Law talk: Discovering offer was for short sale stops buyer in his tracks
Q. Last week I viewed a home. I liked it and wanted to make an offer on this home.
I did not know this home was a short sale, was not informed of this and, had I known of this, I would have run away from even thinking of making an offer.
I decided to make an offer and put down $500 good faith money on this property based on contingency of inspections, etc. Today, two days later, I was informed by my Realtor that it is a short sale and that she was not aware of this either as the seller's Realtor only told her today.
At first, I thought possibly I would go ahead but after much thought, I decided I did not wish to pursue this purchase, having no desire to live in limbo not knowing if and when I would ever get the property.
My questions are:
1. Am I really in a legal contract when I was not informed of the status of this property?
2. I did not receive any papers/documents showing the execution of the buy/sell agreement from the Realtor, so is there actually an offer?
3. Do the lender/seller/buyer all have to sign for there to be a legal offer, whether accepted or rejected?
4. Do I legally have the right to get my money back when I was not informed that this was a short sale?
A. So many questions, so little space, but let's try to address all the issues.
A contract is generally formed when an offer is accepted by the seller, the acceptance is conveyed to the offerer, there is a meeting of the minds and there is adequate consideration on both sides. If the contract is for real estate, the contract must be in writing. The lender does not sign the contract.
The failure to inform you of the fact that this was a short sale could certainly be considered a material omission of fact. Whether it reaches the level to establish a basis for voiding the contract is arguable.
The most common form contract used in this area contains a paragraph where the seller would indicate the fact that the transaction is a short sale. Take a look at this paragraph if the Multi-Board form was used (paragraph 43). If the short sale box is not checked, you could certainly argue that seller made material misrepresentations in the contract and that you are terminating the contract based upon those misrepresentations.
As stated above, an offer turns into a contract when it is accepted by the seller and the acceptance is conveyed to the purchaser. The fact that you did not receive notice that the contract was accepted would give you the basis to revoke the offer, as long as the revocation occurs before you being tendered evidence that the contract was accepted.
As to getting your money back, you need to speak to an attorney immediately. If you are within the five-day attorney approval period, your attorney could reject the contract whereby the contract would be terminated and you would be entitled to the return of your earnest money. Given the facts of your case, other theories probably exist that would lead to the successful termination of the contract.
• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to firstname.lastname@example.org or call (847) 359-8983.
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