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  1. #1

    Default Selling a Property That is Not Yet Owned by the Seller

    My question involves real estate located in the State of: Colorado

    If a buyer and seller enter into a contract to purchase a property, but the seller does not yet own the property, is the contract valid?

    More Detail:
    Seller is looking to purchase property A and flip it.
    The seller enters into a contract with a buyer on 12/12/09, to sell property A.
    The seller purchases property A on 1/7/10

    As the seller sold a property he did not own, is the contract legal? Should monies paid by the borrower under the contract be reimbursed to the borrower if it is illegeal? Can the seller seek damages?

  2. #2
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    Default Re: Selling a Property That is Not Yet Owned by the Seller

    depends what the contract states. You cannot sell something you don't own BUT it is possible to sell a future interest in a property.

    It is also possible to sell one's current interest in a property. While I don't own your house, I can legally sell (and even using a quit claim deed) my interest in your house to another party.

    As the seller sold a property he did not own, is the contract legal?
    depends on the contract. It could be or it might not be.

    Should monies paid by the borrower under the contract be reimbursed to the borrower if it is illegeal?
    that would, again, depend on what the contract states and the entire set of circumstances

    Can the seller seek damages?
    the seller? What damages might a seller be seeking and from whom?

  3. #3

    Default Re: Selling a Property That is Not Yet Owned by the Seller

    Quote Quoting jk
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    depends what the contract states. You cannot sell something you don't own BUT it is possible to sell a future interest in a property.

    It is also possible to sell one's current interest in a property. While I don't own your house, I can legally sell (and even using a quit claim deed) my interest in your house to another party.

    depends on the contract. It could be or it might not be.
    IF there is no clause about future interest in a property and the seller is selling the property as his, is that legal?

  4. #4
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    Default Re: Selling a Property That is Not Yet Owned by the Seller

    If the seller owns the property at the time of closing, then the seller can convey title at closing.

  5. #5

    Default Re: Selling a Property That is Not Yet Owned by the Seller

    Yes, but if the seller has not yet purchased the house, can they enter into a contract to sell it as they do not own it?

  6. #6
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    Default Re: Selling a Property That is Not Yet Owned by the Seller

    as Mr. K said; if they can convey clear title, or whatever was contracted at the time of closing, the contract is legit. If they cannot convey the interest contracted for, then the contract is void.

  7. #7

    Default Re: Selling a Property That is Not Yet Owned by the Seller

    No interest appeared to be conveyed, as the seller did not own the property.

    Example and More Detail:
    Seller is looking to purchase property A and flip it.
    The seller enters into a contract with a buyer on 12/12/09 and sells the property to the buyer.
    The seller later purchases property A from the original owner on 1/7/10.

    Maybe I am unclear on what is meant by conveying a clear title.

  8. #8
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    Default Re: Selling a Property That is Not Yet Owned by the Seller

    Again, if title was conveyed at closing, then title was conveyed at closing.

    If title could not be conveyed at closing because the seller didn't own the property, then they could not deliver and (assuming no applicable contingencies that would allow the seller to get more time to fulfill his end) the contract would fail.

  9. #9
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    Default Re: Selling a Property That is Not Yet Owned by the Seller

    Quote Quoting goofy78270
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    No interest appeared to be conveyed, as the seller did not own the property.

    Example and More Detail:
    Seller is looking to purchase property A and flip it.
    The seller enters into a contract with a buyer on 12/12/09 and sells the property to the buyer.
    The seller later purchases property A from the original owner on 1/7/10.

    Maybe I am unclear on what is meant by conveying a clear title.

    title, or interest, is not conveyed at the time of signing the buy sell agreement. It is when the contract is fulfilled. In real estate, that would typically be at a "closing" where payment is rendered and a deed delivered transferring interest.


    so, when is the contract between the seller and buyer to be closed?

  10. #10
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    Default Re: Selling a Property That is Not Yet Owned by the Seller

    However, if you are going to secure FHA financing, I'd damn well be sure that there was an assertion of the date of ownership in the purchase contract. FHA will *NOT* insure (other than in the case of foreclosures) properties that have been owned by the seller for less than 90 days.

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