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Richard
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 45638
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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Regarding a Colorado Real Estate Buy/Sell Transaction between

Customer Question

Regarding a Colorado Real Estate Buy/Sell Transaction between father/Seller and son/Buyer.

The Buyer/Son elects to use a Quit Claim deed to purchase property from Seller/father, and at closing tenders $25,000 to Seller/father. Several weeks later, after Son has fixed up the property, the Son takes his contract & Q/C Deed to the Title Company, and they determine that the Quit Claim Deed was invalid for 2 reasons:
1. The Deed was never Notarized.
2. The Deed was never Recorded.

The Buyer/Son deliberately never filed the Quit Claim Deed (for his own personal reasons.)

My question: Did the Buyer/Son breach the Colorado Real Estate Contract?

When the father found out that he was still the owner - he listed the house with Keller Williams, closed the transaction at 1st American Title Co. (same title company the son went to earlier) and conveyed good title, and wants to give the son the $25,000 back. The son refuses to accept the money. Claiming the 1st contract was valid and the house was his.

Who's right and Who's wrong?

Melvin Boone XXX@XXXXXX.XXX
XXX-XXX-XXXX
Submitted: 12 months ago.
Category: Real Estate Law
Expert:  Richard replied 12 months ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Can you tell me when the first transaction was done...i.e., when did son/buyer pay dad/seller originally? Thanks.
Customer: replied 12 months ago.

Wow. this is wonderful.


 


The 1st transaction/contract was signed on Feb. 8, 2013 those docs (the real estate contract & Q/C Deed) were prepared by a transaction broker.


 


The son spent about $40,000 in fix up cost. After the house was fixed up - then the son took his docs to a title Company. After examining all docs, the Title Company told the Son/Buyer to go back and redo everything, because NO SALE HAD BEEN CONSUMMATED.


 


The son decided not to go back and redo the docs, but had the keller williams agent list the house through his father/original seller.



So in the eyes of the Title Company, and Keller Williams the house still belonged to the Father and could thus be legally sold.


Expert:  Richard replied 12 months ago.
Thanks for following up. Here's how this works legally. Since there was no recording of the original quit claim deed to the son, the title company and Keller Williams would have had no knowledge of this prior deed. Nor could the buyer from the father. Thus, because the buyer knew nothing about this and got a deed from father that was recorded before any deed was recorded evidencing the transfer from father to son, the buyer is going to be entitled to the property based on the "race to the courthouse" concept in which the first deed recorded wins as long as the buyer had no knowledge of the unrecorded deed. But, the son still has a claim against the father for breach of contract for: i) delivering a defective deed in exchange for payment of the property; and ii) subsequently selling the property to another buyer when he'd already contracted to sell it to son and been paid. Thus, son would prevail in any suit against dad and be entitled to damages...i.e., the $25,000, the cost of fixing it up, plus any additional profit realized on the sale of the house.



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Customer: replied 12 months ago.

Follow up question.

 

Since the Title company knew about the 1st Q/C deed, and the Keller Williams agent also knew about the Q/C. and since they both instructed the son to fix the deed and go record it. AND THE SON DID NOT COMPLY.

 

The father is, in reality, "sucked back into the deal" by virtue of a default of performance on the son's part. Remember, it was the father who signed the Q/C deed in good faith in the presence of a transaction broker (TB). The father thought he sold his house to his son.

 

Shouldn't the TB have had a notary present for such an important vesting instrument? Remember, the County Clerk cannot except or record an unnotarized Q/C deed.

 

Shouldn't the Son have read the "TIME IS OF THE ESSENCE" clause and carried out HIS CONTRACTUAL OBLIGATION to record, the clean Q/C title deed, owned solely by his father?

 

Since the willful non-performance of the son, forced the father back into ownership. Can the argument be made, THAT THE SON BREACHED THE CONTRACT BY NOT PERFORMING WHAT HE AGREED TO DO? or is the TB at fault for his error?

 

Expert:  Richard replied 12 months ago.
Thanks for following up. The father would have a claim against the title company if they were used to document this transaction and failed to do so. The son could not fix the deed without the dad; it's the dad's signature that needed to be notarized. And, a deed is not required to be recorded to transfer title. As long as it is signed and notarized and delivered it is a completed transaction; recording is not legally required other than to protect son from bona fide third party purchasers, like the one that ultimately bought the property. The law is going to look at this as putting the parties in the position they would have been had the deed been valid. The father would get the $25,000 and then son is going to get all the proceeds from the sale because had the deed been valid, it would have been the son making the sale rather than the dad.
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 45638
Experience: 32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
Richard and 12 other Real Estate Law Specialists are ready to help you
Expert:  Richard replied 12 months ago.
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