Dear Real Estate Adviser,
I signed a purchase contract about three months ago. I've since found out the home I was buying wasn't in the seller's name. So I waited to close. Well, the seller has apparently fixed this, but now his agent says the seller got a loan modification package and plans to keep the home! Meanwhile, I've spent a bundle on title search, home inspection, appraisal, attorney fees and storage. How can I recoup these monies?
-- Violet
Dear Violet,
You have stepped into a messy and maddening situation that's apparently not of your making. Whether you have recourse depends on the fine print of the purchase agreement. If the contract says something to the effect that the "seller reserves the right to deny the purchase for any reason" or a similar blanket escape clause, you likely have no legal footing.
But if the owner/seller has no such leverage, there are several things you can try. If he or she has not signed off yet on that loan modification package, you could threaten to record a lis pendens, or "lawsuit pending," which may prevent that new loan modification agreement from closing because it alerts the lender that the title to the property is in question. This could also keep the owner of that house from refinancing or a selling to a different party, at least until your matter has been settled. Of all your redress options, this might pack the most punch because it could tie the hands of the seller on any new loan arrangements, including a refinance or sale to a different party.
If the loan modification is already done, your agent or your attorney could simply write a letter to the seller asking immediate reimbursement for all your expenses, stating you would then agree to terminate the seller's obligations spelled out in that contract you both signed. If that is ignored, which unfortunately is likely, your attorney could then write a letter stating that you intend to sue for "specific performance" whereupon the sale of the house to you could conceivably be forced. What's more, if your attorney believes there was some sort of provable deceit in the case, you could state your intent to sue for monetary damages as well.
Of course, the cost and exasperation of getting an attorney fully engaged in a case like this may not be worth what you would be able to recover, if you indeed recovered anything. The seller may realize this and hunker down into a "calling your bluff" position.
There's one more avenue. If there's a section of your contract stating that disputes must be handled through arbitration, mediation or small claims court, follow that procedure.
At the very least, you should be able to file for restitution in small claims court and perhaps get something for all your expenditures and hassles. I do hope you get some relief. Good luck!
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