Small real estate development company is attempting to sue me for damages for not closing on house, which it says they can do on the contract, but the reason I didn’t close is because there was a notice of violation on the home and the sellers didn’t have permits and misrepresented that in the seller’s disclosure as having “no knowledge of unpermitted work” however I have ample proof they knew. Regardless, claiming they didn’t know that their GC didn’t pull permits doesn’t excuse them.
They ignored me repeatedly when I asked for permits, so I had to call the city. They sent an inspector out who then wrote up a violation. The NOV also states they’re prohibited from selling the home unless they notify a buyer. I didn’t want to take on all of that liability of having to get permits and fines that would be imposed after 30 days.
They originally agreed to get retroactive permits and sell to me, then changed their mind after I had asked for them to take on the owner’s policy as well (I was covering it before) as a way to make me whole on extra costs I’m incurring as a result of not being able to close on the original closing date. I could see they were cutting corners on their permitting anyways and putting minimal updates to the home when it was an extensive renovation. They failed one of their inspections and do not have a certificate of occupancy as a result
They’re trying to now sell to another buyer and seek damages of the price I offered versus the price the next buyer is offering, however I still want to buy the home and have filed a memorandum of contract to not allow them to sell to someone else. Once the permitting is finished I would like to move forward with the purchase.
My attorney says they’re stupid to be filing something like this. They also wouldn’t be able to sell while under a lawsuit. Waiting to get the papers and from there I will countersue.
Do they have any leg to stand on to be entitled to get out of selling me the home or seek damages? My attorney is saying this SHOULD be and open and closed case, however there’s no telling if a judge is going to go strictly by the contract and say I failed to close or if they will see that the sellers breached due to lying on the disclosure and that I have a very good reason to ask for a delayed closing due to the notice of violation. Looking for anyone to share real advice or similar experiences not just “listen to your attorney” as I am already doing so
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DO NOT CANCEL anything!
Did you sign any cancelation? They can’t sell anything that’s currently in escrow pending sale.
Flipper got caught red handed! He wanted to GTFO quick without pulling permits, now he’s caught! He needs to do everything by the codes, pay the fees, request for inspections and pass to get final CofO.
- Threaten the Seller you will tied up the property so tight and so high above, he’ll need a space shuttle to untie it and bring it down.
- File a lawsuit. Court will DEFINITELY rule against the flipper! Sue your broker, agent, seller, seller’s broker, agent. EVERYONE!
Trust me! I’ve BEEN in those situations, many many times AS the flipper MYSELF and as the Plaintiff on BOTH ends of the floor! The LAST thing anyone wants is their CASH TIED UP!!!
He needs to sell and get out asap!!! His int % is enormous unless he’s doing everything all cash. Nevertheless, his cash tied up!
GO TIE HIS SHIT UP!
This is why I will never never buy a flip, new build, or development. Anything under or recently completed construction or renovation prior to sell can be chancy AF, because the bottom line is usually 
You asked for adviceright?
Most people walk away from seller who lie on disclosure forms because they aren’t honest and typically take short cuts. Nobody avoids permits to just build everything to code and then gets caught lying and refuses to back date and bring it current.
People don’t do business this way typically. They walk away and find a new house.
You are overly attached to this deal and these people aren’t going to see you just to take a L. They are suing you to get something…your missing something and it’s going to end poorly for you.
Do they have any leg to stand on to be entitled to get out of selling me the home or seek damages?
They certainly do have standing do sue, but the outcome of that case will be very dependent on the specific facts. General rule of law is that a plain read of the contract is used to resolve the matter, if possible.
You will have to prove failure to disclose and that they had knowledge of those material defects, which is exceedingly difficult to do. That is a main reason these kinds of cases are usually settled out of court or often won by the seller, at least when buyer is suing seller for failure to disclose.
They can sell the house while litigation is pending, if they can find a buyer willing to take on that risk. Sellers can force specific performance on buyers, e.g. force them to buy the house, but buyers cannot enforce specific performance on sellers, e.g. force them to sell the house.
There is no one here in a better position to give an opinion than your actual attorney who is looking at actual documents and not just reading your layman’s summary of the facts.
There’s no point to this post.
I would walk from this deal. They have already shown they are shady AF so why risk that? Just because they ultimately get permits and the city inspects doesn’t mean there’s still material defects you’d be inheriting.
Plus if you have good documentation I’d say don’t sweat the suit