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My husband and I own a construction company. We entered into 2 separte contracts with an owner/builder: (1) to frame an addition and (2) to manage the construction on the job for no longer than 5 months. The owner had the house up for sale when the contracts were signed. The contracts were signed on October 30, 2006 and work on contract #2 was to begin on Nov. 13, 2006. Work on contract #1 is to begin Nov. 27, 2006. Contract #2 states that the contract will become void if the house is "sold" before Nov. 13, 2006.
On Sunday, November 12, 2006 the homeowner left a message stating the house had sold that day. We tried for the next four days to contact the homeowner, who would not answer his phone and would not return our calls. Suspicious, I drove by the house which still had the "for sale" sign. I called the homeowner (who, by the way, is also the realtor) pretending to be a prospective buyer. The homeowner/realtor stated the house was still available. He stated he had an offer, but that he was not happy with the conditions, credits and contingencies the person wanted. He also started telling me about the construction he had planned but stated he changed his mind because he and his fiancee just had a baby. The first problem is that we did not define "sold" in the contract. I think it would be interpreted to mean a signed contract or the start of escrow here since there obviously would not have been enough time for escrow to close between the signing of the contract and the 13th of Nov. The second problem is how do I obtain proof or evidence that the house did not "sell" by the 13th? I would like some documentary evidence before filing a demand for arbitration. The third problem is whether or not the sold clause in the second contract for management will apply to the first contract for framing if the homeowner tries to say it was understood to apply to both (which it wasn't, but he's already proven that he will lie). Last edited by lexi : 11-18-2006 at 09:34 AM. |
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Unfortunately, this time of year is traditionally very "slow" .. and there's been a national increase in the rising numbers of buyers simply walking away from builders in the midst of construction (for a variety of reasons.) No seller is required to accept the first (or any) offer that comes along. It's possible that your homeowner's buyer may have presented an interesting preliminary offer that your homewner felt he could work with. It's also possible that after he called you, his buyer presented a counter with unrealistic demands and conditions that may have cost him too much to close on both transactions. How your buyer sells his property (bluntly, sorry) is not your concern, only that he comply with the terms of your contract with him. Your contingency agreement should've provided specific terms designed to protect both of you .. and if you're concerned he's not fulfilling his end, you should contact a real estate attorney, especially if your buyer is also a real estate agent.
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