Can a Buyer be Compelled to Go Through With a Real Estate Purchase
My question involves real estate located in the State of: Illinois
My neice and her bf are looking to buy a home. They foolishly jumped in too quick and signed an offer without consulting anyone. Their realtor is related to the sellers realtor. The federal loan inspector said no knob and tube wiring. Seller wants to have a contractor patch new to the knob and tube inside the walls to save money. Neice doesn't think this is appropriate. Realtor harrassing and showing up at her work and seller threatening to sue. Neice and bf signed offer contingent on electrical being redone, but it doesn't spell out the stipulation about knob and tube--that was a lender thing. Realtor claims if they can get any electrician to certify it's safe, they are required to buy. The realtor told the kids' parents Sunday that they were not required to buy. Now she's threatening them.
This whole thing has been a mess. Can they be sued or forced to buy?
Re: Force a Buyer to Purchase in Il on Offer
As long as the electrical is repaired to meet code, they can be found in breach. On the other hand, they can offer to pay the difference between the cheapest way and the way they want it, to save paying for part of the job twice.
Re: Force a Buyer to Purchase in Il on Offer
They need to have their contract reviewed by a real estate lawyer. Nobody can tell them what they are obligated to do without reviewing their contract.
If by "The federal loan inspector said no knob and tube wiring" you mean that their financing will fail if knob and tube wiring remains in place, and the seller does not plan to replace the knob and tube wiring, then it follows that financing will fail... and most purchase contracts have a contingency for financing.
Re: Can a Buyer be Compelled to Go Through With a Real Estate Purchase
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sharen67
My question involves real estate located in the State of: Illinois
My neice and her bf are looking to buy a home. They foolishly jumped in too quick and signed an offer without consulting anyone. Their realtor is related to the sellers realtor. The federal loan inspector said no knob and tube wiring. Seller wants to have a contractor patch new to the knob and tube inside the walls to save money. Neice doesn't think this is appropriate. Realtor harrassing and showing up at her work and seller threatening to sue. Neice and bf signed offer contingent on electrical being redone, but it doesn't spell out the stipulation about knob and tube--that was a lender thing. Realtor claims if they can get any electrician to certify it's safe, they are required to buy. The realtor told the kids' parents Sunday that they were not required to buy. Now she's threatening them.
This whole thing has been a mess. Can they be sued or forced to buy?
as stated, there would be knob and tube wiring remaining and due to that, the federal loan inspector would not pass the electrical system regardless of whether it is code compliant or not. If there is a financing contingency and they need to use federal backed loans, that would mean the sale would fail on its own.
also, knob and tube wiring is not allowed to be enveloped by insulation so if there is insulation enveloping the wiring, it is not code compliant.
national electrical code 394.12(5)
Uses not permitted Concealed Knob and tube wiring shall not be used in the following
(5) hollow spaces of walls, ceilings, and attics where such spaces are not insulated by loose, rolled, or foamed in place insulating materials that envelops the conductors.
(sorry but the latest I have near me is the 2008 edition. There is a 2011 and 2014 edition since then although I do not believe the section on knob and tube wiring was altered)
Re: Can a Buyer be Compelled to Go Through With a Real Estate Purchase
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jk
also, knob and tube wiring is not allowed to be enveloped by insulation so if there is insulation enveloping the wiring, it is not code compliant.
national electrical code 394.12(5)
Uses not permitted Concealed Knob and tube wiring shall not be used in the following
(5) hollow spaces of walls, ceilings, and attics where such spaces are not insulated by loose, rolled, or foamed in place insulating materials that envelops the conductors.
If that rule is quoted correctly, it says that knob and tube wiring is not allowed in such spaces where there is no insulation as described, i.e. knob and tube wiring must have insulating material enveloping the conductors.
Re: Can a Buyer be Compelled to Go Through With a Real Estate Purchase
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Taxing Matters
If that rule is quoted correctly, it says that knob and tube wiring is not allowed in such spaces where there is no insulation as described, i.e. knob and tube wiring must have insulating material enveloping the conductors.
it was quoted incorrectly and thanks for catching that.
the "not" should not be there.
the correct statement.
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(5) hollow spaces of walls, ceilings, and attics where such spaces are insulated by loose, rolled, or foamed in place insulating materials that envelops the conductors.
and if anybody wants to verify that and has their NEC 2008 handy it is page 70-236;)
Re: Can a Buyer be Compelled to Go Through With a Real Estate Purchase
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jk
(sorry but the latest I have near me is the 2008 edition. There is a 2011 and 2014 edition since then although I do not believe the section on knob and tube wiring was altered)
I have all the editions of the code from 2002 onward. This hasn't changed (nor is it one of the proposed changes in the 2017). K&T is not permitted in insulated spaces.
(by the way the article numbers are normative...394.12, the page numbers vary without the spec is bound).
In addition to 394.12 that specifically makes it not permitted in insulated spaces, 394.10 says it can't be installed other than in hollow spaces. The handbook explains why in the non-normative text that follows:
Blown-in, foamed-in, or rolled insulation prevents the dissipation
of heat into the free air space, resulting in higher conductor temperature,
which could cause insulation breakdown and possible
insulation ignition. Section 394.12 prohibits installation of knoband-
tube wiring in hollow spaces that have been weatherized.
There are other limitations on knob and tube (clearance from pipes and other wiring) and much problems typically ensue from people splicing on new wiring to existing K&T. This is why a lot of things like VA financing won't touch properties with it. It would take a more detailed (and possibly destructive) inspection that most pre-sale inspections can usually accomplish.
Getting back to the legal question. Even if there is no financing or inspection contingency on the contract, you're at MOST going to get is some monetary damage (if your purchase contract permits retaining the earnest money as liquidated damages). Courts rarely compel specific performance (forcing the buyer to complete the sale in this case) unless there is no other valid resolution.
Re: Can a Buyer be Compelled to Go Through With a Real Estate Purchase
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flyingron
Courts rarely compel specific performance (forcing the buyer to complete the sale in this case) unless there is no other valid resolution.
It's rarely ordered because it's rarely requested. In almost every case the seller is better off simply accepting forfeiture of the earnest money, or in selling the property to somebody else and (if in fact there are any) seeking damages. It's going to be an exceptionally unusual sale in which it's better to try to sue the buyer for specific performance, litigate for six to eighteen months, accrue tens of thousands in attorney fees, while crossing your fingers and hoping that the buyer will actually have the funds to purchase the property at the end of the litigation.
Re: Can a Buyer be Compelled to Go Through With a Real Estate Purchase
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Mr. Knowitall
It's rarely ordered because it's rarely requested. In almost every case the seller is better off simply accepting forfeiture of the earnest money, or in selling the property to somebody else and (if in fact there are any) seeking damages. It's going to be an exceptionally unusual sale in which it's better to try to sue the buyer for specific performance, litigate for six to eighteen months, accrue tens of thousands in attorney fees, while crossing your fingers and hoping that the buyer will actually have the funds to purchase the property at the end of the litigation.
I do not think that its just because it is rarely requested...although I agree that its rarely requested. I think that its also because in most cases its not an equitable remedy.
About the only reason why someone would actually try to force a sale (when the other party clearly defaulted and earnest money could be kept) is if its clearly impossible to sell the property to someone else at the same price, and if its clearly impossible to sell the property to someone else at the same price, there are other remedies in law that would not require specific performance. On top of that, if the property could not be sold to someone else at the same price, then its almost always due to some defect in the property that was hidden.
A hidden defect seems to be the case in this scenario.
Re: Can a Buyer be Compelled to Go Through With a Real Estate Purchase
It is simply not correct that the availability of other remedies will prevent a claim for specific performance. Specific performance is available based upon the unique nature of real estate, which presumptively makes any other remedy inadequate.
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Quoting Bissett v. Gooch, 87 Ill. App.3d 1132, 409 N.E.2d 515 (1980)
Where a contract for the sale of real estate has been entered into without misrepresentation, unfairness or superior advantage, specific performance will be granted to either the buyer or the seller.
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Quoting Giannini v. First National Bank, 136 Ill. App.3d 971, 988 (1985) (citations omitted)
Illinois courts have long held that where the parties have fairly and understandingly entered into a valid contract for the sale of real property, specific performance of the contract is a matter of right and equity will enforce it, absent circumstances of oppression and fraud.... "Contracts to devise or convey real estate are enforced by specific performance on the ground that the law cannot do perfect justice."... Thus "[w]here land, or any estate therein, is the subject matter of the agreement, the inadequacy of the legal remedy is well settled, and the equitable jurisdiction is firmly established....
There is no suggestion that the wiring was not obvious. To the contrary, we have been expressly told that it was known to the buyer. The controversy relates to the nature and extent of its replacement, and whether the partial remedy proposed by the seller would satisfy the seller's obligations under the contract. Beyond that, the presence of knob and tube wiring is not a defect, and it's something that can be easily detected by peeking into the attic space.