Home Buying in Austin>Question Details

David, Home Buyer in Austin, TX

WE offered a 30 leaseback to our sellers at contract. Lease amendment was not completed by either realtor.

Asked by David, Austin, TX Thu Feb 21, 2008

We had the house we were living in for sale. We got a contract offer on that house and asked the sellers realtor if their clients still need to leaseback. They said no, they would be able to move out on the close date. (this was all verbal). Based on those reassurances, we set our close date on our house sale. A week or so after we finalized our house sale contract, and were trying to finalize the close time of the house we were buying, the sellers informed us they need the leasback after all. Well, this meant lodging expenses would be incurred, because we no longer had a place to stay. We did offer the leaseback, but when asked if it was needed and was told no, we set our other close based on that info. Our buyers could not change when we had to be out, so we are left having to pay for our lodging expenses, because our sellers (or thier realtor do not want to pay thoses costs). What can we do?

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In Texas all real estate contracts must be in writing. Verbal doesn't count. It's a little hard to follow the story, but sounds like you were trying to time a move from one house to the other. Typically at possession changes hands at the close date, unless there is a lease in place. I really don't understand all the back and forth about trying to set close dates. This is normally done at the contract signing. There is a specific and binding close date in Paragraph 9 of the standard TREC contract and Paragraph 10 lays out the rules for possession. Timing closing is tricky if you want to move directly from one house to another. Sometimes people can be flexible, but sometimes they can't. It's probably not what you want to hear, but my thoughts are be very happy the first house has sold at a price agreeable to you. Even if you have to pay storage fees for your furniture and minor lodging expenses, this should give you a comfort level of knowing the first home is closed and you have the funds from it to go to the second closing. There are lots and lots of people who end up with two homes these days when the first one doesn't sell. For most people that creates significantly more stress. Just a different way of looking at it.
1 vote Thank Flag Link Thu Feb 21, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
If the sellers do not have a leaseback agreement, they are obligated to close as stated in the sales contract. Since you are using a Realtor, your contract is most likely the one promulgated by the Texas Real Estate Commission and you can find what you and the sellers agreed to in regards to closing on Page 4, Paragraph 9. This paragraph states the Close date in terms of "on or before XXX date", then paragraph 10 states that Possession of the property shall be delivered "on closing and funding".

If you had a lease back, the second box would be checked that states "according to a temporary residential lease". The contract says that if you close without a written lease agreement this would create a tenancy at sufferance relationship (which would lead to legal action necessary to get them out of the house).

From what you are saying, the sellers have the problem because they agreed to close without the leaseback and are obligated by the contract to do so. I have run across unreasonable sellers before that absolutely refuse to do things even though they are wrong according to the contract... this is a frustrating situation for all parties including the Realtors involved.

Be sure that the Realtors are working together to make the seller understand this is what they agreed to when they signed the contract. If the seller is completely unreasonable and refuses to move out, the next step would be to consult a real estate attorney (real estate licensees are NOT allowed to give legal advice in Texas!!) about possible courses of action.
1 vote Thank Flag Link Thu Feb 21, 2008
Bill,

Can you elaborate on the small claims suit more please. I know Florida law quite well (for a layman) but now Texas and your strategy is slightly confusing. Email or here. We are all learning....

There are many differences….for instance in Florida a small claims limit is 5K. Which I guess again proves that things really are bigger in Texas.


Thanks
Gary De Pury
Broker-Owner
Bay Vista Realty & Investments, Inc.
Chairman, Communications Committee
Director, Florida Association of REALTORS®
0 votes Thank Flag Link Sat Feb 23, 2008
Dave, I see this is still pending. Three things you can do, in order:

1. Play “chicken” with Seller. Cancel the closing until Seller is out of the house or signs standard TREC lease-back. Probably Seller will move into a hotel before closing, instead of you. If not, 2 and 3 are still available. The lease-back rent should be sufficient to cover your furniture storage and double moving expenses.

2. Before the closing, file a Small Claims lawsuit against Seller, and make an appointment with a lawyer for after the closing. Then show up for the closing, but refuse to close unless Seller enters the lease-back. If Seller balks, use the phone in the closing room to confirm your appointment with the lawyer. If that doesn’t work, leave without closing.

Or…

Go ahead and close and move to a hotel. Cancel your appointment, and pursue the Small Claims suit you already filed. A lawyer is not required for this informal, summary proceeding. The maximum recoverable damage is $10,000, and should be well documented with written estimates from the moving company and hotel. The hotel should not be more luxurious than the house you’re buying; but other considerations can affect that, e.g., your need to be near work, or to have Internet. Suit must be filed in the Justice of the Peace Precinct where Seller lives, which is why filing before closing is important.

Note: Closing and going to JP Court to recover your damages, or forcing a closing, are mutually exclusive. You must bring all your claims against Seller in one suit, so if you sue (in JP Court) for only your expenses you waive your right to enforce the contract to buy the house (in District Court), so for JP Court you must have already closed. If you start down the JP road and it turns out you don’t close, when you see the lawyer make sure to tell him to take a “non suit” (not a dismissal) in JP Court. A non-suit preserves your right to pursue the District Court remedy.
0 votes Thank Flag Link Fri Feb 22, 2008
I agree with Bruce, the statement is one that should not have been added to the "Special Provisions" section of the contract. A Realtor needs to be extremely careful about what is noted in this section because it does constitute practicing law - which as Realtors we are not qualified to do. (Note how many times "I am not a lawyer" has come up in this discussion thread, especially from the Texas Realtors!) This kind of situation is one where the broker should be directly involved to help, I would move forward with requesting that he/she be involved and aware of the situation. My broker is fantastic about responding to any problems or issues that come up - and the added weight of the BROKER making a phone call to the Realtor or the other broker sometimes has its benefits.
0 votes Thank Flag Link Fri Feb 22, 2008
Hi Everyone,

For updates to this post please see the links below and for the sake of clarity it's probably a good idea to keep answers on this thread.

http://www.trulia.com/voices/Home_Buying/Added_Facts_to_WE_o…

http://www.trulia.com/voices/Home_Buying/Part_Added_Facts_to…

http://www.trulia.com/voices/Home_Buying/Part_Added_Facts_to…

Best Wishes,

Emily Gibson
Customer Service Representative
0 votes Thank Flag Link Fri Feb 22, 2008
This is still not 100% clear to me, and I am not an attorney, but I think I catch the drift. Sounds like the sellers were trying to cover their bases with out actually committing to anything. I'd probably have a sit down with your agent and their broker or office manager and see what you can work out. There may be an issue of "unauthorized practice of law". The special provisions field cannot normally be used for a contract issue for which there is a promulgated form. But this will perhaps be dependant on who wrote in the clause. If the seller did it, then I understand they are allowed to do this. If one of the realtors did it, then I think they have made a mistake. There is a specific amendment for leases "Seller's temporary residential lease" or "Buyer's temporary residential lease" that can be used to clear up the issue. Because these forms don't seem to have been used, then to me the contract "as written" is unclear.... Do you get the house at closing and funding or do you get it when they decide to move out, up to 30 days later if they decide to stay that long.?
Your argument now is that you get it at closing and funding and you won't close unless you get possession of the house at closing and funding. This clause isn't a valid lease and you won't honor it. Of course the seller will argue they can lease back up to 30 days if that's what they want and they're not going to close if they don't get to do that.

Are you still in the option period by chance? That may give you some leverage.

I personally don't like that clause as it just doesn't address everything as outlined on the lease forms. Is there a deposit, who is responsible for insurance, who is responsible for utilities and many other items outlined on the lease forms. This one sentence is pretty wishy washy.

Really though I think the best approach is to let your agent know that you are unhappy and that you want a sit down with the managing broker or office manager and see if you together can't work something out.

Typically on leases I like to cover costs too. What about taxes and insurance for you?

Hope this helps.
0 votes Thank Flag Link Thu Feb 21, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Read your contract to purchase...the Texas Real Estate Commission #20-7 on Page 4, Item 9 addresses when the closing will be and Item #10 addresses the possession of that home. If there is nothing in writing (which there is a form that should have been used) addressing the Sellers Leaseback..then they have to go as stated in the contract or you might go ahead and offer them in writing on the approved from the right to lease it back at a daily charge that will cover your expenses and such. Good luck!
0 votes Thank Flag Link Thu Feb 21, 2008
Sorry Bruce, didn't mean to type over your response. I think we must have entered these at the exact same moment!
0 votes Thank Flag Link Thu Feb 21, 2008
I'm sure most states are this way, but I KNOW in the state of Texas, everything agreed upon HAS to be reduced to writing in order make the parties involved "perform". IF there is no lease back addenda, signed by BOTH parties, technically, on the day of close, they should be out of the house, turn the keys over and you start moving in. All this SHOULD HAPPEN ONCE THE FUNDING HAS BEEN CERTIFIED by the title company. In some cases if the closing takes place on a Friday afternoon after 4pm, funding may not happen until the following Monday morning. This could give the sellers the weekend.
IN ANY CASE, in my opinion neither Realtor protected their clients best interest. Have all documents, changes, and addendum signed at the acceptance of the offer, is the FIRST thing you lean in real estate school, or at least 11 years ago it was. IF they (Realtors) want to get their check, they may think about splitting the cost of your hotel room (within reason of course).
Legal advice should be given ONLY by a real estate attorney, so when in doubt seek one out!
0 votes Thank Flag Link Thu Feb 21, 2008
You can tell the sellers of the house that you are buying that they can lease the house back from you and pay for a hotel, or you can tell them no. The term "lease" implies a document and some form of consideration. (Money) If you have already closed on the home and they are still in it, then you should be getting rent, which will pay the mortgage and your cash (that you would normally pay the mortgage with) will pay for the hotel.

It looks like you may just need some better advice from someone. Your REALTOR is most likely trying to hold the deal together for you (and yes, his cheque) but he is acting on the cues that you give him. So give him your instructions, don't take the answers you don't like and remember, the Day of closing belongs to the buyer. It is your house, you make the decisions.


Gary De Pury
Broker-Owner
Bay Vista Realty & Investments, Inc.
Chairman, Communications Committee
Director, Florida Association of REALTORS®
0 votes Thank Flag Link Thu Feb 21, 2008
I don't agree with David that your Realtor should be asked to pay part of your temporary living expenses, although he might do it as a good will gesture to a valued client. But I do agree with David that it’s probably better to look at the silver lining in this, and take the opportunity to enjoy a stay in a nice hotel. It comes town to dollars: The issue is whether it’s worth enforcing the move-out date – you do have the option of refusing to close until they are out of the house.
0 votes Thank Flag Link Thu Feb 21, 2008
You can ask you're REALTOR to help pay a portion of the lodging amount. As soon as you found out you needed more time your REALTOR could have filed a closing extension to delay to the closing of the house you were going to be buying. Then again you have to really think about this situation. You could look at his as a major inconvenience, or you can take advantage of this time to stay in a really nice hotel while your house is being prepared to move in. Maybe live the DT lifestyle a bit. If you can't find a way to put a great spin on simultaneously selling your old house and closing your new home, then you have an up hill battle, otherwise, make the best of it! How long will you have to spend in a hotel David?
0 votes Thank Flag Link Thu Feb 21, 2008
David,
Why I do not like to be the bearer of bad news I must. Since everything was verbal and the sellers were allowed to stay you the only option you have is to evict them. Now it is going to be hard, if not impossible because when you go to court you have no lease.
Sounds like you tried to do the right thing. Like yourself I have fallen victim to the "right thing" deal. Do what you have to do. Do not let it taint your new home experience and when you finally get in your new home enjoy it. Wish I had better news.
Good Luck
Tony Grego - Indiana Mortgage Broker
0 votes Thank Flag Link Thu Feb 21, 2008
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