Expert: Russel Ray - 3/16/2008

Question
QUESTION: i backed up from a house buying contract due to my health got bad and my self employed business got upside down because i couldn't work as much as i suppose to. builder signed this release of deposit to seller form to me and kept my deposit. also this paper says, seller releases me from the contract and both parties releases each other any kind of problems from it etc. 6 mos ago. I think he forgot about signing this form and he is suing me now. can he do this? do i have right to back of from this contract because of loosing my self employed business? thank you.

ANSWER: Hey, Hakan.

I'm sorry to hear about your lawsuit since I consider the American legal system just that, a legal system, and not a justice system.

In America, anyone can sue anyone else for any reason at any time. That doesn't mean that the person suing will win, but it does mean heartache and dollars spent to defend oneself.

Generally, getting sick or losing one's job or business is not a legitimate reason to cancel a contract, so a seller could sue you to force you to perform. However, if he signed a form releasing you from the contract and releasing your deposit back to you, you should be okay.

However, I'm somewhat confused about the relationship between the builder and the seller. If they are one and the same, then you should be okay. However, if they are two different people, generally the builder can't obligate the seller to anything unless he has power of attorney or some other agreement or partnership.

If I were in your situation, I would make an appointment with a good real estate attorney as soon as possible. Many of them will provide you with a free consultation, and perhaps a copy of the release form along with your attorney's letter can put an end to the lawsuit.

Good luck.

---------- FOLLOW-UP ----------

QUESTION: thank you for your wonderful answer. yes, the builder and seller are the same person. on Sept 27 07 this seller/builder and licensee both signed this form called earnest money disbursement and release form and  it says on the form just like this. " in consideration for the forfeiture release of $500 earnest money, seller agree to release buyer from all terms of a certain purchase and sales agreement, dated (blank), and said seller do hereby agree to the cancelation and termination of said purchase and sales agreement and that in consideration of mutual promises and conditions herein contained, the buyer,seller and brokers (including all licensees connected herewith) do hereby jointly and severally release each other from all claims of every kind and character arising from or connected with the foregoing purchase and sales agreement on (the address). my agent e-mailed me this form to get my deposit and it is signed by them but i am not sure if i signed and sent them back because i didn't know what to do. But i think it should be ok since i have their signature and just go head and sign it. i think the seller forgot about this form he signed because of so many other houses he is building or at that time he had another offer possibly and he wanted to get rid of me ASAP! anyway, can i request a jury trial? i am disabled war veteran and just got diagnosed with PTSD, menthal healt disorder and my lower back messed up bad. i was hoping jury may give me a break since this is a strong fort Campbell military town and we all love and honor our soldiers. i am not expecting special favor but a good justice of course. i taught jury trial would be better than relay on judges decision incase him and his attorney maybe drinking bodies or good friends etc. one last thing i wanted to ask you is, he is also asking $16K extra for his closing cost expenses increased because he didn't want to pay our closing cost but he paid other buyers closing cost and he wants us to pay that over $8K of price different of the house. Can he ask for his closing cost expenses? i think he can as you said, anyone can sue anyone for anything! :( thank you for your help and friendly advice. God bless you.

Answer
Hey, Hakan.

If you didn't sign the cancellation form, then there's no contract or agreement to cancel. Consequently, if they now decide to force you to perform according to the purchase contract, they have the legal right to do so. They might be of the opinion that you decided not to cancel the purchase contract by not signing the cancellation. So it would seem to me that there still is a valid purchase contract on the table.

As far as closing costs go, it's totally negotiable. If the sellers really want to close, they often pay the buyer's closing costs. If the buyers get into a bidding war with other buyers, often one will offer to pay the closing costs of the seller.

With your additional information, it is absolutely necessary that you make an appointment with a real estate attorney as soon as possible and go over things with him since he'll better understand the various real estate and contract laws for your city, county, and state. Make that appointment for tomorrow.

Good luck.