Regular readers remember that we bought a house last month. Signed contract, mortgage, removal of contingencies and a bunch of inspections. The works. Well, turns out we're not done yet. Here's the problem. When we bought the house we knew there was a tenant in it. In fact, our contract required the sellers to give us a signed agreement for the tenant to vacate before we removed our contingency. They didn't. Instead, they asked if they could give us this written agreement before we removed our financing contingency. We agreed, but even though we removed the financing contingency, we still don't have that written agreement with the tenant.
Worse. The sellers (or rather their agent, who is also their relative) finally came clean. Apparently, the tenants have a six month firm lease for the house. The lease ends at the end of February. Our contractual closing date? October 23... Worse still, the sellers and their agent simply don't understand (or are pretending not to understand) what they have done wrong. I met with the agent on Friday, and he said "we'll just cancel the deal". I explained that we have a firm contract, and cancelling is simply not something he can do. His response: "sue me"...
It's not quite as bad as it sounds (well, it's bad enough): the tenants are willing to vacate in December, if the sellers agree to pay two months of their rent as well as their moving expenses, for a grand total of about $7,000. The seller? He's willing to pay $3,000. Period. This weekend he is supposedly negotiating with the tenants and we should have a clearer picture on Monday.
Of course, we could supposedly get this resolved by simply agreeing to pay the difference between the tenants' demands and the amount the sellers are willing to pay. However, the prospect of doing that gives me serious heartburn. We clearly have a very strong legal case against the sellers and could sue them for a lot of money. We could also file ethical complaints against the sellers' agent for misleading us. These guys knowingly entered into a binding agreement to sell us the house, while they had a conflicting contract with the tenants that would not allow them to close the deal. They did this without disclosure and without including a sellers' contingency in the contract.
On the flip side, this is a million dollar house (it's the San Francisco Bay Area, people). Is it really worth letting a million dollar deal collapse because of a $4,000? Yes, $4,000 is a lot of money and the sellers are trying to cheat us and increase our buying price by trying to make us pay for their dishonesty. The question is: should I let the deal fall through and go to court? Or should we just suck it up and get the house?
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