Question (CA): I currently live in California and have entered into a real estate contract in January of this year for a condo in Austin, TX. The set closing date was supposed to be the 15th and the seller who currently does not own the condo until next Monday has been very difficult to deal with. He is a licensed real estate agent and is unresponsive to my calls or emails. He is acting as both the buyer's and seller's real estate agent.
I want to void the contract and receive my earnest money back. The real estate contract is a typical and normal contract with no clauses or conditions except for the fact that he has to close on the property before I closed on this one with him.
Can I ask for the earnest money back and void the contract on the grounds that the closing date has already expired (because of his slow actions) and he still doesn't own the condo at this point?
Answer: There are many variables that could apply here, so the best bet is to hire a local, Texas Board Certified real estate lawyer.
However, from the contents of your email to us, it does appear that your Agent and would-be Seller might have defaulted on his obligation to obtain the condo so that he could then sell it to you.
You are clearly dissatisfied with this agent's representation of you, and Texas law provides for early termination of an agency agreement with a real estate licensee provided you have cause, which it appears that you may very well have cause. Exercise caution, however, because if you terminate an agency agreement without cause, you may have some exposure to liability. Again, hire a Texas Board Certified real estate lawyer!
Question (CO): My girlfriend was going to get a first time buyer loan for a condo. The closing date was set for April 30th. The lender determined that because there were too many renters and not enough owners, she didn't qualify for that loan, so the closing didn't happen.
The lender offered her three other types of loans (80/20 loans I believe), but they made the monthly payments about $60 more than previously expected. They were also telling her that her credit activity wasn't enough for these types of loans as well, so they were having her contact her cable company, cell phone provider, excel energy, etc. for her credit history.
All the while her lease is set to expire at her apartment and they are breathing down her neck as well. As a result, my girlfriend had to cancel buying the place because of all this extra hassle. Clearly this was not her fault, but now the seller is looking to collect on the earnest money.
Who do you suggest we go after if need be, the bank or the seller? Any suggestions would be most appreciated.
Answer: By "bank" we assume you mean the lender. Primary lenders are usually associated with banks.
Your Colorado purchase and sale agreement should contain the answer to your question. We are assuming that the Colorado Real Estate Commission form, (CBS1-10-06), was used. Paragraph 5, FINANCING CONDITIONS AND OBLIGATIONS, sub-paragraph b. Loan Conditions, states:
"If Buyer is to pay all or part of the Purchase Price by obtaining a new loan as specified in § 4d, this Contract is conditional upon Buyer's approval of the availability, terms, conditions and cost for the new loan. This condition is for the benefit of Buyer and shall be deemed waived unless Seller receives from Buyer, no later than Loan Conditions Deadline (§ 2c), written notice of Buyer's election to terminate this Contract as such loan was not satisfactory to Buyer. Buyer shall not have the right to terminate under this § 5b based on the terms or conditions of any loan that is the same as set forth in § 4. If Buyer so notifies Seller, this Contract shall terminate. IF SELLER DOES NOT RECEIVE WRITTEN NOTICE TO TERMINATE AND BUYER DOES NOT CLOSE, BUYER SHALL BE IN DEFAULT."
Your girlfriend should read the contract or even better yet, hire an attorney to read her contract plus any addenda attached thereto. Make sure she has attempted in good faith to comply with the terms and provisions in that contract, and do send timely notice to the seller that she is exercising her right to terminate the contract due to non-approval by the lender, providing that is what her attorney recommends.
If, however, the lender led her on, and she didn't terminate in a timely manner, her cause of action is against the lender who, we suspect, put nothing in writing and told her what she wanted to hear. In any case, her cause of action is against the lender not the seller unless there are also irregularities on the seller's side. That is why she needs an attorney who can help her unravel the timelines involved and initiate the cause of action if the attorney believes it is the best way to achieve your girlfriend's goals.
Question (GA): I recently sold my house to a buyer subject to my existing mortgage and seller-financed the balance. I was only given a promissory note of the difference from the sales price-mortgage balance. I have tried to meet with the closing attorney and she refuses saying she represented the buyer. This is in Georgia and I know that the attorneys represent the lender but she says I was not the lender, but I was the seller and have recently learned that she closes these types of deals for the real estate agent and buyer.
My question is, am I the lender since I seller-financed part of the money?
Is the attorney allowed to represent the buyer and not inform me? She has sent me an email stating she represented the buyers in the transaction. Should I have signed something stating that she is representing the borrowers?
Answer: When you "seller-finance," you are a lender. You are a lender, however, who just doesn't advance any money to the buyer. You are also a seller who is receiving part of the purchase money in the form of a promissory note. You sold to the buyer subject to your existing mortgage loan, and then you more than likely took back a second lien note from the buyer for the difference between the sales price and the mortgage balance. You are a lien holder and hopefully have the right to foreclose if you are not paid.
As to your other questions, "... is the attorney allowed to represent the buyer without notifying me" and "should I have signed something ... .," you really need to hire your own Georgia attorney.
Question (State): Is there such a thing in Texas as an oral contract for a loan of money given to another for the purchase of a home? Can the oral contract be enforced for the return of the money when the home is later sold?
Answer: This must be the week for Texas questions from other states! Oral contracts are generally not worth the paper they're not written on! In order to enforce a contract to pay that is secured by real estate, the contract must be in writing in order to comply with the Texas statute of frauds.
