How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Brandon M. Your Own Question
Brandon M.
Brandon M., Counselor at Law
Category: Legal
Satisfied Customers: 12620
Experience:  Attorney experienced in numerous areas of law.
Type Your Legal Question Here...
Brandon M. is online now
A new question is answered every 9 seconds

I entered into a Lease Purchase Agreement for a home. The

This answer was rated:

I entered into a Lease Purchase Agreement for a home. The purchase price was to be $472,500 with a monthly rental amount of $1500. It was to last for 12 months. 5 months after moving into the property, my wife and I separated and it became financially impossible to purchase the home. I called the sellers and explained the situation and asked if there was anything that could be done as I would not be able to purchase the home at the end of the contract. They came and spoke to me and actually allowed me to continue living there rent free as long as I was taking care of the home. Paying the taxes and insurance, utilities and making sure it was ready to be shown by the realtor. They then contacted me and told me i would have to provide them with "something" to let me out of the contract. I spoke with the owners about this and we came to a verbal agreement that for 3% of the price I would be released from the contract. I vacated the home and made plan to provide them with the 3%. During this time the house sold to another buyer for $360,000. Now I am being sued for the difference in the sales prices plus realtor commissions, taxes, closing costs, etc. A total of $151,000 plus their legal fees. This is a far cry from the $14250 we had verbally agreed upon. Had I known I was going to be liable for this before leaving I would have made alternate purchase plans, ie extending the contract. It should also be mentioned that certain parts of the contract state that it is a "right to purchase" whereas other sections states "obligated to purchase" Any help?
Hello there:

I have to preface everything here by stating that no conclusions can be reached without reviewing the actual contract; I can provide the rule of law in the context of what we understand your circumstances to be, and that will hopefully give you enough to proceed from here.

To start, contracts involving real estate are not valid unless in writing under the statute of frauds. You made an oral agreement regarding your real estate contract (3% to get out), which would ordinarily be non-binding.

It is possible that they may have some sort of suit against you, but $151K is extremely unlikely. The sellers must mitigate their damages; if they sold on the first offer that came along, that is not your fault and you will not be penalized for that; they must make a good faith effort to take as little loss as possible; you would hypothetically only be responsible for the difference between what was agreed to in your contract and what the home's potential sale value was. If the house could have sold for $473,000 a month later, there would be no basis for recovery; the question then is 'what would this hope actually appraise for at the time of sale?'

Furthermore, even though the statute of frauds would ordinarily apply, your detrimental reliance on the oral agreement would ordinarily relieve you from liability under the doctrine of equitable estoppel. In other words, you would have an argument to get off scot-free.

Under no circumstance, based on what you have said, can I see a basis for recovering things like realtor commissions, taxes, closing costs, etc. because those are costs that they would have had to incur anyway. They could ask for reasonable attorney fees.

The fact that some of the language says "right to purchase" and other parts says "obliged to purchase" may or may not be significant; it is impossible to tell without examining the entire agreement. However, it is correct that the contract did not need to be filed for it to be legally binding.

So, in short, there are several defenses that could be raised. My opinion is that you should retain counsel and offer the original 3%; if they don't want to take it, the worst that could happen to you is that it goes to trial and you lose because you could not afford an attorney, so you just file bankruptcy and they never see a dime. A bird in the hand is worth two in the bush, and they should know that.

I hope that this helps.
Brandon M. and 2 other Legal Specialists are ready to help you

Related Legal Questions