Legal Question in Real Estate Law in Arizona
Specific Performance
We are sellers of our current residence (Arizona). A party entered a sales contract with us to purchase our home for $510,000.00. The sale was contingent on the appraisal meeting that amount. The appraisal came in at $615,000.00. It was the amount the buyer wanted it to appraise for, so they could assign $105,000.00 to a 3rd party renovation firm.
All paperwork has been completed, we signed (closed) on our portion of the deal, but when the paperwork hit the seller�s broker or financial institution, they reduced the amount of eligible funding to the buyers, which now jeopardizes our entire transaction.
In the meantime, we have closed pending our home sale on another home, have had our address changed and mail being delivered there, utilities are in our name at the new home and movers had to be cancelled.
We think we can sue for �specific performance� and force the buyers to close on our home.
Our research has nearly closed the thought that the buyer, mortgage broker, appraiser, the renovation company, and the investor firm may all be associated with each other. I think there may be a case of fraud on this whole deal.
All buyer�s contingencies were met on our side, and the buyers waived all inspections.
2 Answers from Attorneys
Re: Specific Performance
If the contract specified that the property must appraise for at least the purchase price of $510,000.00, and you have met all of YOUR contractual obligations, then the buyer is obligated to complete the transaction and you can sue for specific performance.
However, the courts move slowly, and depending on your circumstances, you might be wiser to put the house back on the market and sue for damages if the house does not sell for enough to cover all of your expenses and any decrease in the sale price. You should be careful to make it very clear that the buyer has breached the contract and that you have not agreed to release the buyer from his obligations.
Re: Specific Performance
There are a few unclear points in your post, though I realize this is complicated and you tried to give lots of detail.
You state when the papers "hit the sellers broker or financial institution" which is somewhat confusing. Later you state that "all buyer's contingencies were met on our side," but I thought you were the seller's side.
An examination of the paperwork and contract is required to give a proper opinion in this matter, as well as additional clarification and facts. For example, I would presume that it would take a one-hour consultation with an attorney to sort out all the facts and examine the contract, so it is difficult to give an opinion here. It sounds like one of the contingencies was not met, even though it is stated otherwise in your last sentence. I would encourage you to consult with a real estate attorney right away before taking any further steps.
Best wishes.
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