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Contract used to open escrow includes terms Buyer never agreed to.


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#1 TravisG

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Posted 03 February 2013 - 03:24 AM

I will attempt to thread the needle of providing enough factual information without overwhelming the reader. Please let me know if anything is unclear and I will be happy to clarify. Thank you in advance for any advice you may be able to provide.

I am in the process of buying a house. I made my first offer which was sent to the Seller using the standard CAR offer form. The Seller sent a counteroffer which was a contract other than the standard CAR form. I was not comfortable with their contract because of its terms. Some of the terms were unclear to me and others were objectionable.

I told my Real Estate Agent (my agent) that I was not comfortable with the Seller's counteroffer. My Agent assured me that in California the actual paper contract doesn't really matter because California courts only deal with the "essence of the contract." I told her I thought that was incorrect and that I was not going to sign their sketchy counteroffer. I told my agent that if it is true that the courts only look at the "essence" (whatever that means) of the contract then the Seller should not have a problem signing the CAR form.

My agent and I agreed that we would send the Seller a second offer using the standard CAR offer form identical to the first offer I made except that we changed the price to match the Seller's counteroffer. My agent told me that she explained to the Seller's agent that the Seller could either sign the CAR contract or there would be no deal.

The Seller's agent send my offer back to my agent signed. My agent used the signed offer, now the contract, to open escrow.

I was getting ready to do my inspections and wanted to know exactly how much time I had. I knew that I had 17 days for inspections. But, it was not clear to me when the beginning of that period was. I contacted my agent to ask her what day the Seller signed the second offer.

My agent had not double checked the offer/contract before she used it to open escrow. When she did double check it to give me the date it was signed by the Seller she discovered a couple of disturbing things. 1. The Seller did not date the contract when they signed it. 2. The Seller used a stamp of some kind to add language to the effect that the contract was subject TO THE TERMS OF THEIR PREVIOUS COUNTER OFFER!!!!

My agent told me that I can close escrow by signing a form cancelling the contract. She originally wanted me to fill it out stating that I was backing out based on a contingency. I am not comfortable with this because I do not want to loose any of my deposit money. Additionally, I do not agree that the contract is valid. If the contract is not valid, how can I cancel escrow based on a term in the contract? Furthermore, it is inaccurate. I am not closing escrow because I got cold feet, or was not happy with my inspections. I am closing escrow because it never should have been opened under an invalid contract which contains terms I never agreed to.

Here are my questions:

1. Did my agent act negligently when she failed to double check the contract before using it to open escrow?

2. Does the Seller's act of adding language/terms to my offer, instead of issuing a proper counteroffer rise to the level of fraud (perhaps fraud in the inducement)?

3. How the heck can I get out of this, close escrow, and get ALL of my deposit money back?

#2 adjusterjack

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Posted 03 February 2013 - 10:08 AM

1. Did my agent act negligently when she failed to double check the contract before using it to open escrow?



Of course.

But, OTOH, she might have acted intentionally by knowing what it said and putting it through anyway.

Either way, you might have a good malpractice claim against her.

2. Does the Seller's act of adding language/terms to my offer, instead of issuing a proper counteroffer rise to the level of fraud (perhaps fraud in the inducement)?



Maybe. But there's no way of knowing what the seller was thinking. It's basically a contract issue. I don't know why people keep saying fraud when it's a contract issue. Fraud is so much harder (and more expensive) to prove.

3. How the heck can I get out of this, close escrow, and get ALL of my deposit money back?


My guess is that you will have to hire a lawyer and sue for the money and maybe sue the agent as well.

You can bet that the seller isn't going to release it to you williingly and your agent isn't going to be any help.

Now I'll give you a list of your mistakes so that you don't make them next time you go to buy a house.

1 - You assumed that your agent was your agent. There is no such thing as a buyer's agent, no matter what they tell you. The agent doesn't get paid until the house sells. That means the agent's only concern is the commission. The agent will do and say anything to get that house sold. If you learn anything from this experience learn that. If an agent tells you what time it is, check your watch to make sure of the time and that she didn't steal your watch. You were right not to believe that "essence of the contract" crap. The "essence" of any conrtract are the words that appear on the paper that you sign.

2 - When you sent the second CAR did you keep a copy? If you didn't, that's mistake number 2 because the seller has a contract signed by both of you and how do you prove that the additional wording wasn't there when you signed it. If you did keep a copy then you are ahead of the game and shouldn't have any trouble proving that the seller's copy is bogus.

3 - You should have insisted on seeing and getting the fully executed contract before allowing your agent to open escrow. You could have avoided all of this had you done so.

Real estate is a dirty game and real estate agents are desperate for the commissions and will lie, cheat, cajole, mislead, and threaten in order to make that sale.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#3 TravisG

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Posted 03 February 2013 - 10:37 AM

adjusterjack, thank you for your response.

I appreciate your advice. It won't surprise you to find out that I don't want to hire an attorney. The fact is that the deposit is only worth about 2.5 hrs of an attorney's time. I assume that I can't really go after anybody here for enough money to make it worth it.

Do you think I should just forfeit my deposit?

I am concerned that if I sign the cancellation form under paragraph 14 of the offer (inspection contingencies) I may be allowing for the argument that I agree to the existence of a contract. Which I don't. Do you agree that I should be careful here?

You admonished me not to have allowed my agent to open escrow without my permission. I did not give her permission to open escrow. I was surprised that she did not show me the final document. How exactly would you have stopped her? Practically speaking, is there a way to buy Real Estate without going through agents these days?

#4 adjusterjack

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Posted 03 February 2013 - 12:53 PM

I appreciate your advice. It won't surprise you to find out that I don't want to hire an attorney. The fact is that the deposit is only worth about 2.5 hrs of an attorney's time. I assume that I can't really go after anybody here for enough money to make it worth it.

Do you think I should just forfeit my deposit?


No.

If your deposit is only a thousand or so you can use small claims court without a lawyer. Nice thing about that is that, once you file the lawsuit, you can record a "lis pendens" which would make it just about impossible for the seller to sell the house until your issue is resolved.

I am concerned that if I sign the cancellation form under paragraph 14 of the offer (inspection contingencies) I may be allowing for the argument that I agree to the existence of a contract. Which I don't. Do you agree that I should be careful here?


Yes. Be careful.

Use only the real reason for cancellation the contract. That the seller modified the contract without consent and therefore there is no contract.

And make sure you put everything in writing to everybody. Copies directly to the seller and both agents and to the escrow officer if there is one.

Lay a good paper trail and do not get into any oral conversations about anything once you've sent the cancellaiton letter.

adjusterjack, thank you for your response.

You admonished me not to have allowed my agent to open escrow without my permission. I did not give her permission to open escrow. I was surprised that she did not show me the final document. How exactly would you have stopped her?


Agent (on phone): I just got the signed contract back from seller.

You: I want to see it. Hold it. I'm coming over right now.

That's how.

Practically speaking, is there a way to buy Real Estate without going through agents these days?


Yes, there is.

There's nothing you can do about the seller having an agent but you shouldn't really need one.

There's plenty of resources for finding houses for sale.

As for the process itself, just remember these rules:

1 - Assume that the seller and his agent are lying about everything. So independently verify everything they tell you.

2 - Read every scrap of paper that's put in front of you and never sign anything until you've read it thoroughly and understand every word of it.

3 - Never sign anything without taking it home first and studying it. Don't let anybody rush you. The deal will always be there tomorrow. And if it isn't there'll be another one coming along any minute.

4 - Never sign anything unless there are two identical documents on the table so you can sign both and keep one. Or carry a digital camera with you. They are good for photographing documents when somebody gives you the "Oh, we'll send you a copy" routine. Never hand it back until you have a copy.

5 - Never get emotionally attached to any one prospective property. Always narrow your choices down to 2 or 3 that you like equally. That way you can walk away from a deal that's not going your way.

6 - Always get a professional home inspection. Never use one that's referred by a real estate agent because they are beholden to those referrals and won't queer the deal. Always accompany the inspector and look at everything he looks at and take photos of everything he looks at. Be prepared to accompany him under the house, up in the attic and on the roof. If he doesn't like that, get somebody else.

7 - Never forget that you are the buyer and somebody else wants your money and your signature. You make the rules. They don't like it, walk away.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#5 TravisG

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Posted 03 February 2013 - 01:18 PM

Hey Thanks! Once again, very good advice.

Just to be clear. The agent did not call me and say that she had the returned contract. I did not know the seller had sent the contract back until she told me she had already sent it to the title company to open escrow.

#6 adjusterjack

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Posted 03 February 2013 - 02:13 PM

Hey Thanks! Once again, very good advice.

Just to be clear. The agent did not call me and say that she had the returned contract. I did not know the seller had sent the contract back until she told me she had already sent it to the title company to open escrow.


Then I would certainly put her on written notice of a potential malpractice lawsuit against her for any costs you incur as a result of her negligence. And if she works for (or hangs her license at) a broker I would also put the broker on written notice of his or her own potential lawsuit.

Also make sure that you file a written complaint with the Real Estate Licensing Board about her.

If it was me, I wouldn't wait for anything else to go wrong. I'd come out with guns blazing.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#7 kassounilaw.com

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Posted 28 February 2013 - 08:39 AM

My overall impression of your situation is that the seller did not actually accept your counter-offer. But in fact, the seller made his or her own counter-offer by adding new terms that were not in your offer.
In this situation, I don’t believe there is evidence of an acceptance of the offer to create a binding contract.
A real estate attorney would need to review all of these documents in order to finalize such a conclusion.
In the meantime, I would avoid any broker who suggests that only the “essence” of an agreement would be reviewed by the California Courts. Every word and punctuation mark does have meaning.

Edited by FindLaw_AHK, 04 March 2013 - 10:13 AM.
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