There's absolutely nothing wrong with offering to sell a property with only having an option. Having a recorded option or P&S gives someone a controlling interest in a property. Plus, recording the option/P&S will place a cloud on the title, so his/her info would show up in the title chain. As an investor, I use options from time to time to acquire properties, but I also disclose this fact upfront--although I technically don't have to (at least in the areas where I invest)--as several of the others suggested.
Hopefully, you didn't cancel your contract out of frustration, because I know of several ways to salvage this deal. It sounds like your seller kind of didn't know what s/he is doing. First, s/he could have exercised the option, and arranged for a double close (using transactional funding for the A-B leg) before trying to close with you (on the B-C leg). Second, s/he could have put temporary financing in place, sold it to you using short-term seller financing (to give the title a minimal amount of seasoning [30 to 90 days]--depending upon your loan product), and cashed-out when you refinanced 1-3 months later. And the list goes on. . . . The point is that you don't have to lose that money, and you can get your desired home if you still want it.
Please feel free to contact me for more details.
How terrible for this to have happened when you've invested so much time, emotions AND money into this deal. I would contact the Department of Real Estate Legal Hotline at 213-739-8282 and see what legal recourse you may have. Its a free service and you'll know where you stand. They also have a reimbursment fund setup to pay consumers if a real estate agent was at fault. Call them first and then find a knowledgable realtor to work with. Please feel free to call or email me if you need any further assistance :) Good luck to you dear.
Regardless of what your agent shouls have done it is incumbent upon buyers to read what is given to them by their agents. I agree with someone who said that should have been in the Prelim. but beyond that, your agent should have checked the MLS tax record at the time you wrote the offer.
Ask the person holding the option to purchase to exercise the option, then close.
I am surprised that no one caught this beforehand. You should have been given a Preliminary Title Report within the first week of escrow. On that report it states who the legal owner of the property is. If you received this, then you may be stuck.
I would consult with an attorney. It sounds like the seller may not have properly disclosed which may leave you the option of pursuing the seller for damages.
I'm sorry you lost out on your home and spent the money too. I hope you find an even better home!
Best of luck.
I'm sorry to hear what has happened. You are right, both listing and selling (buyers) agents should have discovered this. My question is have you spoken with your Broker and Realtor? If not I recommend that you do just that. I would imagine that your Broker and Realtor will try very hard to make this right with you. Good luck!
1) who the owner is
2) is any flipping involved (title seasoning)
3) if the property is held in a trust
4) are there any unpaid taxes
5) any liens attached to property
There is plenty of time to learn about potential problems before you spend money on an appraisal. So sorry the people you were relying on ended up failing you.
At this point you may want to speak with an attorney to determine if the seller who had the option was misleading you and whether you can be compensated for the loss you incurred.