Double selling the property two times twice

Is there a reasonable-sounding explanation for the double transaction? What does your attorney say?

Besides it sounding a little fishy, if the transaction falls into some sort of tax gray area you could end up dealing with a subsequent investigation (even being an innocent buyer, even if the transaction is actually legal and aboveboard). If your attorney is hesitant, maybe look elsewhere or maybe get an indemnification agreement for any future legal fees associated with inquiries. And be sure the title insurance is 1000%.

I wouldn't go through with the deal. Apparently, you're willing to pay more for the property that the original buyer and they're going to split the profit? The original buyer is going to pay a premium on this because he hasn't lived in the place for 2 years. I'd worry about the title being messed up also. Also, does the board know about this? I would think they would frown on it.

Is your contract with the buyer or the original seller?

It sounds like the seller is stuck in contract with a developer but kept shopping the property for a better price. they decided to sell to me and split the difference. However, instead of the developer backing out he is trying to get the title assigned to him and them transferred to me at one giant closing. This is impossible to pull off since I have financing and seems like a way to avoid regulatory oversight, piling these transactions into one day.

I was wondering why the seller doesn't just pay him off? Is there huge tax benefit or what? Why would anyone try to set a deal up like this?

Indemnification agreement is a good idea

Our contract was supposed to be with the original seller but turns out would be with the developer. I cannot see anyway that this would work out well for any party involved

Agreed, this sounds like a mess. If you wanted to go through with it, talk to your attorney about something like:
- Seller and developer sign an agreement to void their prior contract for a settlement payment of $X from the seller to the developer, where $X is whatever the developer would have achieved from the nutty 'double-closing' strategy.
- you buy straight from the seller
- get some amazing bulletproof title insurance and indemnity agreements

Or just move on, this is not worth it and I think you are seeing that as you dig into the details.

Or maybe threaten to move on, renegotiate your deal with a good reduction in price, and follow the steps above at a reduced price. If it works you got a discount, and if it doesn't you're free of the mess anyway.

But whatever you do, make sure you have 100% signoff from an experienced attorney.

I actually suggested just the thing to the sellers broker and they are working this out now, hopefully. I can't imagine how they ended up getting so suckered into such a bad agreement with this leech.

I let them know I would have to reassess my price due to the changes in my costs, etc. What percentage reduction or dollar amount would be reasonable do you think?

Our attorney is 100% reliable and on top of things. In fact, I found out what was happening thought him since they tried to slide it into the contract and avoid mentioning it to us. Luckily, I decided to spring for a more expensive , more experienced attorney for this closing just in case something went wrong.

Maybe this will get straightened out but I'm still going to open houses this weekend.

Thank you so much Uptown Joe! You really helped bring some clarity for me.

The fact that they tried to "slide this into the contract" is a huge red flag. If they are not being transparent with you, then there is a large possibility that they are hiding other things. which you won't realize until the tax collector/building inspector/crazy neighbor comes calling. CAVEAT EMPTOR

every anomaly should have a cost. Make sure you extract your pound of flesh.

Instead it seems like they have decided to try to push the developer into closing the sale and are kicking our offer aside. Wouldn't it be nice if one of these people thought it was appropriate to reimburse me my inspection costs?

Before our offer was accepted I had a conversation with the broker about how being straightforward and maintaining good faith with each other through the whole process was very important to us. I mentioned problems we had in the past with deals falling through on the sellers side and the importance to us of a plain and simple closing . I can't believe he kept a straight face when he told me the seller wanted the same thing.

Sorry it sounds like this is falling apart for you, and you're out some fees on your end, but it does sound like you may have escaped just in time!

Thanks, Uptown Joe! I would rather things fall apart now than at the closing table.

I don't really know if things might still work out and kind of still wantthe property. Buying in this town is like dating and breaking up! I can't believe how drama filled things are.

We have had a couple of bizarre deals like this and it is really making me jaded.

I don't know anywhere in the USA where a seller is going to reimburse inspection costs, no matter what happens. I pay for inspections (if any) prior to going to contract, that's the right way to do it. The problem with new condo units is, as opposed to a free standing building, is you could be buying a big mess and no inspector is going to find that out for you in advance. We had accepted offers on a couple of apartments that we had to withdraw because our atty found big lawsuits against developer for things like elevators needing to be rebuilt, bad sewer lines. Your run-of-the-mill licensed home inspector is not going to detect structural flaws in an elevator shaft, it's not going to happen.

Although everybody loves new construction, it's by definition unproven and I consider it more risky (even if free standing).

I bought into new construction many years ago and had a very sharp lawyer. He checked for complaints/law suits on other projects completed by the developer and said he was "better than most". He insisted on his own inspector looking over the building, not just the apartment.

The inspector did uncover some problems that eventually did become a problem to the building. (brickwork, ventilation from garage, roof (new design, untested). All these areas required major renovations within 5 years. However, he could not have known about other things within the apartment unless he had been there during construction.

For example, they used only sheet rock for bathrooms, including the shower/bath tub area. Some of the water pipes in the kitchen were not placed inside the wall and were hidden in the corner where there was no door to the cabinet. Also, the counter top had no support in that corner and sunk down after a few years.

This isn't a new unit it is a detached single family. I really hope we still get this house somehow though. MY husband wants to threaten the seller.

Think you should threaten the seller. Your contract is sale from original owner to you, not from developer to you. All you have to do is say you won't close with some faceless developer to whom you cannot do a title/lien search when the contract doesn't call for that. If they don't produce the property and/or schedule a closing, they're in breach.

I'm not a legal lawyer, but I have it on good authority that a very basic principle of contracts law is that one cannot contract to sell something that one does not own. So I don't really see how this deal can even be.

Of course, as alan points out, he is not a legal lawyer, so his good authority or what he can not see is hardly helpful.

Hartly

Haha- there is something called "assigning" where you pass along a property without actually taking ownership of it.

I think the legal issue is that the broker may be representing both the developer and the seller. We didn't sign a contract, we only had an accepted offer and now the seller is pushing the developer to close instead.

I wish we could do something but it doesn't seem like there is a lot of legal strength without a signed contract since the developer already has a signed contract with the seller.

I think you should offer to assume the developer's side of the contract at his price, and opine that any future buyer may want to do the same or also demur when finding out about the two-step.

A riddle, wrapped in a mystery, inside an enigma

I think the developers contract is about to time out and now they are trying to close. I was thinking about threatening the developer or seller but attorney doesn't think it will accomplish much.

the seller is really eager to close

Go metric.
Get your kilogram of flesh.

In the past 10 days I have been told the house is mine now it isn't abut half a dozen times. Now, after telling me the house was mine just a couple of days ago, the broker says they are going to close next week with the other buyer.

What a roller coaster. I am getting so sick of New York real estate. Why don't they have binding offers contracts like other states? What is with the ridiculous coop laws, the crazy closing taxes and the lying brokers? There are so many things in this market that make buying here a real pain.

@2013nyc -

You were lied to by the broker , your application probably never made it to the Board

I hear you, 2013nyc. The reason we don't have binders in NYC area is that people would walk away. I mean, a normal binder in flyover country is $1000 to $5000. Seriously? When "middle class" housing starts at $1,000,000?

al to, or worth You need to gently get rid of current buyer's broker and find a new one. Search for listings in your hood and find a solo operator preferably, not a team agent, with sales listings equal to, or preferably much more, than whatever your price range is. Somebody with lots and lots of experience.

I don't know your price range but you've been stuck with an agent who is out of their depth. An agent who's great with $350,000 to 400,000 studios is not the same person you want for a new $1,500,000 one bedroom and certainly not a $5,000,000 townhouse. If you're only looking at new developments, your best agent has sold for developers. Depending on your price point you can even offer to contribute to the commission, it might be worth it to you.

Relax about the taxes. Buy right and you will make it all back when you sell. Very few places in the world can have the kind of appreciation we can see in NYC.

On second thought, maybe Kansas City is better for 2013nyc.

Kansas City has great steaks, fieldschester!