October 22, 2012
The Price Of Failing To Read the Fine Print
I sit here today, bruised and sore from all the butt-kickings I've given myself over the past six weeks. Now, me being an idiot in my personal life isn't all that rare; in business, it's much less common. However, my post here should serve as a reminder to everyone that written agreements are the only ones that matter.
A couple months ago I received postcards from two different land buyers in Florida. Each wanted to buy a residential parcel we own in Cape Coral. Each was offering a similar amount, but one offered to shoulder most of the carrying costs. We weren't really looking to sell the lot, but had also been presented an opportunity to buy three other lots around the country. If we sold the lot in Florida, we would clear enough to buy these three others.
I called the number on the postcard and spoke with their Acquisitions guy. I told him he and his competition were about neck and neck on the price; was there anything he could do to help me remove the other bidder from the equation? He then offered a little more than his original price, and also said he would pay all closing costs. AND...and he even put this in an email..."If you decide to sell, we can close in 15 days."
The date of that email was September 13th. I agreed and signed his one-page Purchase Contract that same day. Now, on the contract, the Closing Date clause reads: "Transactions to be closed within 60 business days (or sooner) of receipt." Me, being the trusting guy I am, read that and thought "OK, but he told me (verbally and in an email) 15 days." Because of that, I made no effort to change the timeline in the contract.
The guy told me someone from the title company would be contacting me within the next few days to coordinate the closing. Two weeks later, no contact from the title company, no contact from the buyer. When I asked the buyer the reason for delay, I was asked to be patient as the title company was working on over 100 files for them. Wait a minute...YOU, Mr. Buyer, told me 15 days. I didn't ask for it; I simply expected you to honor your word.
The more I inquired about delays, the more irritated and abrupt the buyer got. More than once I got a snarky email about how "we have a contract" and "we're absorbing all the risk in this transaction, not you". Each time, I assured the buyer I wasn't looking for special treatment; I just wanted him to hold up his end of the deal. Every time I referenced the 15-day closing period, it garnered about as much of his attention as a salad in a BBQ joint.
We are now almost six weeks out from the signing of the contract. My option to buy the other lots expired, so I don't even have a reason to sell the lot anymore. I am now stuck in this contract until his timeline passes. I PROMISE I will remove myself from this contract THE DAY it expires. I also PROMISE to share the name of the buyer in this blog should they not perform as per the contract.
Please let this be a warning to you: The ONLY thing you can bank on is the verbiage in the actual contract. The other party may try to tell you it's just a formality, or "worst-case scenario", but anything else they say or do that contradicts what the contract says, ASSUME THEY ARE SIMPLY LYING TO YOU IN ORDER TO GET YOU TO SIGN IT.
I hate that I'm stuck in this situation. I know better. It is yet another reminder that in business, if you don't protect yourself, nobody else is going to come to your rescue. After doing some research on the company (which I should have done BEFORE I signed a contract with them), I learned they try to resell the lots to local investors before they have to put out any money. That only makes sense - they are delaying my closing until they are able to sell the lot to a third party and make a little in the middle.
There was never any intent to close in 15 days. I got reeled in hook, line, and sinker. I just hope the buyer realizes he's gonna need a bigger boat to land this sucker.
Make it a great week.
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