There’s no rule against flipping contract, making a profit
Q: We signed a contract to sell our house to a very nice couple. We even gave in on price and a few repair issues because we liked them and wanted to help them along. We went to closing, and they had “flipped” the contract to a home builder, apparently making some money on the deal. We feel violated and misled. Can we sue them?
A: For what? Making money on a business deal? Unless you restricted their right to assign the contract, they can do so. What if they had bought it and resold it the next day? You’d be in exactly the same position.
While you may have been misled, it’s hard to calculate your damages, in our opinion.
Q: I’m selling my home to a builder, who will tear down the existing structure. Do I have to prepare a seller disclosure form for him?
A: No, if you deem the value of the structure to be 5 percent or less of the value of the property. You may want to include that agreement in the special provisions paragraph in your contract, just to confirm the agreement as to value.
Q: I have retired and my wife and I are ready for a new, downsized home. I could pay cash, but decided to get a loan so I can preserve my capital for other investments. I was turned down. They gave me a bunch of mumbo-jumbo about the stability of my retirement income, etc. Shall I just keep applying to other lenders?
A: Maybe, if you want a loan. Lenders today look at a lot more than credit because of the new Dodd-Frank inspired “ability to repay” rules. Note that the latest revisions to the TREC contract forms have replaced “credit” approval with “buyer” approval in the financing addenda. There are also more flexible rules for smaller and rural banks you may want to investigate.
These new rules were created by the federal government; they are here to help you.
Q: I’m selling my home, and the buyer’s attorney insists on putting in a provision that my representations will “survive the closing.” What does this mean? A: In our humble opinion, find another buyer. The essence of the “as-is” provision of the contract is that the buyer does his own evaluations and inspections, then closes. The seller is making no representations as to the condition of the property. Once the property is sold, you don’t want the lingering liability for two to four years after you close. The buyer can inspect all he wants under paragraph 7.A. of the TREC form. When he gets an inspection, he should be relying on that professional inspector, not you.
To send us a question visit www.AskGeorge.net and select the “Ask A Question” button. Our answers to questions do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney. George Stephens is the broker of Stephens Properties. Charles J. Jacobus, J.D. is Board Certified by the Texas Board of Legal Specialization in Residential and Commercial Real Estate Law.