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  1. #1
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    Apr 2010
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    Default At Closing, REO Seller Informed Us We Were Out of Contract

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

    Need advise, We were at the closing of a Reo property in Mid April when we were informed half hour after signing papers that we could not close that we had been out of a contract since the end of Feb 2010. We were originally supposed to close at the end of January 2010 (the property is a Reo and we had to order a total of 3 appraisals to be able to get the financing). The delays were caused by the condition of the property such as the differrent appraisals that needed to be ordered. Also the house had a busted pipe and by the time the Reo Seller (Bank is out of State) agreed to pay (after asking for different estimates) we were in April. The Reo Seller was working through a third party that was authorized to represent them. Any communication our Realtor or Listing Realtor had with Seller bank was through Third Party company. All this time extensions to the contract were submitted and to our knowledge approved. Third party kept communication with Listing Realtor and our Realtor and frequently asked when they could schedule closing. First they had scheduled a closing on a Tuesday, then third party representative indicated we would need to reschedule for a day later since the seller did not have time to review the documents on that day. They rescheduled for the next day. Half our after being at the Title Company Listing Realtor contacts our Realtor that they were having issues on their side. This is after their authorized representative had scheduled the confirmed and scheduled the closing. Gave us instructions who the checks should be made payable to for the closing and the Final Hud for our attorney and lender to Review. No one from the Reo Seller is at the closing table, the only type of communication we had with them was through phone or email. Out of nowwhere they stated that we had been out of a contract since the end of February. My question is what happened to the other extensions we submitted and third party indicating to us that they had been approved. Third party was even pressuring us to give them the clear to close a.s.a.p. So there we are at the closing table and aside from our Attorney and Realtor no one than could answer as to why did they make us believe extensions had been accepted. We had already rented the house we live in to be able to move into our new house and since we had gotten the financing and to everyone's knowledge extensions were accepted. It is incredible what is happening, I understand if we had been told since February extensions were not approved (or maybe not even sent by Third Party representing Selling Bank) we would of avoided a lot of losses. We spent approximately $1,200 in appraisals, Down payment we were giving was withdrawn from a IRA account and we had to pay $4400.00 in taxes. I had just started a temporary job a week before and since we really liked the house I asked for two days off (being so new at work, they let me go). We really wanted the house and it seemed we walked into a fake closing. I know reo sellers can protect themselves with the addendums in the contract. But who can protect us form being so mislead by the Third Party Company that in our eyes and our Realtors had bad communication with their client the selling bank. Our Lawyer was trying to ask for an addendum to contract to help us close. However, since the bank was out of state they had no one at the closing table... We are out $5,600 thinking we would close and out of a Job. What is worst at this point my husband is really affected by all of this. What can be done, this makes us feel like big banks can do what ever they want with a consumer. Our Realtor did inform us that she never received any document to cancel our contract on the contrary the third party representing the Seller bank kept on pressuring us to close. What are our rights? If indeed we were out of contract shouldn't we have notified. Why was the authorized representative from the bank e-mailing is our extension was approve. Can they do that, their third party company is the one that confirmed the closing.

  2. #2
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    Mar 2008
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    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Quote Quoting misuerte75
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    My question involves real estate located in the State of: Illinois

    Need advise, We were at the closing of a Reo property in Mid April when we were informed half hour after signing papers that we could not close that we had been out of a contract since the end of Feb 2010. We were originally supposed to close at the end of January 2010 (the property is a Reo and we had to order a total of 3 appraisals to be able to get the financing). The delays were caused by the condition of the property such as the differrent appraisals that needed to be ordered. Also the house had a busted pipe and by the time the Reo Seller (Bank is out of State) agreed to pay (after asking for different estimates) we were in April. The Reo Seller was working through a third party that was authorized to represent them. Any communication our Realtor or Listing Realtor had with Seller bank was through Third Party company. All this time extensions to the contract were submitted and to our knowledge approved. Third party kept communication with Listing Realtor and our Realtor and frequently asked when they could schedule closing. First they had scheduled a closing on a Tuesday, then third party representative indicated we would need to reschedule for a day later since the seller did not have time to review the documents on that day. They rescheduled for the next day. Half our after being at the Title Company Listing Realtor contacts our Realtor that they were having issues on their side. This is after their authorized representative had scheduled the confirmed and scheduled the closing. Gave us instructions who the checks should be made payable to for the closing and the Final Hud for our attorney and lender to Review. No one from the Reo Seller is at the closing table, the only type of communication we had with them was through phone or email. Out of nowwhere they stated that we had been out of a contract since the end of February. My question is what happened to the other extensions we submitted and third party indicating to us that they had been approved. Third party was even pressuring us to give them the clear to close a.s.a.p. So there we are at the closing table and aside from our Attorney and Realtor no one than could answer as to why did they make us believe extensions had been accepted. We had already rented the house we live in to be able to move into our new house and since we had gotten the financing and to everyone's knowledge extensions were accepted. It is incredible what is happening, I understand if we had been told since February extensions were not approved (or maybe not even sent by Third Party representing Selling Bank) we would of avoided a lot of losses. We spent approximately $1,200 in appraisals, Down payment we were giving was withdrawn from a IRA account and we had to pay $4400.00 in taxes. I had just started a temporary job a week before and since we really liked the house I asked for two days off (being so new at work, they let me go). We really wanted the house and it seemed we walked into a fake closing. I know reo sellers can protect themselves with the addendums in the contract. But who can protect us form being so mislead by the Third Party Company that in our eyes and our Realtors had bad communication with their client the selling bank. Our Lawyer was trying to ask for an addendum to contract to help us close. However, since the bank was out of state they had no one at the closing table... We are out $5,600 thinking we would close and out of a Job. What is worst at this point my husband is really affected by all of this. What can be done, this makes us feel like big banks can do what ever they want with a consumer. Our Realtor did inform us that she never received any document to cancel our contract on the contrary the third party representing the Seller bank kept on pressuring us to close. What are our rights? If indeed we were out of contract shouldn't we have notified. Why was the authorized representative from the bank e-mailing is our extension was approve. Can they do that, their third party company is the one that confirmed the closing.
    Since you have an attorney involved, I am curious as to what he had to say about all of this IF ANYTHING.

    If it was my attorney, I would be taking action to prevent the sale of the property to others, and review the actions of the seller and third party agent.

    Apparently, if there are extensions to the contract, it is YOUR ATTORNEY'S responsibilty to make sure they are valid, and not put you at risk. Is the person asn experienced "real estate" attorney, or is he just someone a realtor recommended.

  3. #3
    Join Date
    Apr 2010
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    14

    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Our Attorney we used her before and she is usually very detailed with any closing. I believe she is not that aware or involved with REO's listings. I would like to consult with someone that has more experienced with REO issues since they can get very complicated

  4. #4
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    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Quote Quoting misuerte75
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    Our Attorney we used her before and she is usually very detailed with any closing. I believe she is not that aware or involved with REO's listings. I would like to consult with someone that has more experienced with REO issues since they can get very complicated
    I can't tell you off hand with IL laws, but I dealt with REO's here in NY, and my attorney had proposed using "Vendee Liens" to at least put a road bump in the seller's ability to sell to someone else. It all depends on how Title companies there look at it where you are, whether they'll ignore it, and have you go after them afterwards.

    Many attornies dealing with closing are just familiar with the paperwork mechanics, and is short of knowledge if something out of the ordinary occurs.

    I proposed to do a Section 1031 tax free exchange once, and the attorney looked like he was going to drop dead on me when he heard it. The way I explained it to him was I'll be hiring a third party facilitator, and as part of it, they'll do all the paperwork preparation, and send it to his office, and it's only a few more pieces of paper to be signed at the closing. And if he is still confused, a conference call can be scheduled, and they'll walk him thru it.

    He appeared relieved to hear that he's not going to have more headaches, though he said he might charge a few more bucks to handle a few more pieces of paper. But it got me to thinking, what on earth do I need him for if all he does is take forms someone else prepares, and spoon feeds him?? And I have to coordinate him and the facilitator.

    As to REO's, there are many things that are predetermined, so the attorney in some cases actually has less paperwork, and because of the limited scope, I actually had an attorney work at a reduced rate, since I had done most of the negotiations, particularly on matters relating to clear title.

    Now, knowledgeable RE attornies generally make the rounds of local "real estate clubs", and they might be able to give a connection if there is one near you.

  5. #5
    Join Date
    Apr 2010
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    14

    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Thanks, for the input. Yes, our attorney is not as experienced with REO purchases which is a totally different transaction from A regular home sale. Our Realtor indicated she even had a hard time getting the offer approved and signed. Seems like they have to many on their plate. If the Seller Bank had decided we were out of contract despite their authorized third party indicating all extension were approved, should they have to give notice to the Third Party representing them that are contract was cancelled this alone would of avoided a lot of headaches and would of not made us go and waste our money.

  6. #6
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    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Quote Quoting misuerte75
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    Thanks, for the input. Yes, our attorney is not as experienced with REO purchases which is a totally different transaction from A regular home sale. Our Realtor indicated she even had a hard time getting the offer approved and signed. Seems like they have to many on their plate. If the Seller Bank had decided we were out of contract despite their authorized third party indicating all extension were approved, should they have to give notice to the Third Party representing them that are contract was cancelled this alone would of avoided a lot of headaches and would of not made us go and waste our money.

    Sounds like this third party is an "agent" of the seller (seller's realtor?), in which case, the seller should be responsible for the actions of its agent, particularly if they made promises. Ideally, they should be in writing.

    One of the advantages of using an attorney, as useless as it may be, is that communications took place between the agent and your attorney (your agent), that you can document. You can then put pressure on the seller via it's agent based on the fact you relied on them, and they have fallen short.

    If you really want to proceed with this house, there are ways you can tie it up so it'll be problematic if they try to sell it to someone else. It's a business decision and a judgment call on your part. Your attorney should provide some input here.

    If you plan to go the way of the "Vendor Lien", the cheapest way, the attorney or you should check local practics to see how Title companies treat it. Ideally, it should prevent others from obtaining clear title.

  7. #7
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    Apr 2010
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    14

    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Thanks, for the info. Yes, my Realtor has forwarded me all of the emails where they were asking us if we were ready to close and they set up the closing and completed a HUD. The Seller Bank was going through a Third Party Company which was communicating with Their Listing Realtor and my Realtor. Can I ask them for all the money that went into this transaction $5600.00 which is aside from my earnest money deposit, not to mention I lost my temporary job. We have e-mails from them where their authorized Third Company never doubted we were out of a contract. On the day of the closing at the title company there was no one from the bank that can explain to us what was going on. Wouldn't that be their entire responsibility to not lead us to believe we were going to close. If we were truly out of a contract why did the Seller bank not notify their Third Party company to let us instead the Third Party was making us believe we were closing. Seems to me it was a misscommunication between the Bank and their Third Party company, but we are paying for it.

  8. #8
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    Mar 2008
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    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Quote Quoting misuerte75
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    Thanks, for the info. Yes, my Realtor has forwarded me all of the emails where they were asking us if we were ready to close and they set up the closing and completed a HUD. The Seller Bank was going through a Third Party Company which was communicating with Their Listing Realtor and my Realtor. Can I ask them for all the money that went into this transaction $5600.00 which is aside from my earnest money deposit, not to mention I lost my temporary job. We have e-mails from them where their authorized Third Company never doubted we were out of a contract. On the day of the closing at the title company there was no one from the bank that can explain to us what was going on. Wouldn't that be their entire responsibility to not lead us to believe we were going to close. If we were truly out of a contract why did the Seller bank not notify their Third Party company to let us instead the Third Party was making us believe we were closing. Seems to me it was a misscommunication between the Bank and their Third Party company, but we are paying for it.

    Look like you got a good case.

    Since you have a lawyer, one of the advantages is they can send threatening letters asking for damages, the filing of "Vendee Liens", and the seeking of injunctive relief and so forth. In other words, it should sound like you know what you're doing, and credible.

    You should be having a discussion with your lawyer on what should be going out today. She can best check on local issues and customs.

    If your lawyer cannot handle this, then I suggest you get someone else, as you should not lose time on this. You make it so that it is difficult, if not impossible for the seller to close with anyone else, at least not quickly, but with you.

  9. #9
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    Apr 2010
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    14

    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    thanks. One more questions are all REO purchases this difficult? We feel so frustrated even at closing our lawyer asked if they can add an addendum to the contract but there was no one from the Seller bank there. Just the Realtor e-mailing the Third party company since we couln't access the Bank directly. Someone out of Texas, just stating we were out of contract and we would need a new offer. At this point we already have spent $1200.00 in appraisals and my husband does not want to take a chance with them again. Do REO normally this bad?

  10. #10
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    Default Re: At Closing, REO Seller Informed Us We Were Out of Contract

    Quote Quoting misuerte75
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    thanks. One more questions are all REO purchases this difficult? We feel so frustrated even at closing our lawyer asked if they can add an addendum to the contract but there was no one from the Seller bank there. Just the Realtor e-mailing the Third party company since we couln't access the Bank directly. Someone out of Texas, just stating we were out of contract and we would need a new offer. At this point we already have spent $1200.00 in appraisals and my husband does not want to take a chance with them again. Do REO normally this bad?

    The short answer is some REO's can be nasty.

    I did a few REO's, but only one ran months behind schedule, but it had more to do with issues on my end. The seller advised that I was out of contract, after two extensions, and started showing the place to buyers, once while I was on site.

    Your advantage over me appears to be most of the delays had nothing to do with you, if I read your post correctly, and extensions were agreed to in any case.

    My attorney filed a "Vendee Lien", and sent a strong letter threatening legal action. Instead of a new offer, what I did was to agree to cover some minor expenses incurred by the seller. Note the "carrot and stick" approach.

    I don't know the market where you are, but if prices escalated, then it would not be to your advantage to make a new offer, as it'll start a whole new ball game. But I have heard of people increasing offers on current contracts to obtain contract extensions. Since I don't know the entire circumstances, or market conditions where you are, I can't say if it is warranted.

    Other REO's went smoothly for me, considering the risks of not coming in with 100% clear title, and buying as is.

    The property I live in was purchased as an REO. The developer built a row of these houses, and all were sold as REO's, after renting them out a few years. My next door neighbor had no idea of what buying "free and clear" is or is not, only realizing after the purchase that he was stuck with $35,000 in tax leins.

    It was a nasty surprise to say the least.

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