Home Selling in 46254>Question Details

Millertime31…, Home Seller in Indianapolis, IN

House appraised low in lease to own, now renter wants out & option money returned. Can I keep money?

Asked by Millertime31579, Indianapolis, IN Sun Jun 30, 2013

The house is in Indianapolis, IN. We are waiting on our realtors to help us clarify paperwork, but the renter wants out of our lease to own now that the house appraised for lower than agreed upon purchase price. I agreed to sell, at a loss, but on the last business day of the lease, the renter said she didn't want the house any longer & wanted her option money back. Since she is walking away, she should lose her money in my opinion. That money was there to buy the house or she'd lose it. Wanting to know if you've had this experience & what was the outcome / what are my options? Her money is in my realtor's escrow account. That broker is saying we have to agree or I have to take her to small claims court, before they'll release the funds.

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"The Purchase Agreement has a "Further Condition: ...If the appraisal does not meet the purchase price the seller has the option to reduce the purchase price to that value. "

well - you took that option - you said you did meet the appraisal price...............so..........based on that, it appears as though the option money would be forfeited if the buyer didn't move forward with the sale.

Still.............you need to get legal advice......this is only my opinion.

Turn to your agent and a real estate attorney!
0 votes Thank Flag Link Sun Jun 30, 2013
I am the seller & feel I'm losing in this deal because the buyer changed her mind & is backing out. We didn't cover this in the contract fully, but there are so many docs, I'm trying to include excerpts from a few. First, we were worried about buyer obtaining financing & didn't go into depth about house possibly appraising low. The Purchase Agreement has a "Further Condition: ...If the appraisal does not meet the purchase price the seller has the option to reduce the purchase price to that value. (Which I did, I got the funds together & we were planning to close) If seller chooses not to sell for less than $x, the buyers option money will be returned to buyer. If due to no fault of her own buyer can't obtain financing by 6/30 she will be offered an extension to close by 12/31 or her option funds will be forfeited to seller." Then in the Option to Purchase property it states, "Closing & disposition of option money: A: The option money shall be credited to the purchase price B: If option is not exercised, then Seller shall retain the Option Money as consideration for the granting of this option." My only concern there is that the Option was through 6/30/13 & the renter just told me at about 4PM on 6/28 that she was not buying the house, staying through 7/31, & wouldn't pay rent until her option money is returned.
0 votes Thank Flag Link Sun Jun 30, 2013
ps
of course the tenant wants out.....who would want to buy a house that appraised for less than the sale price? Not to mention, it's probably a moot point in that they won't be approved for the mortgage even if they wanted to proceed.

As Ron suggested - ask an attorney...........but I wouldn't be surprised if the tenant's deposit turns out to be non-refundable.

Buyers looking for rent/options out there - take notice!
0 votes Thank Flag Link Sun Jun 30, 2013
What does your contract say in regard to the house appraising out?
Let me guess - it doesn't deal with this situation.........

............this is a prime example (for a buyer especially) of why they should avoid this kind of arrangement....or at least make sure they are protected in the contract from something like this happening.
0 votes Thank Flag Link Sun Jun 30, 2013
Over the last couple years; I have cautioned many 100 people about doing a Lease/Option:
I take no job in knowing I was spot-on.
BUT, at this point, you should involve a Real Estate Attorney;
unless you feel like being magnanamous.
Of course; think of how much it has appreciated since you gave them the place, plus the rent money.
0 votes Thank Flag Link Sun Jun 30, 2013
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