Here we go with volume 5 of this WTF! Wednesday series. I swear I am running into every possible road block ever conceived in this Real Estate game. So check this shit out. I received word last week that the two Champaign properties, which were held-up due to a bankruptcy, were clear to close from my Realtor. Apparently, bankruptcies take forever and a day to resolve, as these properties were put under contract in February. So I start making calls and getting things ready for the closing of one of them.
Everything was going smoothly, I went to follow-up with the bank that held the note on the two properties. The reason being that their original approval letter was vague due to the fact that it didn’t specify what the payoff amount was. As a matter of fact, I’ll give you exactly what this letter said:
February 18, 2010
To Whom It May Concern:
Please allow this letter to serve as notification of approval for the [Jon and Jane Doe], to sell property located at [1234 Main Street] and [4321 Main Street] both located in Champaign. Should you have any questions, please contact me at [217-222-2222].
Sincerely,
[Deez Nuts]
Assistant Vice President
So, as you see, this letter is completely vague. So I made a call to the bank, to request a more specific letter per my lawyers instruction. See email chain:
—Message Reply—
Justin,
They need to specify the amount of money they agree to receive in exchange for releasing their mortgage on the subject property (i.e., a specific payoff amount).
—Original Message—
[Lawyer],
I guess it’s time to revisit the (vague) bank approval letter. We spoke months ago about this and you said that once the time came I’d need a more detailed letter. If you tell me what is specifically needed in the approval letter, I can contact the bank and request what I need.
So I give the bank a call and get connected to the Assistant Vice President that drafted the original letter. I proceed to request that I need a more specific approval letter. He then proceeds to tell me that the sellers no longer own the properties and that they deeded them both back to the bank. And there is no way that he was going to sell for the 30K price I had each under contract for! (and dude kinda copped an attitude)
I was completely baffled by that statement, I thought everything was going smoothly and now this. First thing I always do in these situations is play “devils advocate”. So after the phone conversation, I begin to brainstorm how this “deed in lieu” could legally have been done. These are the points I’m able to come-up with:
- Bankruptcy actions supersede any previous contracts
- Contracts were expired
Those are the only pro-bank arguments that I can think of. Now onto what matters, the pro-Justin arguments. Here are my arguments:
- I was able and willing to close (in March) before contracts expired
- I had the required 3rd party bank-approval (in February) before contracts expired
- I made numerous efforts to update contracts with seller (once in April and in May)
As I write this, I’m still waiting to hear back from my lawyer on this issue. But, the realistic part of my brain is thinking that pro-bank bullet point #1 is what may be true. Perhaps, bankruptcy actions overrule in this matter. The emotional side of my brain is thinking “F#&K You, Pay Me” (cool points to who can name the movie with that quote). But anywho, this is a stellar example of why I must increase my lead quantity and concurrent deals in the works. When you’re counting on one deal, it’s almost guaranteed to fall through.
Even if there was some illegal foul-up on behalf of the bank or the seller, it would most likely cost more time and money to correct. And if it involves court-action, I can forget about it. These aren’t marginal deals, but court costs aren’t feasible.
I’m curious to hear if anyone else has experienced something similar, or if you have any expertise on the matter. Please provide your input in the comments.
- Justin
Short Sale
Foreclosure, Rantoul, Short Sale, WTF Wednesday
