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We have a land contract on a cabin in Michigan. The property…

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We have a land contract...
We have a land contract on a cabin in Michigan. The property is un-insurable as it has no indoor plumbing and is by no means up to code. We signed an agreement that stated "“The Purchaser agrees to pay $200.00 upon the execution of this Agreement and the balance of the Purchase Price being payable in monthly installments of $100.00, due on the 1st of each month, beginning on September 1, 2015 until the purchase price is paid in full.” Nowhere in the contract does it specify that we must have the Purchase Price paid in full within any specific period of time and we never missed a payment. The seller asked us 2 years after signing the contract to pay the balance of the contract in full. When we explained to her that we could not do that right away but maybe we could in a year, she got very upset. She then demanded we return the keys and pay the taxes and utilities for the past 2 years. Our contract states "For the duration of the Agreement, the Seller will be responsible for all taxes and assessments levied against the Premises and may collect the same from the Purchaser by giving 30 days' notice in writing". We notified her of our intent to make our payments to an escrow account until this was all resolved and sent her proof of our $100 payments to an escrow account and offered to terminate the contract, under a mutual termination, so she could attempt to sell it to someone that could afford it before we would be able to . Now today, she sent us a "Final Notice of Default" because we refused to pay the 2 years of taxes and utilities within 30 days as she requested and she demanded we return the keys immediately. We put over $5000 of updates and repairs into the cabin but just wanted to do the nice thing and give it back, now I am not sure what to do. Is there anything that can come back on us if we do return the keys? Or should we continue to fight and sue her for harassment?
Submitted: 9 months ago.Category: Real Estate Law
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Answered in 1 minute by:
12/7/2017
Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago
Legal Eagle
Legal Eagle, Lawyer
Category: Real Estate Law
Satisfied Customers: 15,650
Experience: Licensed to practice before state and federal court
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Hello! I am a licensed attorney, admitted to practice in state and federal court. I have a nearly 100% satisfaction rating (click here for more info) so all that means is that you can count on me to help today. Because I want to provide you with the most accurate answer possible, do you mind if I take a moment to review your question?

Please keep in mind that our conversation does not include an attorney-client relationship and this is for general information purposes only.

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Customer reply replied 9 months ago
Please do. I also have the contract and correspondences if you would like to see them.
Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

This appears to be a classic breach of contract by the person because they are requiring an acceleration of the purchase price without any legal justification to do so. A breach of contract just simply means that one party was obligated to perform and they have either have not performed or have said that they will not perform. Typically, the aggrieved party is entitled to be returned to the same position they were in before the breach. There’s a site that I’ve used in the past where you can find a good template for advising of a breach of contract. It's a bit easier (and cheaper) than going through litigation and I have seen it be effective in the past. If this doesn’t work, sadly, the only other option is to either go through an informal mediation or file a lawsuit in your local court. This website is also pretty cool because they have some state-specific breach of contract forms that you can use as well. Click here to choose your state and get started.

If you returned the keys, then you may unwittingly be agreeing to these new terms that she is saying existed. Thus, I would recommend holding onto the keys until you're able to reach a new agreement with her either to cancel the agreement, sell it back to her, or figure out what you're doing with the utilities and taxes.

What other questions did you have for me today that I can help you out with:-)?

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Customer reply replied 9 months ago
Are we obligated to pay the taxes and utilities if we don't send back the keys? I've included a copy of the page in the contract that pertains to taxes and utilities.
Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

Let me look...

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Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

Thank you very much for your patience. So, the bot***** *****ne is if she agreed to pay for the taxes and utilities for the duration of the agreement, then she cannot later say that you owe for the taxes and utilities. It's a breach of contract and if she tries to cancel the agreement, then you can sue her for any damages you suffered.

What other questions did you have for me?

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Customer reply replied 9 months ago
I just realized I sent you the wrong copy. It was changed from that version before we signed it. Attached is the signed copy. So, even though it says "....and may collect the same from the Purchaser by giving 30 days' notice in writing", she can not collect on them because it first states "For the duration of the Agreement, the Seller will be responsible for all taxes and assessments levied against the Premises..."? Sorry, just want to make sure I am perfectly clear on our rights before responding to her.
Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

Ok, let me take a look at your updated copy.

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Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

Ok, I had a chance to review this in detail. One moment...

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Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

Ok, after taking a look, it seems like the seller is able to come after the purchaser for the utilities and taxes. It is an odd term of the agreement, but if the purchaser does not comply with this term, then it triggers the default actions for the seller. Your best bet here would be to argue that this is an ambiguous term and that it can't be enforced. I don't know that a court would be able to make sense of that particular term only in part because it's hard to understand why the seller would be able to go after the purchaser for something the seller agreed to pay. Could you help me understand that term a bit better?

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Customer reply replied 9 months ago
I don't quite understand it myself. She never mentioned it to us when we signed, she only said that she would pay the taxes and utilities because they are very cheap (taxes are $400 per year and utilities are typically less than $15 per month). It wasn't until after we told her we couldn't make the balloon payment when she requested it, that she came after us for the taxes and utilities for the duration of our agreement. Seems to me like it's retaliation against us for not agreeing to the acceleration of the purchase price.
Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

Interesting. It may seem like some sort of negotation is going to be your best way out of this altogether.

One little known, but very effective tool that lawyers use when there isn’t a law that they can rely on to support their position is called principled negotiation. All this means is that you are looking to get something done on the basis of principles, even if you can’t find a law to support you. It takes the anxiety out of dealing with the other side because you’re focused on the facts, not each other.

Here are some simple steps you can follow:

  1. Figure out what the other side’s interests are (saving money, saving time, etc.?);

  2. Think about what your interests are (saving money, saving time, etc.?);

  3. Come up with 2 to 3 reasonable and objective ways to solve the problem;

  4. Present it to the other side;

  5. If the other side rejects, ask them, “Is there a reason why you do not feel it is necessary to negotiate?”

Of course, these are just building blocks to get the other party to help solve the dispute. Believe me when I say that good lawyers use this technique all the time to keep things out of court. You’ll find that it is very effective even with the most stubborn of individuals.

You may want to just agree to pay the taxes and utilities in exchange for her not trying to pursue you for the rest of the property amount or you can just agree to buy her out if it is affordable for you.

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Customer reply replied 9 months ago
I have tried to negotiate with her but she refuses to respond. She just keeps sending these "Written" notices which have only been sent to me via PDF attachments to an email. I really just want her to go away and I refuse to pay anything more after all of the time and money we've put into it.
Real Estate Lawyer: Legal Eagle, Lawyer replied 9 months ago

I can understand. You may be able to sue her on the grounds that this term is either unconscionable (very unfair) or ambiguous. A court would either interpret that agreement for you or allow you and her to rearrange that agreement in a way that makes sense.

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