Backing out of a real estate transaction

I have a neighbor in Texas -- a poor elderly widow, not financially sophisticated, I'm not even sure she can read -- who signed a contract to sell her house about a week ago but then decided she doesn't want to leave her home. What is likely to happen if she breaches the contract? I'm sure the buyer has the right to sue, but how likely is that to happen? She has zero money for a lawyer.

What does her agent say?

mbaldwin said:
What does her agent say?

Did she sign a listing or a contract to sell. Are there provisions in the contract for the buyer to have x number of days to secure a mortgage?

Is there a legal service agency in her vicinity? Is there a social worker?

01/27/2015 | Author: TAR (Texas Association of Realtors) Legal Staff
I accepted an offer on my house two days ago, but I’m worried that I won’t be able to find a new home. I’ve decided to stay put. How can I get out of this deal?

If using the Texas Real Estate Commission or Texas Association of REALTORS® contracts, sellers generally never have a right to terminate a contract once it’s been executed. The only right a seller has to terminate is when a buyer is in default. Under Paragraph 15 of both the TREC and TAR contracts (the Default paragraph), one of the options a seller can take if the buyer is in default is to terminate the contract and keep the earnest money.

https://www.texasrealestate.com/advice-for-consumers/article/if-a-seller-gets-cold-feet-can-he-back-out-of-the-deal

I don't like her agent. She has not represented my neighbor's interests well.

The contract does not make the sale contingent on my neighbor finding a replacement property. That seems to be a big mistake based on what I've read. My neighbor wanted to downsize and get some cash out of her house, but she's not finding anything remotely acceptable. She'll use all of the sales proceeds to move into a crappier house and end up with nothing.

Yes, my neighbor should have done some house-hunting before listing her house. Should the realtor have taken her house-hunting or given her some sense of the market before selling her house? I think so, but maybe it's not her job. My neighbor says the realtor kept saying they would look at houses after her current house was under contract.

Her agent says she'll be in breach of contract. But then what will happen? I guess it depends on the buyer. How likely are buyers to sue? She has no money. Can they force her out of the house? Probably so. The buyers have not put any money into the transaction so far.

The problem is that it's an unusual property. The house is nothing special and poorly maintained, but it's on the bank of a river with a fabulous view in an area that was quietly decaying for decades but thanks to development upstream is about to become red-hot. There are few useful comps because people stay in their houses for generations and most sales are by owner and privately financed. They picked a sales price at random. An offer for 10k over came in the day of listing. The agent pushed her to accept it, and she did. But there has been a ton of subsequent interest and much higher offers. Yes, she regrets not waiting and accepting a better offer, but her bigger issue is that housing prices are way above what she expected and she won't be able to find anything decent for what she'll clear.

Sorry to ramble on at such length, but I really, really like my neighbor and I hate to see her in this situation.

Things are different in Texas, I guess. I bought a house in NJ earlier this year. Out of attorney review I had the house inspection and several structural defects came up. The sellers didn't want to fix them or give me the money to fix them -- and then decided they didn't want to move after all and canceled the contract. They refunded me my initial deposit and I lost the money I spent on the house inspection. They didn't lose a thing.

Also, the buyer is an investor paying cash, and there are no repair contingencies. The buyer is buying the house as-is. No escape hatches there. I think her only bet is to throw herself on the mercy of the buyer. Maybe sign a contract to let her live in the house for the rest of her life and then have the estate sell the house to the buyer for the same price.

mumstheword said:
Things are different in Texas, I guess. I bought a house in NJ earlier this year. Out of attorney review I had the house inspection and several structural defects came up. The sellers didn't want to fix them or give me the money to fix them -- and then decided they didn't want to move after all and canceled the contract. They refunded me my initial deposit and I lost the money I spent on the house inspection. They didn't lose a thing.

Same in Texas -- a dispute over repairs is the only way for a seller to back out of a contract (at least based on my 45 minutes on Google). But this buyer is not asking for any repairs. They didn't even go upstairs!

Are they out of attorney review (if it's only a week)? Isn't there a "buyers remorse" clause in the contract?

mumstheword said:
Are they out of attorney review (if it's only a week)? Isn't there a "buyers remorse" clause in the contract?

No attorney review in Texas. Evidently there are lots of ways for buyers to get out of a contract but almost no options for sellers.

kthnry said:
I have a neighbor in Texas -- a poor elderly widow, not financially sophisticated, I'm not even sure she can read -- who signed a contract to sell her house about a week ago but then decided she doesn't want to leave her home. What is likely to happen if she breaches the contract? I'm sure the buyer has the right to sue, but how likely is that to happen? She has zero money for a lawyer.

I'm going to bet they are indundated with calls, but this is a free legal/referral service for Texans over the age of 60 or on Medicare. Perhaps they can help, or point her in the direction of someone who can.

http://www.tlsc.org/programs/legalhotline.asp

Also, if you feel the realtor has not acted in your neighbor's best interest, you can contact the Texas Real Estate Commission. If she cannot read, how did she know what she was signing?

http://www.trec.state.tx.us/complaintsconsumer/default.asp

Good luck to your neighbor. You're a good person for helping her.

kriss said:

kthnry said:
I have a neighbor in Texas -- a poor elderly widow, not financially sophisticated, I'm not even sure she can read -- who signed a contract to sell her house about a week ago but then decided she doesn't want to leave her home. What is likely to happen if she breaches the contract? I'm sure the buyer has the right to sue, but how likely is that to happen? She has zero money for a lawyer.

I'm going to bet they are indundated with calls, but this is a free legal/referral service for Texans over the age of 60 or on Medicare. Perhaps they can help, or point her in the direction of someone who can.

http://www.tlsc.org/programs/legalhotline.asp
Also, if you feel the realtor has not acted in your neighbor's best interest, you can contact the Texas Real Estate Commission. If she cannot read, how did she know what she was signing?

http://www.trec.state.tx.us/complaintsconsumer/default.asp

Good luck to your neighbor. You're a good person for helping her.

I am not a lawyer but the only way I can figure for her to get out of it is to plead incompetence. That will likely generate other problems.

Again, does the municipality or any other agency have a social worker for seniors?

Again, I am not a lawyer. Another possibility comes up if the sale price is ridiculously lower than a reasonable market value.

If that were the case, the agent and buyer could be in collusion to defraud the elderly. On the other hand, it is Texas so I don't hold out much hope for justice if that is the case.

If she is unable to read, how can she have legally signed a contract without someone there (other than the agent, who has an inherent conflict of interest) representing her interests?

A contract for the sale of real estate is a legal document governed by the laws of the State in which the real estate is located. If the OP's friend had a sudden rash she would go to a Doctor. The only way for her to deal with her problem is to consult a lawyer. She should call the local County Bar Association for a referral.

Or she or her friend ought to Google real estate lawyers in the area and then make phone calls to see if she can get a free or law cost consultation.

I love Maplewood online but any advice given ( even though people are trying to help) when they don't know EXACTLY what the law is could result in this woman losing her home.

SHE MUST CONSUTL AN ATTORNEY - it would cost her a few hundred dollars at most - but this is her home we are talking about. The first consultation with a lawyer might actually be free.

I can only talk about my experience in NJ and it is important to understand that every state has very different laws. This is not commonly known in New Jersey ( and NY) if a seller decides he or she wont go through with the sale, there is very very little that a buyer or the realtors or the attorneys can do.

Of course, the buyer could take the seller to court, but that takes a looong time, and a lot of money - in most cases it's not worth it.

In most states there are strict laws that protect the elderly from cooercion. If she says she did not understand what she was signing and an attorney could make a case that this lady was bulldozed into this and that the agent and/or seller were taking advantage of her, there could be stiff penalties and they would back down.

Also, in NJ and in many states there is a right of recision. If anyone changes their mind within 72 hours of signing a contract they can back out with no penalties. If she could say she told the realtor that she had changed her mind, it could be verbal, doesn't have to be in writing, they could make a good case.

The agent may or may not be trustworthy. HEre will be the test. If you call the agent and explain that she really does not want to sell her home and desperately wants to stay - see what the agents response is. If the agent tries to help - then maybe you can trust him or her. If the agent give you a hard time and threatens in any way, then that agent is looking out for his or her commission.

Here are some questions to ask. Is the agent also representing the seller ? If so, was this disclosed in writing to the client. Was the house multiple listed. Did other potential buyers have an opportunity to see the house. If the agent represented both parties, the house was not multiple listed and other buyers did not see the house chances are your friend might have been taken advantage of.

If this is the case and the agent does not help you out of the deal, then call the manager. Play hardball. Say the owner was bulldozed by the agent, that the owner was taken advantage of. That you can make a very good case and will bring this before any state agency that protects the elderly, the state attorney general, the state real estate commission and the Board of Realtors.

If you make a lot of noise they will back down. But an attorney would make it a lot easier.

Another idea - try calling the local board of realtors, explain that your friend was taken advantage of ( don't give the name of the realtor) and ask what they would recommend. They may or may not be helpful.

I have no experience in Texas, but if I can help you strategize in any way, or if I can be of any help feel free to contact me at sarahzm@aol.com

I want to add that this may not be that difficult. IF the realtor and the seller are decent people, they will let it go and let her stay in her home. If they don't let it go, I think this is a fight you can easily win, but I don't know Texas, you must consult an attorney.

Sarazhm, doesn't N.J. Right of Recision apply only to in home sales?

I agree that a Texas lawyer is the way to go but the O.P. says she doesn't have any money for a lawyer. Therefore, the next bestist thing is to find a free alternative if one exists... social worker or agency that defends the elderly.

If your friend can't afford a lawyer, would you be willing to spend a few hundred dollars on an attorney consultation for her to figure it out? She needs to do that.

But I think it's going to be very important that she make it absolutely clear a sap to her agent and the buyers that she doesn't want to sell. I think the sooner she does that, the better her chances are of backing out successfully.

Damn autocorrect. That is "asap," not "a sap."

Formerlyjerseyjack said:
Sarazhm, doesn't N.J. Right of Recision apply only to in home sales?


I agree that a Texas lawyer is the way to go but the O.P. says she doesn't have any money for a lawyer. Therefore, the next bestist thing is to find a free alternative if one exists... social worker or agency that defends the elderly.

My understanding is that it applies to all contracts, but I may be mistaken.

@kthnry - I sent you a PM

Thanks, everyone. Lots of good info. I hope to have an update tomorrow. I got your PM, kriss.

Here's something odd -- the realtor didn't have any business cards. She wasn't temporarily out of cards. She didn't HAVE any cards. In my pretty extensive experience, realtors always have stacks of business cards at their fingertips. She's listed as a member of the local board of realtors, so maybe she just got her license. But no cards???