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TJ, Esq.
TJ, Esq., Attorney
Category: Real Estate Law
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Experience:  JD, MBA
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My question involves the definition and Legal Rights associated with "First Right of

Customer Question

My question involves the definition and Legal Rights associated with "First Right of Refusal at Contract Value". I bid on a HUD home, HUD accepted my Bid Price, a Contract was written and accepted. Just before Closing the Title Company discovered an issue with the Title (Bank of America never re-titled the Title to HUD). HUD's Agent issued a "First Right of Refusal, at Contract Value", to be used when the Property comes back on the market. Fifteen months later, the Property came back on the Market,at nearly double the original Contract Price, but HUD would not honor the FROR. Upon asking why not, HUD's response was because the title was not in HUD's name, the contract was invalid. I feel the Title issue was a technicality that occurs in many transactions and was due to HUD's and Bank of America's internal negligence and not anything I did. If the definition of FROR, at Contract Value, firm enough to hold up in court, should I elect to Sue HUD?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  TJ, Esq. replied 1 year ago.
Hello and thank you for allowing me the opportunity to assist you.

Q: If the definition of FROR, at Contract Value, firm enough to hold up in court, should I elect to Sue HUD?
A: If you have a reasonable case, then it may certainly be worth while suing since I presume that the property in question is now worth much more (double?), and that is why it is listed at more than what you paid. Obviously, you'll have to talk with a lawyer to breakdown the costs that he'll charge for suing, and the profit to be made from the property.

However, you'll note that I wrote "If you have a reasonable case." Unfortunately, I'm not sure that you do. If HUD gave you a FROR that is premised on HUD being the then current owner of the property, and HUD was not the owner of the property, then the FROR is not likely enforceable because HUD can't sell something that it doesn't own. The FROR would have to indicate that it is enforceable against the property if HUD should own it in the future. Since I don't have the FROR for review, I can't say whether the FROR is enforceable or not. But I will say that ownership of property is generally a mere technicality. It is usually the most basic requirement in land deals.

Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, your positive feedback is much appreciated. Thank you for using our service!

If you would like to direct additional legal questions to me in the future, then please type "To VAMD" in the subject line of your question.
Customer: replied 1 year ago.


I would like clarification on your response, "But I will say that ownership of property is generally a mear a technicality". Then you say, "It is usually the most basic requirement in land deals". The to sentices seem to contradict each other. Am I reading them correctally? In a court of law, which is correct to win in my situation?


 


I have tried to attach the FROR letter from HUD's agent. Would you like to review the Contract?


 


Attachment: 2013-07-27_225524_first_right_of_refusal_at_contract_value.docx

Expert:  TJ, Esq. replied 1 year ago.
Hi again.

I failed to add the key word in one of those sentences! Thank you for pointing out the contradiction. I intended to write: " But I will say that ownership of property is not generally a mere technicality."

I saw the Word document that you attached, but it is not the FROR. It appears to be a draft of your question for this website. Feel free to attach the FROR, as I am curious as to what it states about this issue.
Customer: replied 1 year ago.
Expert:  TJ, Esq. replied 1 year ago.
Hi again.

If your claim is just based on that email, then I'm sorry to say that I do not believe that you'd win a lawsuit. Simply put, that email would not constitute a contract for right of first refusal. It's just a promise in an email, and it does not seem to be supported with "consideration" (which is a requirement to create a contract).

I wish that I had better news about that.
TJ, Esq., Attorney
Category: Real Estate Law
Satisfied Customers: 9934
Experience: JD, MBA
TJ, Esq. and 6 other Real Estate Law Specialists are ready to help you
Customer: replied 1 year ago.

What kind of total legal effort ($$$) is involved insubmitting a lawsuit throught the court system to get a Judge to rule on our claim that the intent was always to resolve the title issue and return the property to the market so we could complete the sale?

Expert:  TJ, Esq. replied 1 year ago.

Hi again.

All I can do is give you a ball park guess based on my litigation experience. Your particular case may cost more or less depending on the amount of work that will be involved in the lawsuit. With that in mind, I would expect to spend at least $20,000 in attorney's fees to take the case through trial. That assumes that you must pay an attorney hourly (which is most likely, since few would probably take the case for a flat fee). Hourly fees can range anywhere from $200-$400 per hour depending on the attorney that you hire (obviously, it's possible that it could be more or less than that range, but that's about average).

On the other hand, if you were to sue (or even threaten to sue), then it's possible that HUD would just give in and honor the contract, thereby costing you little in attorney's fees.

Customer: replied 1 year ago.


What kind of Attorney would be required. Real Estate of Personal Injury?

Expert:  TJ, Esq. replied 1 year ago.
Hi again.

You would need to hire an attorney with experience in real estate litigation. A personal injury attorney would definitely not be the attorney you need because they deal with physical injuries.
Customer: replied 1 year ago.
No
Expert:  TJ, Esq. replied 1 year ago.
Hi again.

I don't understand your latest response ("No"). Do you still need help or have a follow-up question?
Customer: replied 1 year ago.

No I do not.

Expert:  TJ, Esq. replied 1 year ago.
No problem. Thank you for using our service!

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TJ, Esq.
TJ, Esq.
Real Estate Lawyer
9934 Satisfied Customers
JD, MBA