Looks like I'm gonna get sued

Hubby and I were in negotiations to buy a house. The same agency is reperesenting us, and also representing the seller. It was an old, somewhat run-down house that looked like all it needed was some TLC. We were really excited, because we could see the potential that this house had . . . once we had it fixed up, it would have been our dream house.

The inspection came back with some major problems. We decided to ask that the home owners fix these problems before we bought it. Our realtor . . . I’ll call him Mike, tried to talk us out of most of the things we asked for, saying that the homeowners wouldn’t do it, and if we wanted the house, we’d better make it a short list. Hubby insisted on having the BIG problems repaired, and that we would take care of the small ones. We asked that they repair the crumbling foundation, replace the ancient knob & tube wiring, and do a couple of other things. We also inisted on a clause that we had to approve of the repairs, as much as Mike objected. Mike said he would send us the estimates as soon as they came in.

We spoke with Mike a few days later, and he told us that the homeowners were willing to fix all of the problems. Great, we said, let’s see the estimates. Mike said he didn’t have them yet, but that he would get them to us.

36 hours before closing, we got the first few estimates, (have yet to see all of them, actually) and nearly passed out.

We haven’t seen the foundation estimate, because Mike says he can’t read it. By implication, this means that he doesn’t really understand what’s going to be done, but he explained it over the phone, making it sound very simple to fix: a beam would be put in to support the house. Hubby asked for the contractor’s number and called him. He got a VERY different story from the contractor. Basically, the back side of the house is sinking. The foundation was going to be beamed, and the house placed on a jack. We would be responsible, over the next six months for raising it. The contractor said that, honestly, he couldn’t promise that the repair would fix the problem, and that if any damage occured during the jacking-up that it would be an expense that we would have to pay.

The electricity estimate said that the knob-and-tube wiring would be fixed, but only that which would be easy to get to . . . they wouldn’t fix any within the walls.

We called Mike, and said that this was unnacceptable, and that we did not approve of the repair to the foundation. Mike replied that we HAD to approve . . . that this was the only company in town that would do this sort of work. We insisted that we were not satisified, and that we couldn’t approve of a repair that wouldn’t be finished until six months after closing and might not even fix the problem in the first place. Mike said we were being unreasonable, that the repairs WERE done as soon as the beam was in place, and that the jacking was “maintanence” that we would be responsible for, and “maintenance” was not part of a repair. We argued that lifting the house back up WAS part of the repair.

We then told him about the knob-and-tube wiring, and that our insurance company said that they wouldn’t cover us if the knob-and-tube were present, because it’s a fire risk. Mike replied that we didn’t have to tell the insurance company that it was there in the first place, and that “it’s not like they’re going to check for it, anyway.”

We told Mike that we were not satisfied with the repairs, and that we were invoking our contractual right to approve/dissaprove, and that we would not close until the repairs were done properly and completely. Mike said that we could not do that, and that the approval clause “doesn’t mean that.” Furthermore, if we did NOT close on the contract date, then he would see us in court. Mind you, this guy is supposed to be on OUR side.

Turns out that there are four deals hinging on ours going through on time, and Mike implied that all of the parties in these deals could sue us as well if we didn’t close on time. We tried to reason with him, as it sems pretty clear to us that we have the right to approve of all repairs, and that we adamatly do NOT approve. We put that clause in to protect ourselves. The conversation ended with Mike saying “Well, I guess this will be settled by the courts, then.”

A relative of mine knows the person who owns the agency, and called to ask if the agency was planning to sue. The owner said that the agency had never sued anyone and wasn’t about to start now, and where did we get such an idea? The agent? Well the agent shouldn’t be saying that to you! The homeowners, of course, could sue, but the agency itself would not.

We decided to see an attorney, who told us that, yes, we did have a leg to stand on. The homeowners had not disclosed what had to be obvious flaws, such as the holes in the roof, bad plumbing, falling foundation, etc. Mike had also screwed up the contracts, making them questionable.

I’m just absolutely sick about all of this. As I told Mike, I love the house, and if all of the repairs were complete and done properly, I would buy it. But obviously, we cannot have repairs re-inspected if they’re not going to be complete until six months after the closing. I don’t want to be sued, but I don’t want to be stuck with a house that’s not fixed, either.

I don’t know whether to worry about this, or not. The couple who own the home are not in the best financial shape, and the costs of a law suit could be high. The lawyer told us that all they could sue for is the difference between the price that they eventually sell it for and what we offered. At the present time, they’re not out any money-- no repairs have been done yet.

Our attorney had us write a letter to the agency explaining that we were dropping out of the deal, briefly explaining why, and that no further action was to be taken by Mike on our behalf. He seemed to think that this was the last we would hear of it.

My relatives had me call another attorney, who didn’t take such a good view of the situation. He called it a “can of worms” and said that the people could sue us for six to up to fifteen years in the future for breaking the contract. Being semi-homeless and living with relatives, Hubby and I want to buy a home, but the idea that a few years from now when we’re tied up in another property they could come back and slap us with a big ole law suit makes me ill.

What do you guys think? Am I losing sleep over nothing?

I’m not a lawyer, but you seem to be on pretty good ground. The number and size of the out of code problems on this house make it into a giant liability.

It would be unreasonable for any party to assume that you would close on a structure with so many major factors in doubt.

If the rewiring contract (you do have a copy don’t you?) did not specify the removal and replacement of all knob and tube wiring from the house, or if that same contract specified that some of the knob and tube would continue to be used, that should pretty much void the deal. Any qualified electrical contractor worth their salt would never allow such a thing to occur. You might be able to get the deal voided on that basis alone.

You may need to consider filing an interlocutory(?) suit against the agency (and another against the agent specifically) for their attempt to sell you unfit goods. Unless you specifically signed an agreement to buy the house “as is”, they shouldn’t have a leg to stand on.

Get a second legal opinion from a specialist in title transactions and rest better at night. You seem to be in the clear. You may just need to fire a couple of legal shots across some bows.

We’ve considered taking action against Mike if the homeowners sue us, but I wouldn’t want to sue the agency, simply because the owner is a friend of the family, and has expressed that they don’t want to lose our friendship over this. I have no ill will against the agency, just Mike.

No, we didn’t know of any of these problems beforehand. Nothing was mentioned about the foundation problems in the disclosure form. They said that the roof had leaked 2 years ago, but not since. The drip marks were still on the wall, which at first I thought meant the people were just slovenly housekeepers, but after the inspector said he could see the sky through the roof, I’m suspecting that the drip marks were fresh.

Thanks for the advice, though. I feel better knowing that someone else agrees with us!

IANAL, and business law was awhile back, but I believe Mike’s problems are his own. He shouldn’t have made contracts that hinged on his BS’ing you into buying a dump.

You should always be wary about buying things from friends, cause you may have to end up suing them. But you probably knew that.

Oh well. Good Luck!

I’m personally againt most of this sueing crap, but if you do end up getting in trouble from all this, i think that if anyone should be sued it’s mike. From what you wrote before, he definatly didn’t have your intrests in mind, and with 4 other contracts lined up on this one, he would be making a pretty penny from it. That’s probably why he wants you to buy it regardless.

just my 2 cents

You’re very lucky you found out about the problems before you closed escrow and very smart to have pulled out and gotten legal counsel already.

I don’t know what state you’re in but in California your are under no obligation to buy a home if this kind of stuff is not disclosed to you. I can’t imagine any other states would differ on this.

“Mike” should have is license pulled out of his grubby little hands (and shoved up his @$%!). Don’t let him scare you. If he or anyone else does sue (which they probably won’t) you’re going to want to spend some money on legal representation but you’ll be far better off than getting forced into buying that money pit.

Good luck.

I agree, Wump. I’d rather settle this over a cup of tea around the coffee table with them, and forget this ever happened. I’m just trying to protect myself by getting a lawyer, just in case they want to sue me. And if I suffer any losses, I think Mike should be held responsible for his actions.

Before the threats Mike made, I hadn’t even told him that my family was tight with the agency owner. I didn’t see the point of bringing it up, because I’d never want anyone to think I was throwing names around, trying to look important. In retrospect, maybe it would have made Mike a little less eager to try to screw us if he knew.

My thoughts exactly. Last time we talked with him, he tried to play the martyr card about it, saying that he and the seller’s agent had agreed to take commission cuts in order to help the sellers out with the costs of repairs, in a sort of oh-you-see-what-trouble-you’re-giving-me voice, and sadly intoned about the dissappointment facing the other four couples whose deals hinged upon us playing nice. When he saw that we weren’t buying it, that’s when he started threatening to release the dogs of law.

What really bites my butt is how he tried to HIDE the condition of the house from us, by saying that he didn’t have the estimates yet. When we got them, they were dated a week earlier. He thought we’d just take his word on the condition of the house and what was being done and got a bit huffy when we asked him for the phone numbers of the contractors so we could check it out.

Lesson learned: don’t trust a real estate agent further than you can pick them up and throw them.

Is that something that you just assumed, or is was that what the agent told you? And if the latter, have you mentioned this to your lawyer?

IANAL, but I’ve always been told that it’s impossible for someone to represent both parties on a legal contract, and highly illegal for anyone to claim that he is doing so. It’s also something that any realtor should both know and practice.

(I’m guessing that this is just something that you assumed, because the realtor would be putting himself in serious jeopardy if he made such a claim - and presumably knows it. If that’s not the case, however, IMHO it’s your realtor who is in serious trouble and you should be at least mentioning this tidbit to your lawyer.)

I CAN’T BELIEVE WHAT JUST HAPPENED!!!

Hubby just called. He got called in to work, and found a statement of closing on his desk. Evidently one of the agents involved in the sale called a few days ago and told them to go ahead with the closing. Hubby told the loan officer on Monday that we were not going to close. I told her on Wednesday that we were not going to close, and I called her yesterday that the deal was completely off. THEY WENT AHEAD AND CLOSED ANYWAY, and are billing us for $3000 in closing costs! I just cannot goddam believe this! We signed the origional papers to take out the loan, but we didn’t authorize anyone to close for us! Quite the opposite. Jesus, I am just so sick!!! Here comes ANOTHER law suit as the mortgage company tries to recover its closing costs. Here’s the kicker . . . the loan officer is Mike’s sister!! I don’t know whether to cry, laugh or throw up. Well, this is what Mike threatened us with, I guess. Did signing the loan application give them the authorization to close even though we told them not to? I just can’t believe this is happening to me.

The lawyer did say something about this. Both agents are from the same agency. One is representing the sellers, and one is supposed to be representing us. The lawyer told us that there is no such thing as a “dual agency” no matter what we signed. (Mike gave us a dual agency disclosure form to sign, which I thought was common practice because when we bought and sold our old house, we got the same from from the other agency too.) He said that the realtor couldn’t be on our side, because the agency was representing the seller. To tell you the truth, I didn’t understand that part all too well, but he said that the agency was on shaky ground because of it.

{{{{{{{{{Lissa&Hubby}}}}}}}}}}}

I am truly speachless.
All I can say is I am sorry that you are having such a bad experience. Buying your first home is supposed to be a wonderful stressful time, not a crapy stressful time.

OK, now I’m really confused. In my state, the buyer has to sign a zillion documents as part of closing, and it’s simply impossible for closing to happen without the buyer (or his legal agent) signing all of those documents.

Assuming that’s the case where you live, the only way that closing could have happened was if you’d signed a power of attorney document and given someone else the right to sign for you - someone who definitely, positively is legally presenting himself as looking out for your interests as you’ve explained them to him/her. And if he/she is not doing so, then he/she has presumably just put him/herself in a world of trouble.

That’s my opinion, but my opinion doesn’t count. You lawyer’s opinion does, though, and that’s the person you should be talking to.

Well, I am not an electrician, but I think there’s no real problem with leaving knob and tube wiring in situ. In some ways it’s actually safer because the grounded and hot wires are physically removed from each other. It would definitely be a matter of local code, though.

As WFFF said, I can’t conceive of a house closing taking place without the principals being there. It’s just barely possible that what happened is that the loan company went ahead with the loan process and is charging points. Hopefully you sent them a letter indicating that the closing was off. Pretty much any dealings with the bank or the agent should be conducted in writing so you have a record of it.

In Massachusetts, the boilerplate for making an offer on a house makes it contigent upon a satisfactory inspection. If the house fails, or repairs aren’t made satisfactorily, then that constitutes reasonable grounds for calling off the deal.

Oh yeah, one more mystery. You said that the insurance company wouldn’t cover the house if it had knob and tube wiring? When I closed my house, the loan company insisted on documentation proving that the house was fully insured for the next year.

Wow Lissa, I really feel for ya!

You said that the couple that currently owns the home aren’t in great financial shape? That may be true, but you can’t expect to sell a house with that many repairs needing to be done on it.

If it’s any comfort, just image the headaches that you would be having if you did buy the house.

Bleh.

Lissa, my advice is to run away from this house as fast as you can. Don’t let anyone pressure you into going into a situation that you know is bad. Face it; if Mike and company are lying to you this much before you’ve even signed the dotted line, how badly are you going to be ripped off afterwards?

As for the legal situation, remember for each and every lawsuit, there is a counter-lawsuit. Unless you’ve been totally biasing your posts on this deal, you’re going to win in court. Make sure any unnecessary legal expenses are included in the settlements you receive.

I don’t know jack sh*t about law, but I know this is good advice: document everything you can. Document what you knew when. Document when Mike told you certain things. I know it is not always easy to remember after the fact, but you seem to have a good memory for details. Sit down with your spouse and try to get the timeline down right, and assemble all the documents you have already.

If this does go bad, you will be in a much better position if you can say “On December 11th Mike told us via phone that he has no estimates. On December 14th we saw the estimates, and they were dated December 7th;” rather than “Mike told us he didn’t have them, but when we saw them later we noticed they were dated a week earlier.”

I’ve seen people who thought they could win on a “he said vs. she said” basis, and they had to back down in a hurry when the other side had more/better information. You want to be on that side!

Just thought I would second the advice from ** CrankyAsAnOldMan **. My aunt and uncle were recently involved in a very nasty lawsuit where they were also misled about the condition of the property they bought by both the real estate agent and the seller. They documented ** everything. ** They sat down and started at day one, writing down what they remembered about every single meeting or phone call from all parties involved. Things that seemed trivial at the time proved to be invaluable in court. This type of information will help your lawyer be better prepared and make you much more credible in front of a judge.

I am sorry you are going through this awful experience. I wish you luck and am keeping my fingers crossed that it all gets straightened out without any legal wrangling involved.

That’s a big third vote on the timeline. Document every little thing that has ocurred. When you (perish the thought) come before a judge with a clear and concise history of the case, your credibility will rise several notches. Once again, I reiterate, get another legal opinion from a title expert.

I cannot imagine that Mike has a leg to stand on. There seems to be a lot of conflict of interest in this case. You should not lose a lot of sleep over this.

Best wishes and please keep us posted about this.

Signing a loan application certainly isn’t the same thing as signing a mortgage.
Could it be that the document was a proposed closing statement?
As said above, buyers normally have to sign a shitload of documents at a closing, and you should have a good attorney there to explain to you what you’re signing. Which is why most of the closings I’ve attended take 2 or 3 hours.

Also, as stated above, document everything. Make a diary of everything that has happened and what happens in the future, with names, dates, times, etc. And talk to your lawyer A.S.A.P.!!

Lissa, I don’t think that Mike is a Realtor. I think that he is a real estate agent. They are NOT the same.

Open the phone book, find the local Realtor agency & see if he is listed. Or look at his card, it should say Realtor or real estate agent.

Realtors are the ones that are professionals. My experience with real estate agents & from talk with the local Realtor board is that agents can lie all they want, not that they do, just that there isn’t anyone to check on them.