Expert: Sharon Huneycutt, Realtor, Associate Broker, GRI, e-PRO - 4/28/2010

Question
I have signed a land purchase agreement with a private real estate company and deposited a required $500. Within the agreement is stated that I have inspected the property. I visited the property at a later date (prior to submitting the remaining balance due) and had an unsavory encounter with local officials at gun point. I learned more about the property during the incident which was not disclosed to me by the real estate agent. Apparently there is ongoing crime in the area, weekly break ins at neighborhood properties by illegal aliens and potential danger to residents. I am not going to follow through with purchasing this land and will be breaking the purchase agreement. I understand I may loose my deposit of $500, however are there any other repercussions I should be aware of.

Thank you
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PURCHASE AGREEMENT


PURCHASER:       SCOTT

SELLER IS A LICENSED REAL ESTATE BROKER WITH PORTAL-RODEO REALTY

SELLERS:   SIRRUS, INC., a Nevada Corporation
          2001 E. Lohman Ave., 110-318
     Las Cruces, NM 88001                                             

Wherein SELLER in consideration of the amounts set forth herein, agrees to convey to PURCHASER by Warranty Deed, and you as PURCHASER agrees to acquire from SELLER according to the terms and conditions herein set forth, that certain real property situated in the County of Cochise, State of Arizona, described as follows:

PROPERTY DESCRIPTION:   Parcel 199, Three Triangle Ranches, Section 17, T18S R32E, G & SR Meridian, Cochise County, Arizona

SUBJECT TO:  Taxes assessments, conditions, covenants, easements, encumbrances, exceptions, reservations, restrictions, roadways, rights and rights of way of record.

The cash price of the above described property is Thirty-Five Thousand Dollars ($35,000.00)

Purchaser acknowledges that he has physically inspected the subject real property    
prior to execution of this agreement.

TERMS AND ALL CONDITIONS:
1.   Contract will be binding with the receipt of earnest money of $500.00
2.   Balance of $34,500.00 will be due at closing no later than May 15, 2010.
3.   Purchaser waives Title Insurance.  Seller to provide Deed at Closing.
4.   Purchaser will be responsible for all of 2010 taxes when due.

PURCHASER:                                                   SELLER:  SIRRUS, INC.                                                               by _____________________ 1/08/10
Scott                      Date                          Karen                  ,  Director         Date

Answer
Hello Scott,
Unfortunately a number of bad ideas here that I see.  As you now know, never buy it without seeing it first.  Two, always make sure that you have Owners Title Insurance on any property you purchase.  It's a small one time expense and without it, you are out of luck and a bunch of money if someone else comes along and claims title to the property.  Three, I'll wager you didn't check for Tax assessments, conditions, covenants, easements, encumbrances, exceptions, reservations, restrictions, roadways, rights and rights of way of record.  Any of the above could affect the property and this is usually done by the Buyer's Real Estate Attorney (which you didn't have) or if you are getting a Mortgage, by the Mortgage Company. However, you still want an Owners Title Policy even then because the title policy you usually see on the HUD1 is FOR THE MORTGAGE COMPANY not you. Dealing through a Realtor, you would have have these problems pointed out to you.

Your problem at this point is actually a legal one now and if the Seller does any further follow up, you will need Legal advise not a Realtor.  That being said, I notice the company is in Nevada, the property is in Arizona, and I don't know where you are.  In theory, you have signed a contract and in most states, you could be taken to court to have you complete the contract.  In most instances this is not done due to legal expense, and possibly in this case, due to multiple jurisdictions.  But given the contract above, with it's loopholes for the Sellers,etc., these maybe the type of folks who will follow up.  If they do, get a Real Estate attorney, specifically an attorney who deals in real estate.

Good Luck and I hope you hear no more from them.  $500.00 is a fair amount of money for this lesson but it could have been worse had you completed the contract as it was written.