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  1. #1
    Join Date
    Sep 2019
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    2

    Default Can a Seller Cancel a Contract Due to Title Issues

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

    We recently entered into a contact to buy a home. Our home was on the market and we got an offer on our home the same week we put an offer down on a home we love. We got past attorney review period for both homes (the one we were selling and the one we were buying). Both contracts were signed the same week, our contract (as the buyers) stated that we needed to close on our home in order to purchase the home we love.

    Inspections were scheduled around the same time, surveys ordered around the same time etc. With the exception of title. The title was order on our home (the one we were selling) and we provided to our buyers pretty quickly after the contact was signed.

    However, we were not getting the same type of response from the sellers that we were in a contract with (again we were the buyers here). They went dark on us for at least 2 weeks and would not answer calls from either my attorney or broker. My attorney even went as far as to wait in the seller's attorney office for him for a day since he was not getting emails or phone calls returned.

    They told us that there was an issue with the title and that they may need a couple more days to resolve and requested that we push the closing back a day. Then they asked if it could be a week, maybe two. This communication was all in the same day. We asked our buyer if he could delay and he could not as he was renting and his lease was up, he could only give us a day. We told the sellers the best we could do was 1 day.

    They then went semi-dark again and were very small in their responses. When we asked them for info as to what the issue was--1 week before close they told us that they didn't own the entire property. They had 2 pins on our contract and they sold one of the pins the year before with an adjoining property. Its complicated, but the sale the year before was legit, and it was shown that the entire lot they sold included the 2nd pin/property that we needed--as it was to allow us to get into the garage. So not an issue with the title--they had to work with the neighbors and the neighbors mortgage lender to reevaluate the property, make a new survey etc.

    When asked what they were doing on had done to resolve this, as well as how long had they known of this issue--they stated that they knew for at least 4 weeks but thought they could get it done in time before close. We were not told of this till less than 1 week before close.

    Since we had our house ready to close with our buyer, we started to talk about pre-possession closure. We asked them to come to us with a package (ie who is responsible for repairs to the house, garden/lawn) plus costs per month and an agreed upon date that we walk away if they don't have it resolved (like 30 days? 45 days?). Additionally we asked them that if we moved in and they couldn't resolve would they be putting money in escrow to cover our 2nd move? They didn't answer any of these questions.

    A few days before we were to close, or move in with a pre-possession closing agreement, they sent an email cancelling the contract--that was the response we got from the questions above. Two sentences saying the contract is cancelled. They also stated that they will only return our earnest money if we sign a release of all claims from all parties.

    My legal team states that they can't cancel and that they don't have the right. Their legal team says it wasn't intentional and that these things happen. Any beliefs or opinions here?

  2. #2
    Join Date
    Oct 2014
    Posts
    7,429

    Default Re: Can a Seller Cancel a Contract Due to Title Issues

    Quote Quoting blizzard72
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    My legal team states that they can't cancel and that they don't have the right. Their legal team says it wasn't intentional and that these things happen. Any beliefs or opinions here?
    I haven't read your contract for the sale for the purchase of the home and thus cannot tell you whether they breached the contract by canceling it. Very likely they did given what most real estate purchase contracts say, but the specific language of your particular contract is what matters. Your lawyers have read the contract and thus are in a far better position to opine on that than anyone here. Do you have any reason to think your attorneys are giving you bad advice?

  3. #3
    Join Date
    Mar 2013
    Posts
    17,221

    Default Re: Can a Seller Cancel a Contract Due to Title Issues

    Quote Quoting blizzard72
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    My legal team states that they can't cancel and that they don't have the right. Their legal team says it wasn't intentional and that these things happen.
    Never take legal advice from the enemy. Rely on only your own legal team.

    You don't have much choice but to go through with your sale, move all your stuff into storage, and rent a place until you can find another home to buy. The one you were going to buy is a dead issue.

    Meantime all your costs will be monetary damages for which you can sue the seller that backed out of the deal.

  4. #4
    Join Date
    Sep 2019
    Posts
    2

    Default Re: Can a Seller Cancel a Contract Due to Title Issues

    Our contract doesn't say anything about only getting EM back if they can't produce title. What it does say is that if there are any encroachments or other matters that are not acceptable to Buyer, then seller needs to have them removed. If they cannot remove then they are supposed to allow the buyer to take the title as-is, with the right to deduct from the purchase price. We didn't get this as an offer, and when we mentioned this--they didn't respond.

    We also suggested to them that we close, without the other pin, then they buy back the property they sold, deed us the pin and work with the neighbors to re-finance and buy it back from them. They didn't want to do that either. We even offered to have our mortgage lender reach out to the neighbors to see what they could do and they didn't want that option either. Their idea of solution? Was to have the neighbors quit claim deed it, and threatened to sue them if they didn't. The neighbors got their own attorney who told them to back away---fast. And they did.

    I don't think my attorneys are giving bad advice--its just so odd that a contract says what a contract says but yet two teams have completely different interpretations of what it means, and what actions the parties are responsible for.

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