In mid 2005, one of my Investors had a contract to purchase a vacant lot that he was going to build a 10 unit condominium on. At the time, we negotiated a deal for $64,000 that was accepted and we also negotiated a 90 day "due diligence" period. The lot is owned by a REALTOR®.
Once the contract was accepted we spent the next 75 days or so doing due diligence and we were satisfied that the lot would work for what my Investor wanted to do. So like a good little Broker I sent the owner over an addendum releasing our contingency and to let her know we were ready to close.
Well, during this time, values sky rocketed and a similar lot sold for $245,000!! Needless to say, my Investor was ecstatic. The owner wasn't so ecstatic and decided NOT to honor the contract and refused to close. Well OK then. She can do that but my Investor can also sue and he did. His Attorney immediately filed suit and was given a "lis pendens" on the property.
A year later, we went to mediation to try and sort things out to no avail. The only solution the Seller had was to "let the buyer get his deposit back". My buyer wanted to close. The Mediator, seeing that this would not be resolved, recommended to the courts that arbitration be waived and all parties agreed.
The Seller is now on her 3rd Attorney and more than 2 years later we still have not been able to get her into court. So we wait.
Anyway…..fast forward to yesterday. My Investor was in Poinciana and had a flash that he should ride by and check out "his" lot. Well he drove by and lo and behold there was a shiny new for "sale by owner" sign offering owner financing!
Now folks, what would happen if an unsuspecting Buyer decided to purchase this lot on a contract for deed? What if they gave this Seller $10,000 down and agreed to make payments? What if they decided not to have a title search since title was not changing hands?
Well….I'll tell you what if…..they would be screwed! They can't get clear title because my Investor has a lis pendens filed on the property. That lis pendens ain't going nowhere until a court hears his case.
The moral of the story is NEVER purchase property without peforming a title search.
Did I mention this Seller is a Broker and a REALTOR®? What the heck is she thinking? I think I'll send her this post. What say you?
Disclaimer: I am not an Attorney and have no idea how this will play out in a court of law. However, I do know a lis pendens is something that a Seller MUST disclose.
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