went to mediation to try and sort things out to no avail. The only solution the Seller had was to "let the buyer get his deposit back". My buyer wanted to close. The Mediator, seeing that this would not be resolved, recommended to the courts that arbitration be waived and all parties agreed.

The Seller is now on her 3^rd Attorney and more than 2 years later we still have not been able to get her into court. So we wait.

Anyway.....fast forward to yesterday. My Investor was in Poinciana and had a flash that he should ride by and check out "his" lot. Well he drove by and lo and behold there was a shiny new for "sale by owner" sign offering owner financing!

Now folks, what would happen if an unsuspecting Buyer decided to purchase this lot on a contract for deed? What if they gave this Seller $10,000 down and agreed to make payments? What if they decided not to have a title search since title was not changing hands?

Well....I'll tell you what if.....they would be screwed! They can't get clear title because my Investor has a lis pendens filed on the property. That lis pendens ain't going nowhere until a court hears his case.

The moral of the story is NEVER purchase property without peforming a title search.

Did I mention this Seller is a Broker and a REALTOR®? What the heck is she thinking? I think I'll send her this post. What say you?

Disclaimer: I am not an Attorney and have no idea how this will play out in a court of law. However, I do know a lis pendens is something that a Seller MUST disclose.

http://www.brokerbryant.com/0015C7

Posted on November 30, 2007 15:58:22 by Broker Bryant

Posted in Broker Bryants opinion

Comment from: Bill Gassett [Visitor]

· http://www.sellmyhomeinmetrowestma.com

Hi BB - I was out in the blogosphere and came across your site. What a terrible situation to be in with this client. I have no doubt in the end you will prevail. It is too bad some people are not honorable.

Regarding the title search...Would the Lis pendens not show up?

Permalink November 30, 2007 16:59:08

Comment from: Bryant.Tutas [Member]

· http://buypoinciana.com

Hey Bill, Thanks for stopping by. The "lis pendens" would definitely show up. Thats why we filed it and why it is so important to have a title search done even if it is not required.

Permalink November 30, 2007 17:11:53

Comment from: Paula Bean [Visitor]

· http://www.WaterfrontLivingInFlorida.com

Way too odd BB!

Why did your buyer not just sue for specific performance? If you had an agreement, and the seller backed out, after buyer did due diligence, it would seem to me that specific performanced lawsuit is the answer.

Perhaps buyers atty was not that good?

Also - since the seller was an agent and is held at a higher level of responsibility than a non-licensed seller, I'd file a grievance with the board as well.

No wonder the public thinks we are idiots! Jeez! Good luck and tell your buyer to hang in there! One day - it will be worth it. Once your buyer wins the 'specific perfomance suit' they will think you walk on water ;-)

Go BB GO!!!!!! LET us know how this turns out ;-)

Permalink December 01, 2007 13:41:57

Comment from: William J Archambault Jr [Visitor]

· http://www.firstnationalmortgagesources.org

Bryan,

Been their! I bought a house 5 days before the listing expired, I made a full price offer on very favorable terms. The listing expired on a Friday, by Monday the seller had received 5 offers from agents trying to get around paying the listing agent. The seller accepted 3 of these offers! Three of them, all for cash and more than the listed price. I heard about it Monday morning, I filed a Lis Pendens before noon.

It took about 60 days to get to court and all of 5 minutes to win a summary judgement, it took the other buyers up to a year to get their deposits back.

One REALTOR and two REALTOR Associates were expelled from the board, two other were disciplined.

Lis Pendens is a powerful tool when you’re in the right, or have reasonable reason to think so, but you can be libel for damages if you miss use it. Every thing varies from state to state. Like you I’m not an attorney! You’ll need some very specialized knowledge or legal help or both!

You have to have a reason to file a Les Pendens, it’s offensive and creates an adversarial atmosphere. Many if not most times you don’t find out you have a problem in time to cloud the title. To get around this when I was developing apartments and commercial buildings, I’d record a memorandum of option, or even of a sales agreement. This can be done without the sellers signature, but I never had one refuse to sign when presented with the option and check. A memorandum is inoffensive, doesn’t normally require an attorney and clouds the title, protecting your buyer’s interest without offending the seller, unless of course he intends to re-neg.

More often I simply included permission to record a memorandum in the option or O & A, because the Memorandum requires notarized signatures.

Bill

Permalink December 01, 2007 13:43:10

Comment from: William J Archambault Jr [Visitor]

· http://www.firstnationalmortgagesources.org

Bryan,

More often I simply included permission to record a memorandum in the option or O & A, because the Memorandum requires notarized signatures.

This is a useful tool for any property that is going to take time and investment to close. I highly recommenced it if your client is advancing cash for "up-grades" on a home under construction, the builder won’t like but I don’t represent builders!

Bill

It took about 60 days to get to court and all of 5 minutes to win a summary judgement, it took the other buyers up to a year to get their deposits back.

One REALTOR and two REALTOR Associates were expelled from the board, two other were disciplined.

Permalink December 01, 2007 13:52:21

Comment from: Jay Thompson [Visitor]

· http://www.phoenixrealestateguy.com

Sounds to me like the Realtor/owner ought to lose their license.

Permalink December 02, 2007 18:01:15

Comment from: Paula Bean [Visitor]

· http://www.WaterfrontLivingInFlorida.com

I would agree with Jay......that agent should not only lose their license, but should go to jail for fraud.

It's people like HIM that makes good agents like us have to overcome our bad reputations.

Permalink December 08, 2007 14:39:15

Comment from: Laurie Manny [Visitor]