Expert: Todd C. Menard - 8/31/2009

Question
We signed a contract (actually 2 contracts) on a piece of real estate in Chicago
IL. There are obviously 2 attorneys and 2 LAs involved and the seller (a husband
and wife, that have a joint tenency) and us. The first closing was rescheduled
because the seller had an issue with the tenants moving out. we found out 11
days after the original closing day that the tenants were moving out (we found
this out from the building we are trying to move into). We asked why the 2nd
scheduled closing had to be postponed and the sellers said it was because of the
tenants again. When we let the seller know that we knew the tenants were
vacated, the seller told their agent and attorney that they were having 2nd
thoughts and would send their lawyer the reasons they were having a bad feeling.
We then received a forwarded email from their attorney sent by the wife of the
party stating that she never signed anything and that she does not intend to
sell anything, she stated that she would be following up with more information.
She also stated that she wanted to have all earnest money returned. Originally
our LA had asked if the wife needed to sign all of the documents and the
seller's LA said that she didn't and the husband had the authority to do any
signing. This has created a huge mess, their LA is not happy with them and is
threatening to legal action because all of the contracts were legal, ours
doesn't know what to do. Their attorney has notified them  that they are
unethical and they do not wish to ever due business with them again. We have
heard nothing further and are now coming up on the 31st which means the end of
our lease with our rental property, as well as no where to go. We have written
them a letter explaining to them (with very humble and soft wording) that they
are causing us harm and how, as well as that we are still interested in
following through with the contract and would like to know what we can do or
what went wrong. We have spoken briefly with a lawyer that said that we can
schedule another closing and if t
hey don't show up then we have a stronger case. But we were considering offering
them $1000 cash if they show up to the closing, just so we can get this over
with and move in. We are at a loss of what to do at this point, we do not want
to release them from the contract because now we have been caused essentially
homeless and are trying to find storage for our things to see if we can stay
with friends we also have no address in the city now so have no way of parking
on the street, we really just want the place. The only way we will let them out
of this is if we get all out of pocket expenses (but what would that include?),
if we could per sue specific performance we would. We need help in every way,
obviously we will be consulting an attorney further but would like some expert
advice on what our options are so we can be more informed when we go to the
attorney again. How does joint tenancy work in this case. Is there any contracts
that an LA would normal have that would give one member of a joint tenancy the
ability to sign without the other (because they are a husband and wife). They
have made every effort to move forward as a similar mind now the wife is
claiming this.  Please help and inform the best you can, no one seams to have
dealt with something like this before.

Answer
Hello Kay - Of course every transaction is different therefore it would be impossible to state that I have experienced this before. On the other hand, I have been in the situation where only one of the sellers signed the listing agreement, and when the offer was to be accepted the "other" seller refused to sign. This is very common, mostly in situations of marital separation or divorce when one feels the home is worth more than the other, or in situations where the listing agent didn't disclose they did not have the signatures of all the sellers on the contract creating a situation where the buyer thought all sellers had signed when in fact the listing agent knew this was not the case. I am anticipating this is residential property and you are dealing with contract law issues which require counsel from an attorney with real estate expertise. You may want to check out your state's STATUTE OF FRAUDS which will explain when there is a valid and enforceable contract and when there isn't. This will be the crux of your position. There may be a 'Disclosure' issue as well as there is a due diligence on the part of both the listing and buyers agent to pull the tax records to be certain the person that is signing the listing is in fact AN owner. If this was done, the LA should have noticed that there was more than one owner of record. At that point it would have been the LA duty to be certain that ALL owners of record signed the Offer/Contract (your agent/counsel as well, if represented). The laws vary state by state, and so will the language in the Statute of Frauds. If the contract is enforceable then you should be able to sue for "Specific Performance"... this is where the court determines that the seller must sign the closing/settlement papers. If the seller wants out of an enforceable contract there may be more damages that the seller may be required to pay (in addition to a release of your earnest money). As you say the series of events and failure to disclose by the seller, and your representative, have caused you additional financial hardship and in a seller breach the seller may be responsible for your damages. Finally, if the contract is determined to be unenforceable then there is little you can do to hold the seller to performance. In this situation there is a possibility that your agent failed to represent you. Look at the The National Association of REALTORS Code of Ethics Articles 1-9 which indicate a REALTORS "Duties to Clients and Customers" and Articles 10-14 which cover an agents "Duties to The Public". You may find this interesting and pertinent to your situation. A real estate agent does have to be a member of the National Association of REALTORS to be held accountable to the code. This will provide and understanding into a REALTORS competency in their field of expertise. If you feel there has been any violation of an Article then you would file an Ethics Complaint against either the sellers REALTOR or you own depending who performed the action that purportedly violated the Code. I hope this has answered your question satisfactorily. If you have any additional questions please reply to this e-mail. Remember, I am not an attorney so this is not to be construed as legal advice, rather this is real estate information any experienced REALTOR should be able to provide. - Todd C Menard