WA state real estate law, breach of contract home purchase and sale agreement, dispute with agent

Ilwaco, WA Viewed 1189 times. Posted about 1 year ago in Real Estate

Real Estate: breach of contract?: My sister was approached by a coworker asking if she would sell her house. My sister agreed. No realtor was involved.
Agreements were reached: the price, buy the house "as is", The buyer would provide proof of financing within 1 week, the buyer would pay all closing costs, and closing would be on an exact date.
The coworker typed up the agreement, they both signed.
2 weeks before closing, the coworker announced she was having problems with funding, and was going to use a different bank. The new banker contacted my sister asking her to sign an addendum to raise the asking price so the coworker would get more money to help pay for building a garage. She stated the price would be raised $6500, the but the addendum would say "the SELLER would put it toward closing costs and retain the original amount agreed on. "
The bank also gave my sister an itemized list of the closing costs. Apparently when the coworker typed the agreement she left out she offered to pay the closing costs. This was not realized until after the addendum was brought up and the bank was changed.
When told she forgot to add she was paying the closing, the coworker emailed my sister assuring her that she agreed to pay the closing costs and she was still intending on it, even tho she forgot to put it in the contract. (we have this in writing)
When she realized closing costs were more than she anticipated, she told my sister since it wasn't in the contract (that she made herself) she wasn't going to pay them, that my sister was responsible for all closing.

Now to my questions:
1. Is the coworker in breach of contract by not sticking with the original funding? Could my sister cancel the contract?
2. Is it morally correct for my sister to sign an addendum that lies saying it is going for the closing fees that would be paid by my sister? (Remember the coworker agreed to pay that)
3. Is the coworker legally responsible for the closing costs, even tho she "forgot" to put it in the contract and we have in writing that she agreed to pay them?

She is making my sister's life a living hell trying to change things, my sister has already quit her job, hired movers, and rented a uhaul. The closing date is approaching in 1 week.

Answers (4)

Thuong-Tri Nguyen

This attorney is licensed in Washington. Posted about 1 year ago.

Your sister's situation is one example of why it is a bad idea to do-it-yourself in real estate transactions. Having a professional whose duty is to look out for your sister's interest may have prevented these problems.

It is not too late for the sister to contact an attorney to review her facts and options.

Besides talking with the sister, the attorney likely will want to review all the documents.

It can be a federal violation to falsely sign bank applications.

David Carl Beyersdorf

This attorney is licensed in Washington and 1 other state. Posted about 1 year ago.

The written contract will control. If, however, the written contract is mute as to who will pay the closing costs, then parole evidence might be introduced to prove what the parties' agreement was. Also, if the written contract says nothing about who will pay the closing costs, then the escrow company won't know how to close the transaction. Your sister will have some leverage at closing. She may decide not to sign if the closing docs indicate that she will pay the closing. THIS IS NOT INTENDED AS LEGAL ADVICE, BUT IS A SIMPLE STATEMENT OF SOME POSSIBILITIES IN THIS FACTUAL SCENARIO. YOUR SISTER SHOULD CONSULT A LOCAL REAL ESTATE ATTORNEY. Good Luck
David C. Beyersdorf

www.fresnolegal.net

David Alexander Phipps

This attorney is licensed in California. Posted about 1 year ago.

Your post is not clear, so I have had to make some assumptions to fill in the blanks and resolve the ambiguities. If the following answer contains facts that are not accurate, my answer won’t be accurate either:

The coworker is the buyer. Your sister is the seller. The verbal agreement required the buyer to pay closing costs. By "closing costs" you mean the costs of escrow and related fees, not loan closing or loan processing fees.

The written agreement did not say who would pay the closing costs. That leaves the parties with an equal obligation for the closing costs. Assuming that the written contract is valid (I can't tell because I haven't seen it), the contract is enforceable even though it doesn't accurately reflect the verbal agreement. The contract could be corrected by a court action called reformation. That's possible in spite of the parole evidence rule because the lack of any mention of closing costs creates an ambiguity. Parole evidence can be introduced to resolve an ambiguity. Your sister would probably win because the contract was drafted by the other side. But if there is an escrow and the parties signed escrow instructions which say the parties are equally responsible for escrow fees, then there is no ambiguity, parole evidence should not be admissible and an action for reformation should not succeed.

And, an action for reformation would be more expensive than the possible gain. If the closing costs turn out to be $7,500 (hypothetically) and if the bank is putting up $6,500, that leaves $1,000. Your half is $500. You don't want to sue for reformation when the impact is only $500.

There is nothing immoral about the bank's plan and nothing immoral about your sister signing it. The bank wants the extra money to go to the seller along with the rest of the loan money. The bank wants the seller to use the extra money for closing costs. That will leave the buyer with a reduced or zero obligation for closing costs, so the buyer’s cash can be used for the garage. This plan is harmless to the seller if the closing costs are less than $6,500.

If the amendment has already been signed, then your sister is stuck with the original agreement and the amendment, unless she starts an action in court for reformation of the contract. That would be economically unwise. So your sister should simply pay her half of the closing costs.

If the buyer or the bank thinks that the term "closing costs" includes loan closing or loan processing fees, that is not a problem unless the escrow officer agrees, and distributes the escrow after subtracting the bank fees from your sister's share. In that case, your sister's distribution from the escrow would be reduced and she would have the right to sue the buyer and the escrow company for the improper charge.

You said: “She is making my sister's life a living hell trying to change things,” Change what things? Do you mean she wants the amendment signed? Great, that means it hasn’t been signed. In that case, you sister should simply refuse to sign until the contract is corrected to state that buyer pays the remainder of closing costs.

This answer must not be relied on as legal advice for the reasons posted here: http://mcgyverdisclaimer.blogspot.com . And I am not your attorney.

David

Oksana

Posted about 1 month ago.

We had a professional ( we think we did) buyer agent but she was not helpfull. We were ripped off and had to pay for seller unpaid taxes. So not every professional is really a professional.