You Be the Judge - Real Estate Killeen TX

November 28, 2007

Hi! Mary Ann:

I read your post that is 3 month old.  Maybe you have an answer already.

I am just wondering how come nobody responds to your post as mine.

My answer is this:  Let it go as the buyer wants. 

Why?  Not fair.

1. There are all kinds of people.  I had a buyer who changed her mind to buy a house.  She wanted sellers to release her liability to the contract by offering to have all the earnest money she put into escrow confiscated.  As a listing agent, I told her that she could use any of "escape clauses" to cancel the deal and have all her money back.  It would be just about 3 days to do that.  No. she wanted to do it NOW and took the responsibility she made, willing to lose $5,000.  What can I say?  She lost that money when the contract was terminated as she wished.  I respect her so much, even she is a young lady.  

Bear with those irrational principal, don't upset yourself if you have one.  Life is too short to spend it on a jerk!

2.  Okay, you will say that is not fair.  I know it is NOT, but the law doesn't have the same eyes as morality has.  Yes, it is different from the above case I had, yours incurred so many costs and expenses.  Who is going to pay?   I don't know the details of your purchase contract.  But, it is a general customary rule that who places an order pays.  In case the escrow (in Texas, it is the title co.) places orders, then the escrow has to pay.  But, the escrow can in theory deducts those costs from the deposit and ONLY refund the balance.

3.  Yes, the law says you can ask a reckless seller or buyer do a specific performance.  But is it practically realistic for you to go for it?  I will say, "probably absolutely NOT."  A lawsuit is a "Lis Penden" that will create a title "cloud" to make your seller's property "unmarketable."  Your sellers don't want their property being tied up by a lawsuit for quite sometimes.  Can they afford that?  Are you sure they can afford a two payments a month for that period of time without being a victim of foreclosure?  Unless your seller release your agent's liability in black and white, it is possible that you are going to be blamed for no sale or delaying of a sale to cause the problems. 

To the extreme scenario, you quickly find a good buyer for your seller later and ready to close.  Your seller may be forced to "beg" the other party of the lawsuit to "settle" by paying some extra money (in addition to the deposit).  Or if the lawsuit takes two years to have a verdict to ask the buyer do specific performance, the buyer says he doesn't have the money?  Or the property appreciated a 20%, the loser turned out to be a winner by paying the previous agreed price to buy at a discount, assumed that no penalty was given by a judge.

Well, you may say there is a clause for a loser to pay the liquidated damages.  Are you sure about that ALL the damages to the seller are included in the purchase contract?  Even the consequence of a foreclosure happened to the seller?  Before you answer it, make sure our laws have a fundamental difference than British laws.  Basically, not like a British court, our courts assume there is no liability for anyone's wrong-doings without a written contract obligation.  A British case winner is assumed to be able to recover from the loser most of his expenses such as attorney's fee.  But we are more liberal in USA.  Our assumption is the opposite: generally we don't deserve to see those money we spend on an attorney fee back to us, let alone our time, energy or emotional worry.

4. If the buyer will not accept the amount of refund paid by the escrow, it is his/ her turn to go to judge first.  However, 9 out of 10 escrow officers don't want do that due to the fiduciary role an escrow is supposed to perform.  As a person with fiduciary duty will take an action other than the original instruction, ONLY a new change or amendment of the escrow instruction is reached by both parties. 

5. Just as our stock market is not perfect and inefficient, our current legal system is inefficient to solve the most common situations like you have here.  The law doesn't give us a clear-cut help here.  This is a lesson I learned from my other case involved with a buyer of mine, an owner of Hilton Hotel.  Unfortunately I was his agent and he is a buyer as the one you have now who refused to close an escrow without a reason.  No need to ask me be in your shoes; I had a real case.  I fully understand what you feel.   

What I am talking about here is based on my understandings on California real estate law.  I know it is a more complicated purchase form used in Texas.  At least, we don't have the "option" clause in the board form.  So I am not sure my opinion will help you.  It may be not the right answer in your state. 

Your article title does make me laugh a lot.  Who says our legal system is perfect!  It is so funny that you ask us to be a judge while we are having a whole bunch of real judges with respect and a good paycheck, who are sleeping on the wheel and don't really see the needs of us to give us help. 

While Mr. B. B. and his co-workers are trying to do something about the current housing bubble, we the people are blaming them.  But look around, we have too many legal guys who do nothing to cure our legal systems, we don't blame them and ask them do something about it.  Why are we so unfair? 

Simple enough we don't see the "legal bubble" as a real threat to our society as we can see the financial crisis from the housing bubble popping in the reality.  It is so funny that we exaggerate the effects of housing bubble to say it will cause a recession as Dr. Shiller said, when literally a few of us facing foreclosure.  Compared to the majority (maybe, 95%) of us feeling so hopeless in the legal fields [as per statistics, 95% legal cases are settled out of court, i.e. no law, no justice, you guys resolve it by yourselves], we don't feel the pain to realize the root possibility to downfall of our great country as we did in a housing bubble.

What a funny world we have!  To you, me and every regular person, the answer is so clear.  But is it also so clear after a courtroom invited?  No dust, smoke, confusion at all.  Now is my turm to ask you be the judge.  Have fun, my dear!

Without those confusion invented by the legal genius, how can we have a funny world to entertain ourselves?

Ed