Expert: Karyn Foley - 3/15/2010

Question
I recently received a signed and dated acceptance on a home, now the original buyers have come back with an attorney saying that the selling agent did not fill out paperwork to get their financing full-filled. The seller now wants me to release my contract and go back to the original buyers, can they do this? I have went forth with my loan application and trying to get appraisals done, but the FHA # is held up because the other people, after their contract has expired, has went ahead with their appraisal, what do I do?

Answer
Dear Aimee:  I am sorry you are going through this problem, and I can imagine how disturbing it is for you.  Please understand, however, that I cannot "practice law without a license" and a real estate attorney may need to be a last resort for you.  Also, I do not have a copy of your contract.  But it seems to be that if each principal signed the contract, it cannot be amended or changed in any way unilaterally; it would need all signatures of all principals to make or accept changes.  Make certain you discuss this with your agent, if you have representation.  If not, tell the listing agent.  If you do have representation, that would be called the selling agent - confusing since it represents the buyer.  

There is a concern, and that is regarding your loan.  Check over your contract, and there is probably a period for a loan contingency stating both when the appraisal is due and when formal loan approval is due.  If those two items are not completed according to the time stated in the contract, then the seller may try to use this as an out.  The seller might prevail on this, but still, do not sign a release from the contract.  Then, if the seller decides to use that as an excuse to then sell it to the original buyer, still don't sign it as it would then have to be sold "subject to the existing buyer canceling the contract" which you will not do.  It could get sticky if the time goes by too long.  If this should happen, and you still want to buy the house, a real estate attorney would be your best choice to give you support and direction.

Also, your contract probably does include a mediation clause plus an arbitration clause.  Each party is obligated to do first one, then the other if they both agreed in the contract and you still have problems reconciling this issue.  Both options do cost money, and it is usually the party who loses mediation and/or arbitration who pays the costs. However, it can be less time and money than a lawsuit.  

This is a terrible situation, and the other party will no doubt try to intimidate and threaten you but stick to your guns.  It sounds to me as if the original buyers opted to pay more that they originally did, or their paperwork is more current.  Maybe their cancelation was not correct, and the listing agent ended up selling the house to two buyers!!!!!

The more I think about this, the most I feel that if you cannot reach a position of comfort on your own, you should consult an attorney at least one time who can write a letter to the seller and listing agent supporting your position.  You should address these issues as soon as possible and then make a decision.  How much do you really want this home?  Is it going to be worth the time, effort, and money to move forward?  You can only make these decisions after a professional consultant.  I truly hope you had a real estate agent to represent you; they can offer you some help.  

My gut feeling is that the listing agent totally screwed up, and she/he is worried as is the seller.  Let me know what happens, what you decide to do, and so forth.  You might also consult some of the legal businesses that operate with para-legals who do some of the same jobs as an attorney but may cost less and they could give you direction.  But - if you truly want this home, call an attorney and it may work out that the attorney can collect the fee from the seller, or work on a contingency basis.  Or - go back to this same website for allexperts and pose these questions and concerns to a real estate attorney who can be of better help.

Good luck, Karyn Foley