Selling my house part 2

The lawyer, conservative in me, agrees with Rapoole. See a lawyer if you don't sell to the first person. Edit: Even though purchase agreements have to be in writing, there are exceptions in some circumstances if someone changes their position in reliance on a verbal understanding.

The honor question? I am not sure that MJ and the first buyer really thought they had a firm deal. MJ listened to other offers. The first buyer raised his offer to meet the second buyer's offer. They didn't write it down. It looks as if details were not discussed. What was the plan for putting together a written agreement? Or was there one? Not enough facts to know for sure if there really was a "deal."

This is why agreements should be in writing. One or the other party might not be on the same page. If you write it down, the chance of a misunderstanding is reduced. It may not be so much a question of honor but an issue of whether there was a "meeting of the minds."
 
At the root of all of this ... as have many on this board, my DW and I have bought and sold a fair number of homes now. We have never considered doing so without either an agent representing us, or at least working closely with a title company (generally didn't live in states requiring an attorney) to generate the correct paperwork. And we only did our own deals with minimum representation after much experience (and after both of us had held real estate licenses).

At least go to a title company or attorney now to handle your transaction correctly.

With respect, to you and the comments above, if you make a deal in the future, for anything, changing your mind the next day can and will leave you open to legal and reputation problems. Just not good form.

Good luck.
 
Brat said:
Jay, get a real estate lawyer ASAP and have that person sort this out.
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:confused: I'm not the one selling the house... I'm a lawyer and would have never done things this way.
 
Oy...

I agree with Martha, that offerer #1 did increase his bid, so he was in the game, so to speak. Still, he made a deposit, and should get first rights.
 
Opps, by bifocals caught the wrong OP handle. I will correct my post. Thanks.
 
73ss454 said:
To me it doesn't make any difference.

MJ said he made a deal and that's that, yea legaly he could walk away. But what's right is right.
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Repeating the part where I noted we didnt really get much detail on how the deal was "made".

And the part about reasonable and customary. In the vast majority of home sales, a P&S with conditions and contingencies are listed is required before you "have a deal".

Let me give you an example of why that may change a few things. Say the buyer cant get a loan. How about if the buyer does a home inspection and it reveals major problems with the home that MJ doesnt want to pay to fix because he's sold the property for $30k (or more) below value.

Does that mean the buyer can forget they "had a deal" and walk away? You betcha. And it'd be specified in the p&s agreement they put on paper.

"Big" changes to the parameters of a deal usually mean some further analysis of the deal. Things like a better offer, problems with financing, problems with the property, etc. This isnt selling an old car or loaning your neighbor fifty bucks, its a six figure transaction with a five figure deviation. Sure, the original guy should have the right of first refusal to meet and make the deal.

Several aspects to this came to mind last night. Thought I'd share because i'm like that ;)

#1: Separating the really well-heeled members here who can look at 30k as a trivial amount of money, i'm betting a lot of the "honor" supporters take the higher bid if its THEIR money.

#2: As a permutation of that, we're all whores, its just a matter of the price. Apologies to mother theresa and the 10-12 other people on the face of the earth who cant be bought or tempted at any price.

#3: I think the value of either using a professional or following the same procedures a pro would to do a large transaction has been highlit here. A written offer and written acceptance, followed by a purchase and sale agreement before a handshake or 'deal' is considered made would have been prudent, and still could and should be performed if it hasnt. The forms are usually available as part of a 'fsbo' package at many bookstores and websites and some notaries know where to get them if you cant find them.
 
()

I feel that once that handshake is done that the procedure of buying a home should be started at once. If the buyer doesn't qualify or the house is damaged the negotiations should continue at that point. If neither is satisfied the deal should be dead.

This shouldn't change the fact that MJ agreed to sell the house to that buyer for a said price.

Like I said before if the 1st buyer agreed to give MJ the additional 30K that's his business. There should be no question as to who gets the house.
 
That would be swell if we knew the magically invented "handshake" ever occurred. All MJ said was the guy came over, made him an offer and left a check. We dont know what happened, so for the third time, we dont have much detail on what the "deal" consisted of or what agreements were made.

Without the specifics of what was said or agreed to, we're all reading what we will into this.
 
Left him a check that he accepted. Doesn't this mean for the 4th time that they had a deal.
 
Not at all.

I'm pointing out everyone was hung up on a "handshake" that MJ never said he made, and speculation as to who agreed to what.

Without further speculation, such as "maybe they talked about a price and the guy left a check while MJ told him he'd think it over", I'll wait to hear what exactly happened, was said and committed to before I question someones "honor".

So there ya go MJ, you're either a scumbag without honor for trying to get the best price you can for the biggest thing you'll ever sell and thereby assuring you and your family are best served financially, or you're not. Spoken by a bunch of folks with more money than most and absolutely no skin in the game.

73ss454, one last question going back to my earlier postulation, because I really want to understand your reasoning.

Explain to me the difference between a seller unexpectedly finding out his home has a higher value than he thought being different than a buyer unexpectedly finding out the home has problems, or a buyer (probably expectedly) finding out his credit is so bad he cant get timely financing?

In both cases, the value proposition changed. You seem okay with the deal voiding or going back to negotiation if something changes with regards to the buyer, but not for the seller.

Just for the record, I've received higher offers after accepting one and stuck with the one I accepted, but then the difference wasnt 30k. On the flip side, I had a seller back out of the deal about a week before it closed. I could have sued the recently widowed grandma, but I didnt. The whole thing left a bad taste in my mouth so I discontinued my efforts to buy about 6 single family homes that I could have grabbed up for about $150k a pop. All in the nice neighborhoods of Folsom California, where those homes ~6 years later are worth 400-500k each. By the way, she put the house back on the market for more money a couple of months later, probably when they thought I wasnt watching anymore.

Its all part of life.
 
Many deals go down after they are agreed upon for one reason or another.

I'm not saying it shouldn't go both ways. Also If you remember I said that if the first buyer agrees to pay the 30K extra so be it. Just that he should have first shot at the house. MJ said he didn't know who to go with and I say the first guy.

MJ did not cash his check but did accept it and they agreed on the price. Which by the way was what he was asking.
 
I'm a bit confused. MJ wrote;

"The following morning, a 2nd buyer knocked on my door and was interested in my house too. He voluntaired to up the price by $30k. I contacted the 1st buyer and he matched the increase. I then contacted the 2nd buyer he again up the price by $30k but said he would not go any further."

So, if he were to take the first offer discussed, he'd be down $60,000 dollars, correct? I think we're asking a lot from MJ....
 
First, you should get a lawyer. Second, you should consider doing the right thing and honoring your agreement with the first buyer. But if you want to go the legal route....

Whether you are obligated to the first buyer will vary from state to state. But the two major issues are:
Is there enough in writing to meet the statute of frauds? This is usually narrowly construed; if the check had both your names, the price, and the address of the property, that could be enough. Common law would fill in the gaps.
Statute of Frauds also requires the person the agreement is being enforced against to have signed the writing. So if the seller didn't sign it, (or endorse the deposit check) it's probably not enforceable.

As long as the buyer gets his money back, it's hard to see what other losses he has suffered.

As far as baby boomers being morally evil, etc. goes, that's a load of hogwash. The statute of frauds has been around for over 300 years, to keep all those merry old Englishmen honest. Trying to wriggle out of real estate transactions, after receiving a better offer, was hardly invented by the boomers....

-GenXer
 
I think the common misunderstanding of the Statute of Frauds is being presented here. "There's no signed agreement" - that would be MJ's defense to the contract from the 1st buyer at common law. However, the 1st buyer would sue MJ for breach, depose MJ, and ask MJ if the contract was formed in the deposition (or in an interrogatory). Unless MJ lied and said no contract was formed, the contract would still be upheld*, in spite of the failure to satisfy the writing requirement of the Statute of Frauds. The statute of frauds is merely an evidentiary law, instead of substantive contract formation law. All you need is offer - acceptance - consideration.

Disclaimer: I'm not a real lawyer. I just went to school to be one.

*All this assumes an actual contract was formed between MJ and 1st buyer (but that may be up in the air).
 
Rich said:
I'm a bit confused. MJ wrote;

"The following morning, a 2nd buyer knocked on my door and was interested in my house too. He voluntaired to up the price by $30k. I contacted the 1st buyer and he matched the increase. I then contacted the 2nd buyer he again up the price by $30k but said he would not go any further."

So, if he were to take the first offer discussed, he'd be down $60,000 dollars, correct? I think we're asking a lot from MJ....
Click to expand...


So, in other words. If the deal involves $60,000 or more integrity is no longer a factor. - I guess we know how the Executives of Enron Think now.
 
MJ said:
As I mentioned in another thread I started, I am selling my house without a broker. Since this is 1st home that I bought and now am selling, I am new on the proper rules that one should follow. I started speaking to a few neighbors about my intention.
A neighbor brought over a buyer that met the price I was asking. He gave me a large deposit check which I haven't cashed yet. There was no written agreement. I was happy with the deal at that time. The following morning, a 2nd buyer knocked on my door and was interested in my house too. He voluntaired to up the price by $30k. I  contacted the 1st buyer and he matched the increase. I then contacted the 2nd buyer he again up the price by $30k but said he would not go any further.

Who should get the sale, the 2nd buyer who was willing to increase the price or the 1st buyer who only matched the price?
Click to expand...
First question: how will you feel about this $30K in 20 years? Will you feel good that you extracted it out of the buyer in the true spirit of capitalism, or will you feel bad that you essentially jacked him up on a handshake? I'm not accusing you of either tactic, but that's how I bet the first buyer feels. Especially if he's buddies with a legal professional.

After 40 years my FIL will STILL tell the stories of the small slights made by careless sellers, realtors, escrow companies, and others. We're talking less than $1000 but it meant a lot to him at the time and it still means even more today.

More questions: pretend for a minute that you'd gotten the first buyer's offer on paper. If you had, did it have any contingencies? Was it a cash offer or was it contingent on his sale of his first home or contingent on his obtaining a mortgage? And then was the second buyer's offer contingent on anything? In the world of written offers, if the first buyer's offer has contingencies then the seller's acceptance reserves the right to request that those contingencies be vacated upon receipt of a second offer without those contingencies.

An ethics textbook will advise selling the house to the first buyer at the original (lower) price. You'll "lose" $30K but if I was in your shoes then I'd consider it tuition at the University of Experience.

A litigious buyer will cost you far more than the $30K that you "gained" from raising the offer. If you go with the lower offer then they'll also feel obligated to cut you a break if any other surprises show up on the home inspection or other paperwork-- because there will be a written offer & acceptance this time, right?

The second buyer can submit his $30K higher offer in writing, too, and you can hold it in reserve in case the first buyer's offer falls apart.
 
justin said:
I think the common misunderstanding of the Statute of Frauds is being presented here.  "There's no signed agreement" - that would be MJ's defense to the contract from the 1st buyer at common law.  However, the 1st buyer would sue MJ for breach, depose MJ, and ask MJ if the contract was formed in the deposition (or in an interrogatory).  Unless MJ lied and said no contract was formed, the contract would still be upheld*, in spite of the failure to satisfy the writing requirement of the Statute of Frauds.  The statute of frauds is merely an evidentiary law, instead of substantive contract formation law.  All you need is offer - acceptance - consideration.

Disclaimer: I'm not a real lawyer.  I just went to school to be one.

*All this assumes an actual contract was formed between MJ and 1st buyer (but that may be up in the air). 
Click to expand...

My gosh, I'm gone 24 hours and we're still hashing this:confused:
Once more, there are no legally enforceable
verbal RE contracts.
You can talk until Hell freezes over, but when it comes to RE, it
means nothing (legally)...................unless it is written.  If you
can disregard honesty and honor you are not encumbered.
That is where some of us have trouble.
I know of no exceptions to this rule.

JG
 
I am done with my comments on MJ's situation, but want to comment on the statute of frauds. First of all, it is not federal law but state law. These types of statutes provide that various types of contracts are not enforceable unless in writing. Therefore, I disagree with Justin that a statute of frauds is an evidenciary rule only and the contract is enforceable if you admit there was a contract. Instead, I would view it as a rule which makes certain unwritten agreements voidable by either party.

As in most things in the law, there are exceptions to the rule. If a party has partly performed the contract, the contract may be enforceable. For example, if a seller entered into an unwritten agreement to sell land payable over time, and the buyer made a number of the payments, the buyer may be able to enforce the contract on the theory of part performance.

Another exception would be a situation where a person has changed their position to their detriment in reliance on the contract. For example, in reliance on an unwritten agreement to buy land, and with the seller's knowledge, a buyer has utilities installed on the seller's property. It would be unfair for the seller to back out in those circumstances.
 
Martha said:
I am done with my comments on MJ's situation, but want to comment on the statute of frauds. First of all, it is not federal law but state law. These types of statutes provide that various types of contracts are not enforceable unless in writing. Therefore, I disagree with Justin that a statute of frauds is an evidenciary rule only and the contract is enforceable if you admit there was a contract. Instead, I would view it as a rule which makes certain unwritten agreements voidable by either party.
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Martha,

Let me lay out a fact pattern, for the sake of argument, and see if you agree with the legal conclusion I draw.

Assume that MJ and 1st Buyer did in fact enter into an oral contract for the sale of MJ's house. No writing evidences this contract whatsoever (assume the check that 1st Buyer gave MJ was made out to "pay to the order of CASH"). MJ sells the property to 2nd Buyer at a higher price.

1st Buyer sues, alleging breach of contract. MJ isn't going to perjure himself. MJ, as a witness in the case against him, answers 1st Buyer's question asking "Did you enter into a contract for the sale of your house to 1st Buyer?". MJ says "yes".

I conclude that based on this fact pattern, 1st buyer has a contract enforceable against MJ. No writing required. This fact pattern assumes that MJ is honest.

In my opinion, the Statute of Frauds makes a writing evidencing the sale of real property a sufficient, but not necessary, condition of a valid enforceable contract. In reality, a defendant in MJ's position might deny the existence of the contract, and the case is over - no contract. But from a theoretical perspective, I don't see how the SoF requires a writing, since a valid enforceable contract can exist in the absence of a writing evidencing the formation of the contract (assuming the opposing party admits the existence of a contract).

UCC sec. 2-201 codifies the SoF as it applies to the sale of goods. Paragraph (3)(b) includes the exception that when the party against whom the contract is sought to be enforced admits in "his pleading, testimony or otherwise in court" that a contract was made, the contract is enforceable, in spite of a lack of a writing evidencing the contract. It is my understanding that this same type of exception applies to the sale of real property (obviously the UCC doesn't govern the sale of real property though).

I guess my classification of the Statute of Frauds as evidentiary and your classification of the SoF as substantive may depend on your point of view on the SoF.
 
Justin,

Enough already, my head is beginning to hurt. :D (and I'm a lawyer -- does that mean I'm still human?)
 
justin said:
Martha,

Let me lay out a fact pattern, for the sake of argument, and see if you agree with the legal conclusion I draw. 

Assume that MJ and 1st Buyer did in fact enter into an oral contract for the sale of MJ's house.  No writing evidences this contract whatsoever (assume the check that 1st Buyer gave MJ was made out to "pay to the order of CASH").  MJ sells the property to 2nd Buyer at a higher price. 

1st Buyer sues, alleging breach of contract.  MJ isn't going to perjure himself.  MJ, as a witness in the case against him, answers 1st Buyer's question asking "Did you enter into a contract for the sale of your house to 1st Buyer?".  MJ says "yes". 

I conclude that based on this fact pattern, 1st buyer has a contract enforceable against MJ.  No writing required.  This fact pattern assumes that MJ is honest. 

In my opinion, the Statute of Frauds makes a writing evidencing the sale of real property a sufficient, but not necessary, condition of a valid enforceable contract.  In reality, a defendant in MJ's position might deny the existence of the contract, and the case is over - no contract.  But from a theoretical perspective, I don't see how the SoF requires a writing, since a valid enforceable contract can exist in the absence of a writing evidencing the formation of the contract (assuming the opposing party admits the existence of a contract). 

UCC sec. 2-201 codifies the SoF as it applies to the sale of goods.  Paragraph (3)(c) includes the exception that when the party against whom the contract is sought to be enforced admits in "his pleading, testimony or otherwise in court" that a contract was made, the contract is enforceable, in spite of a lack of a writing evidencing the contract.  It is my understanding that this same type of exception applies to the sale of real property (obviously the UCC doesn't govern the sale of real property though). 

I guess my classification of the Statute of Frauds as evidentiary and your classification of the SoF as substantive may depend on your point of view on the SoF. 
Click to expand...

Can't believe I'm still posting on this, but I need to keep my count up.  :)

Even if MJ testifies truthfully, he can simply say  "Yes, I told the buyer
many times he had a deal and yes, I took his money.  Then I changed my mind."
Case dismissed IMHO.

JG
 
Jay_Gatsby said:
Justin,

Enough already, my head is beginning to hurt.   :D  (and I'm a lawyer -- does that mean I'm still human?)
Click to expand...

Not necessarily. :)

JG
 
Jay_Gatsby said:
Justin,

Enough already, my head is beginning to hurt. :D (and I'm a lawyer -- does that mean I'm still human?)
Click to expand...

I'm not (not a lawyer, that is), so this stuff is still a little fun to me (in a sadistic, intellectual sense).
 
justin said:
I'm not (not a lawyer, that is), so this stuff is still a little fun to me (in a sadistic, intellectual sense). 
Click to expand...

Well, I'm no masochist, so let's not migrate the discussion over to the Rule Against Perpetuities or the Erie Doctrine...
 
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