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Ms, Home Buyer in USA, Mobile, AL

Feel cheated and Duped by the Seller

Asked by Ms, USA, Mobile, AL Sat May 26, 2012

I live in NJ and recently my offer was accepted by the seller. The Seller signed Agreement on May 21st and I sent it for Attorney Review on May 22nd. May 23rd. my attorney sent the addendum to the seller and waited to hear back from the seller. On May 25th, the seller's attorney sent an e-mail at 8:45 PM saying that they are terminating the contract. I was told by my Buyer's agent that the house actually went under contract last night and the pending sale date is showing July 2nd. This means, seller played a game with me and when they accepted my offer, they actually had another offer for which attorney review was going on and it came out of the attorney review last night and became a binding contract. Is there a way I could take any action against the seller and the seller's agent?

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Gloria Laughton Allston’s answer
There is no binding contract until the Attorney Review period ends; and even then the are often contingencies that have to be met that, if not met, could cancel the contract. Your attorney and your agent should be able to help you understand the ground rules. I am sorry this one did not work out for you because sounds like you really wanted the home. I wish you luck with the next one.
0 votes Thank Flag Link Sat May 26, 2012
Welcome to New Jersey. Unfortunately, until attorney review is over there is no binding contract and the seller can entertain and enter into other offers. If it is any consolation as a buyer in attorney review you also could cancel the deal and buy another house until attorney review is over.
0 votes Thank Flag Link Mon May 28, 2012
Thanks Deb :)

Glad to know we are on the same page.
0 votes Thank Flag Link Mon May 28, 2012
Mary - Absolutely agree!
0 votes Thank Flag Link Mon May 28, 2012
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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Deborah,

We don't know for sure that the second offer wasn't sent directly to the attorney if "Frustrated" was in fact the first buyer .

If that's the case, if second offer was a better offer, the sellers canceled "Frustrated''s contract on May 25, while still in the AR period, and accepted the second offer. Also, though there are not facts to support my theory, I suspect that the second offer,, ince it's scheduled to close so soon on July 2, went right from signing on May 26, to AR to Under Contract within 24 hours or less.

As you said, this situation happens all the time and is very frustrating to the first buyer, but not uncommon or illegal IMHO.

That being said, I would imagine if Frustrated's attorney thought something wasn't right, he/she would have said something to Frustrated already.
0 votes Thank Flag Link Mon May 28, 2012
@Gina - I read this that Feeling Cheated was the first buyer....but, Feeling Duped may have been the second buyer??

Feeling Duped - A seller should not be signing a second contract. An offer received from a second buyer should be sent to the seller's attorney. The seller's attorney can terminate the executed contract and the seller can then proceed with the second buyer. If you were the second buyer and the seller signed a contract with you, I would suggest that you discuss that with an attorney. It's beyond my scope. If you were the first buyer, and your contract was terminated in favor of the second offer - it's unfortunate.....but completely within the practice of real estate. We see it every day.
0 votes Thank Flag Link Sun May 27, 2012
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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MS,

From what I understand from your question - you were the SECOND buyer? When you made your offer and the seller signed it the home was ALREADY IN ATTORNEY REVIEW (and you were not told that the seller ALREADY ACCEPTED AN OFFER WITH ANOTHER BUYER? If yes, your offer was presented to the seller directly and not through the seller's attorney? I'm not sure of any legal action however I do think that the listing agent (seller's agent) should've told your agent that the seller had accepted an offer and it was in attorney review and that your offer would be sent to the seller's attorney. You should see what your attorney says because obviously we cannot offer legal advice.

I've been part of quite a few transactions on the buyers and sellers side that were in attorney review when other offers have come in and the second buyer was always told from the beginning that they were the second offer and that offer went straight to the attorney bypassing the agents and seller. Sometimes the second offer bumped out the first and sometimes it didn't but the second buyer was fully aware that they were, in fact, the SECOND offer and the seller was already in attorney review with another buyer.

You were not in a binding contract however the seller's agent should've told your agent when the offer was being submitted that the seller was in attorney review and to submit your offer to their attorney.
0 votes Thank Flag Link Sun May 27, 2012
Nope...seller probably had the other contract on the table when yours was signed, and they are NOT obligated to tell you there was another contract on the house.

Most contracts here in New Jersey state something to the effect " the Buyer or the Seller MAY choose to have an attorney review this contract...this contract will become legally binding within 3 days unless the attorney for the buyer or the seller reviews and disapproves of the contract"

Essentially this means that within this 3 day period, either party can "disapprove" of the contract and effectively cancel it without penalty.

Sorry you lost the house, but sometimes it's for the better.
0 votes Thank Flag Link Sun May 27, 2012
What one believes is ethical or "their word" does not always sync with what is legal. In NJ, the contract is not binding upon the parties until such time that it either concludes AR (Attorney Review) - or such time for AR elapsed without a review. Therefore, you did not have a binding contract, and therefore there is no breach or actionable offense from the situation you describe.

The seller does not sign the second contract, but rather it is sent directly to the seller's attorney.

The seller's agent is legally obligated to assist the seller exercise the seller's legal rights and proceed in accordance with the seller's wishes.

If a contract is in AR, the seller can still show the property. Actually a seller can show his/her property up until the minute of closing if they so wish. If buyers had an interest and were told that the property were still in AR, their buyer agent would submit their offer directly to the seller's attorney. The seller's attorney would then advise the seller of his/her rights and they would make their decision.

I have had sellers receive a second, and even third offer, while in AR, and decline to treat either as anything other than a back up - despite a 10K++ differential. I have also had sellers terminate a contract for a lower price, but faster closing. It is the seller's legal right.

Seller's agents and seller's attorneys are required to provide these options to sellers. To fail to do so would give a seller cause for legal action against them.

It doesn't sound like either party did anything illegal. It's unfortunate and I wish that AR was not a loophole for shopping an offer. The AR period was not intended to be that, but it does become that sometimes.

A seller has no obligation to return to the original buyer and offer them an opportunity to modify their price or terms. Sometimes they do........and find themselves with angry buyers for that, too.

I am sorry this was a disappointment for you. I have been the agent on both the seller side and the buyer side when a buyer has been deeply disappointed.

My comments are not legal advice as I am not qualified to provide such.....I am not an attorney. If you believe that you have been wronged, you should consult an attorney who will review all of the details and be able to provide you legal advice.
0 votes Thank Flag Link Sat May 26, 2012
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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In NJ, either party can change their mind while still in the Attorney Review period. It does seem like you were mislead. They should have shown you more respect. But if a Seller loves a second offer more than the first, and AR is still in progeress, then they are within their rights to move to the second offer.
0 votes Thank Flag Link Sat May 26, 2012
How can a seller sign 2 purchase agreement with 2 buyers on the same time? I understand about having a backup offer. In that case, they should have been transperent to me and that way I wouldn't have spent $1000 on attorney?
Flag Sat May 26, 2012
You have too many lawyers in your transactions, that would drive me nuts!! We don't see or hear from lawyers until the time to close the deal.
0 votes Thank Flag Link Sat May 26, 2012
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