Once It Is Rejected by the Seller, Offer to Buy House Becomes Void
QUESTION: Three weeks ago we made a written offer to buy a house. The seller didn’t like our offer, but made a counteroffer that was too high for us. We told the realty agent we couldn’t afford to pay any more than our original offer.
Last night the agent phoned to tell us the seller will accept our original offer after all. But now we have decided we don’t want that house. Can the seller sue us if we don’t buy?
ANSWER: No. The seller rejected your original offer by making the counteroffer. After an offer has been rejected it cannot later be accepted. Unless you renewed your original offer in writing, there was no offer the seller can later accept. For further details, please consult your attorney.
Think of Liability When You Co-Sign
Q: A dear cousin wants me to co-sign on his home mortgage so he can buy a house. Then he says I can quitclaim my interest in the house to him and be free of any liability. Is this true?
A: No. Most mortgage lenders insist that a mortgage co-signer also be a co-owner of the property. If you quitclaim your title to the resident, some lenders argue this is a title transfer, which enables the lender to call the loan under the due-on-sale clause.
More important, you remain legally liable on the mortgage, including for any foreclosure deficiency the lender may suffer, especially if the loan is a VA or FHA home loan. This is true even in states with anti-deficiency laws. Please consult a local real estate attorney for more details.
Wife Must Sign Deed When Husband Sells
Q: I own a house that I bought before I married. When I recently sold it, the title insurance company insisted that my wife sign the deed. Since she doesn’t think I should sell it, she was reluctant. This house is my separate property.
I argued with the title insurance officer, but he refused to insure the buyer’s title unless my wife signed a quitclaim deed. I own several other properties that I want to sell. How can I avoid this problem in the future?
A: The title insurance company is looking out for its best interests. Even though the house was your separate property, in most states the wife might acquire a marital interest in it.
Dower, curtesy or community property rights may be involved. Title insurers usually insist on a quitclaim deed from the non-owner spouse just to be certain all marital rights are being conveyed. For further details, please consult a local real estate attorney.
The Service You Get From Discount Brokers
Q: I usually agree with your good advice, but you really blew it recently when you disparaged “discount brokers.” Yes, we perform fewer services for home sellers than so-called “full-service brokers,” but many home sellers don’t need all those fancy services.
For example, I find that my sellers are perfectly capable of holding Sunday open houses.
My office has three salespeople, but last Sunday we had 19 open houses advertised. Two of those sold. When a buyer expressed interest in buying, the seller phoned our office and one of our salespeople rushed over to prepare the written purchase contracts, which were accepted by the sellers, who saved thousands of dollars in commissions as compared to full-price brokers.
A: I am well aware of the pros and cons of discount brokers. The problem is that many discount realty brokers are not as successful at selling homes as you seem to be. Another difficulty is that most sellers are not very good at holding their own weekend open houses, because they are too anxious and buyers are turned off by pushy sellers.
Although your discount firm may do an excellent job, in my community I observe that most of the discount brokerage For Sale signs are not replaced with Sold signs, but with For Sale signs from full-service brokers. For these reasons I am not convinced most home sellers will benefit from listing their homes with a discount broker.
Sublease Protected, But Not Disturbances
Q: I am a novice landlord. Several months ago I bought a two-family duplex. The upstairs apartment is occupied by an elderly couple who appreciate quiet. But the downstairs apartment is occupied by two young men who love to have wild parties.
At the time I contracted to buy the property, the downstairs apartment was occupied by a single woman. It seems she subleased to the two bachelors without the permission of the former owner.
But in reading over the lease I see there is no prohibition on subleasing. This lease has about 6 months remaining. Since the two men are uncooperative and rude to me, I want to get them out, so I don’t lose my good tenants upstairs. What can I do?
A: Unless a lease prohibits subleasing or assigning, the general rule is that a sublease or assignment is allowed. In the future, I suggest you use a lease form that prohibits subleases without the owner’s permission.
Although you would have a difficult time evicting the men on grounds of their sublease from the original tenant, you may be able to get them out for breach of another lease provision, such as causing disturbances.
The next time they have a loud party, suggest to the upstairs couple that they phone the police, so there will be evidence of the disturbance. Should the loud noise continue, you will have grounds for eviction. For further details, please consult a local real estate attorney.
An Exclusive Listing Means Realtor Gets Fee
Q: We listed our home for sale with a local realtor for 90 days. Before she put the listing into the local multiple-listing service book or advertised it, I told a friend our home was for sale and she immediately bought it from us.
When I phoned the realtor to tell her we would not be needing her services because we found a buyer, she thanked me for locating a buyer but said we owe her a full sales commission anyway. After I explained that we can handle the closing, her boss phoned to say he expects to be paid the full sales commission and will put a lien on the house if we don’t pay. Is this legal?
A: If you signed an exclusive-right-to-sell listing, it is legal for the realtor to sue for the commission. When you signed the exclusive-right-to-sell listing, you became obligated to pay the commission whether the listing agent, another agent or you found an acceptable buyer. However, the agent cannot put a lien on the house to prevent its sale. Please consult a local real estate attorney for more details.
Legally, Anything Can Make a Down Payment
Q: I recently attended a weekend real estate seminar where the speaker advocated trading discounted junk bonds for down payments on real estate. Since I own some junk bonds, this idea sounds very good to me. But when I talked with a real estate agent about the idea she said it is illegal. Is this true?
A: No. You can trade discounted junk bonds or anything else--a car, boat, or widgets--as your down payment to buy real estate. It is perfectly legal.
However, you and the agent must disclose to the seller that the junk bonds are not worth their face amount, and they may never be paid off if the company obligated to pay goes bankrupt. Ask your attorney to explain further.
Title Concerns in a Lease-Purchase Plan
Q: Last weekend a local realty agent showed us a nice home available on a 5-year lease-purchase plan. As I understand the program, we will pay $1,250 monthly rent and $250 will apply toward the purchase price if we make all our payments on time each month. The sales price is locked in at today’s market value. What do you think of this plan?
A: The lease-purchase plan is fine if all goes well. The danger is that after you faithfully make your payments for five years, the seller might not be able to deliver marketable title.
Be sure to have all the documents reviewed by an experienced local real estate attorney. Also have the property’s title checked to be sure it is marketable. Then hope it remains that way for the next 5 years.
Title Insurance Doesn’t Guarantee Boundaries
Q: When we bought our home about three years ago, we were given a title insurance policy that showed the current condition of our title. There were no special problems noted, just the FHA mortgage we were taking over from our seller.
A few months ago our new neighbor said she had a survey made, and it appears our driveway is about four feet on our neighbor’s property. When I called the title insurance company that insured our title, I was told that our policy does not guarantee our boundaries, since we did not have a survey made at the time we bought. Is this correct?
A: Yes. In many communities it is customary to obtain a survey at the time a property is purchased and, for an extra title premium, the property boundaries as determined by the survey are insured. However, if you did not have this done, the title insurer does not insure the location of your property boundaries.
Before either moving your driveway or paying your neighbor to buy a driveway easement, I suggest you have your own survey made. Mistakes are often made with surveys, so it is a good idea to have your own survey just to be sure the neighbor is correct.
