Greedy Landlord Stealing Lease Option Deposit

[CommonLAW]

Scenario: $1,500,000 house, sitting vacant 1.5 years, new buyer finally comes in with lease option plan...

Lease w/ Option Agreement entered X/07. Non-Refunable Deposit of $XXX,XXX required, 75% due at signing, 25% due at 6th mth. By 3-4th mth, renter communicates with owner that work and finances have changed, renter requests permission of owner to seek alternate buyer to assume option with intention to get original $XXX,XXX deposit back... Owner agrees verbally, and also agrees verbally to reduce house price if the sale can comence 12 months early.

Renter proceeds to find new buyer, New buyer is identified who can close 12 months sooner, all seems to be in order except that an agent is now involved who wants 5%. Based on verbal agreement by owner, renter increases sale price of home by $20k, assuming owner's promise to reduce house was *at least $20k - all seems in order and back on good terms. Renter is told the deposit wil be returned.

Owner coaxes renter out of contact info for new buyer on promise to refund money, following day the home is in escrow, lawyers are in the middle now, and owner is claiming he never agreed to this arrangement... NOT ONLY THAT, he's moving to evict on premise renter is in breach (21 days into the month) since renter did not pay March rent... though this was suggested by owner. Since new buyer was handed over at start of March, 25% additional portion of deposit due during March was also not paid (again, on recomedation of owner).

Renter has 4-5 emails to the effect stating owner's understanding of the deal, but not a lot of correspondance from the owner... Though the owner often commented on other aspects IN EMAILS, he was always evasive in recognizing renter's repeated attempts to have his requests acknowledged regarding the return of his original deposit.

Renter also has emails acknowldging owners 'agreement' that he said he would reduce the house for an early close... The owner also eludes to the transaction as though he knew renter was looking for a way to find new buyers. The owner has even cc'd his own council to the effect.

Today, Owner is trying to steal the Renter's $XXX,XXX deposit on the grounds Owner was not a party to the decision that led to a new buyer coming into the picture, though in MANY emails he admits the renter is THE reason there is a buyer, and that he had knowldge of this plan... on some level, he is taking the stand he is not required to refund deposit. All of this is happening in a HUGELY depressed Real Estate climate, and after this house sat VACANT for 2 years in a dead market!

At the end of the day, the owner is trying to push the very person who helped him out from under a dead horse right out of the picture as though the renter should be penalized for helping sell the house SOONER and FOR MORE. That Renter is me, and I have a lot of money on the line here. Attorney's have been hired, I am just fishing for ANY more thoughts from the public or from the group that might help us.

We have a lot to loose here - I want to be sure we prove beyond a shadow of a doubt that he was an active party to the decisions that led to us finding another buyer AND that he was WELL AWARE our intention was to have our deposit returned. I want to be sure we are standing on 'terra firma'.

Thank You,

commonLAW

Your bigggest problems are that you didn't get things in writing. Had you had the alternate arrangements in writing and signed by both parties, there would now be no disagreement about the specifics of the purchase plan. Additionally, you decided to coorespond by e-mail, which is inadmissable as evidence in most courts. You should have sent all correspondence by written letter and mailed certified, return receipot required, to prove receipt. Why would you even consider buying a $1.5m house based on e-mail agreements? Anything changed from the original sontract should be written up, signed, and notarized as if it was the first contract all over again.

[CommonLAW]

Thank you for your feedback. Just as an FYI, the Lease/Option contract (is) in writing and in great detail. I agree 100% that we should have got the 'parting agreement' in writing, we sent the owner no less than 6-7 emails to this extent. He told us time and time again, 'my lawyer is working on it'.
The problem is, when we found a buyer, given the climate of Real Estate right now (especially in this price range), we were (very) anxious to (not) stand in the way of a smooth transaction... When the owner promised us he would return our deposit, but that "in the interest of concluding a Purchase Contract, we should just BELEIVE HIM and let him start the process"... we felt it was in ALL parties best intrerest to have some faith in his words.
Our lawyer is confident the emails will hold (some) water to the extent there are (many), and (each) is demanding him to put something in writing, (each) is making it VERY clear that we are expecting our money returned.
Our lawer is confident his willingness to respond to our emails, but that he neither suggests he will or (will not) refund our deposit is grounds to sufficiently proove he was not 'disagreeing' to our request, which is better than not agreeing at all.
ALSO, in his own emails, he illudes to our agreement several times, he even admits to agreeing to lower the house price... Again, our attorney feels there is enough between the 4-5 emails to prove the owner was 'a party to the direction this transaction went'.
The clincher here is that he entered into a Purchase Contract on the 4th of March (BEFORE) our Lease Option agreement was over, or before he even sketched something in writing that resembled a "termination agreement" with us.

In effect, he breached his contract with us when he entered into another contract. Not only did he breach our agreement, but he cannot "lawfully" deliver this house to another party UNTIL our parting agreement is decided.

I am curious about the emails though - you mention they don't hold weight? Our attorney is banking on them... Have you got any other thoughts on this? Or if anyone else in the group has thoughts on the amisibility of email correspondance, I would sure appreciate it.

THANKS!
CommonLAW

The reason e-mails don't often hold up in court is because they are so easily faked. I can use any publishing program and in minutes write up an entire conversation through e-mails that never happened. The publishing programs avaliable out there now make it so easy to fake these types of things that I could show you 2 e-mails (one real and one that I faked) and you wouldn't be able to tell the difference. Unless you take your computer into court, there is no way to show that you actually recieved them and that they actually came from the other party. If the other party claims they are fake, how can you prove otherwise? For this reason, many courts and judges won't look at e-mails. They are as hard to prove as a verbal agreement. One person says they are real, the other fake.

Phone calls are the same thing. Even if you took a phone record of your calls into court, that won't prove a conversation. It only shows that you called that number or that number called you, but doesn't prove what the ensuing conversation (if any) was about. Sometimes text messages will be accepted by the court (the phone will show what number the message came from). You can't fake that. But an e-mail only has a certain format where it shows the sender's address (which may or may not be easily deciphered as being from the sender since some people use cryptic names on their e-mail) and can easily be typed into an publishing program to look like it came from there. Any computer savvy judge knows this. Your attorney should too. If you are going to try to use these in court, take a photo of your computer screen showing them listed in your incoming mail (it will show the date and time). That may help some.

The other problem with e-mails is that they are not a contract. They are more of a conversation. They are not signed. Conversations don't hold up in court. Signed contracts do. A written e-mail is not a signed contract. Without a signature, it may show nothing more than intent, but not necessarily agreement. An intent to buy a house is not the same as a signed contract to do so. I may intend to buy your house and may tell you I want to, but if I don't sign on that dotted line, my intentions are worthless. So while your attorney believes that the e-mails (if accepted) prove the owner was 'a party to the direction this transaction went', they don't show a written agreement to do so. (Frankly, I'm surprised your attorney is putting so much weight in these e-mails. - purely my personal opinion)

The next issue is that you entered into a rent to own type agreement, which is not covered under LL-Tenant laws. These agreements are covered under purchase contracts. Most state laws say any RE purchase contracts must be in writing, so the one you have in writing may be the one that will hold up in court. Verbals will not. (Your atorney should know this too!) And that RTO agreement may have some clause in it that says you forfeit any and all money if you default on the contract (which you did when you didn't pay the rent or the 25% deposit this month). If that clause is in there and the judge won't accept your e-mails, you're in trouble. You may have just lost that money and your attorney's fees.

[judg4]

Good comments!

[CommonLAW]

Thanks "Unreg" and "Judg4". Your insight and comments are much appreciated, keep 'em coming please. We do have a thourough and talented lawyer. He was quick to identify (among other weaknesses) that, "if" we are to go along with the owner's position that there was "no verbal or emailed modifications to the original wrtten agreement" in January (that is the owner's position btw), then "actually" the owner himself breached our Purchase Option Contract when he signed his name on, and entered a new purchase contract 18 months sooner with the intention to sell this home from under us this April 15.
Opposing counsel is now backpeddling and taking a new stand that these talks in January were 'settlement talks' and therefore inadmissable, to which our attorney has replied - "Question - Were there talks, or were there not talks?". Our attorney also pointed out, "these talks were in January, 18 months BEFORE the Option was to be excersized, at a time when everything was in PEFECT standing with the exisiting Lease/Option contract - therefore it would be VERY tough to prove in court that these were "Settlement talks" and THEREFORE these talks (if indeed both parties now agree they occured) WILL BE ADMISSABLE and WILL be considered as possible "Modifciation Discussions".
Of course then there is the issue of the fact the owner has replied in 2 "detailed" emails to ME (that he also cc'd his attorney) explaining what his "idea" of what he 'thought' our talks were about - ALL BUT HANGING HIMSELF on his own words.
Last but not least (I forgot to mention this before), the home is being sold WITH our furnishings... The purchase contract he entereCLEARLY details the INCLUSION of our furnishings... If we didn't have a verbal agreement, HOW IN THE WORLD DID THIS MAN THINK HE COULD BARGAIN WITH OUR FURNISHINGS.
I'm just an armchair attorney who has read and studied law for a few years, but I'm seeing a great case develop and this guy has a closing in UNDER 20 days... His home sat vacant for two years and the market today is no better (it's worse) - I pulled a title report and found he stands to BANK $320,000... (after he pays us back)...
Are people that GREEDY and that FOOLISH that they refuse to look at the possibility of a LOSS?!?
OH... one last thing...
His lawyer states "it's YOUR fault you marketed the home with such a HIGH interest (5%) to the person who helped close it...
Our lawyer confidently responded - "If you're suggesting MY Client caused YOUR Client to enter a Purchase Agreement with another client that didn't pencil out for him... then you are suggesting my client was acting in the role of "Agent" (which my lawyer thinks a judge might agree to since we did market the home and find the buyer) - Then we would be entiteld to ALSO recieve 50% of the comission...
I will keep you updated as I hear from counsel - The 29th is the drop dead, drop out date for all parties in the Purchase Contract... This Friday is our deadline for decided to 'settle' or put the gloves on.
Keep ya posted.

(By the way, I have contacted my hosting company for my website (this is also the admin of our email accounts) - They are able to go back 6 months and pull message records from the storage servers.

Stay tuned.

Electronic communication and Email is becoming a widely recognized source of evidence in many court proceedings. It can be modified, but since all parties risk significant losses if they are found to be 'tampering' and since most email service providers can retrieve messages in their entirety as far back as 5-7 years {incl. date, time, identity of originating email server ISP addresses, and exact message in exact detail}, it would very unwise to risk bringing anything but original and accurate data into court.
Furthermore, most states in the Union 'do' recognize "Verbal Modifications", even in circumstances where a contract prohibits it. Contracting is a great example of an area of law where [even with obvious contracual prohibitive writing] people still modify their agreements outside the four corners of original contracts and contractors [still] have a right to be paid and challenge people on the grounds a modification was made.
Not withstanding the above, the burden of proof is still on your shoulders and when there is even remote doubt, rest assured the four corners of white paper will prevail so you are better considering that and heading down that road.
There is apparently a contract in place here for one party to have an "option" on a purchase involving a significant non-refunable deposit, that option is apparently stretched over time with some performance graduated into it; including a second deposit payment; the option is apparently still in good standing on the date one party to the agreement elects to enter another contract to sell the property before the option term expires, and while the Option agreement is still in good standing.
Forget all of the communications. Forget all of what was discussed. Forget who agreed to pay what. The party who signed his/her name to sell this property outside the terms of the original agreement is in "Material Breach" of the four corners of original white paper that bound both parties to an option term.
Ironically, your grounds are fortunately very stong to prove "Material Breach" by virtue of his signature on a "new purchase agreement", thus the agreement itself could be considered "broken" and so, though all intention may have been good, the likelihood this owner will be required to refund the deposit is very good. He breached the agreement, not you.
If the market is as described, this owner would be a fool to challenge this in the courts. Not only will it probably kill his sale, he will likely wind up with a judgment for the balance of your deposit in the form of a Note of Interest against his property. That is, assuming the other parties don't sue him also for making a false warranty that he could deliver this home "unencumbered" with a free and clear title. The prevailing party may even be entitled to legal fees, and there may be some damages in the event the courts find "his/her" actions were ultimately what botched the successful sale.
I would hang my hat on the dates and times this owner entered into a new agreement. If he admits he did it because you discussed it and agreed to this mutally, then he digs an even deeper fox hole around himself. If he claims he did it without consulting you, then he is obviously in breach.
The courts will ask him point blank: "what did you agree to with your renter before you signed this purchase contract?" This will be a tough question to dance around - If he says "nothing", he's in big trouble. If he says "they agreed to take a discount on their deposit and go away", the courts will say: "show us the writing".
Your case is built on shifty sands, but if these facts are true, there is no way this owner will be successful proving he acted in anything but an unlawful way.
Personally, if there is a pending closing, I would be worried right now about my buyer catching wind of this struggle (most people don't like buying a home that is filled with bad blood), and I would be even more worried about the possibility everyone will turn toward me and expect to sue if this all falls through.
If it was my home, I would give you your deposit and kindly thank you for your services and ask that you please keep quite through the balance of this closing, which it seems is creeping up very soon.

[CommonLAW]

Settlement reached - $55,000. We are not leaving furniture. We will be paid from escrow. Could have worked out better, after legal fees we'll be lucky to see $50k. We're marketing the furniture now through sources - we think we might squeeze $10k-$15k more... We'll see.
Ironic twist of fate, our lawyer didn't let on during the last week, but he lost a releative (5 year old nephew) to an agressive cancer (literally all started with a nose bleed earlier this week, 4 days later, the little one was gone).
He is a great lawyer, and a good man. This was amazing lesson in what IS and WHAT IS NOT that important in life I guess.
He said to me today... "This is a great ending, as I see it, both parties will be equally pissed with this settlement".
We still have our health and our families... Better than the reality the played out in his life as he was writing his letters and fighting this battle for us.
Our heart goes out. Indeed, as I listen to my family up arguing about who gets to use the sink first - As much as it annoys me, my heart bleeds for this family sho just lost their little loved one.

I'll be sticking around this forum for a while... it's been very theraputic for me to vent and write.
CommonLAW

I have similar issues I am facing. This has been very helpful!!

[CommonLAW]

Dear Guest:
Our counsel was more than glad to litigate this and quite sure it would have been a succesful outcome (in our favor), but as in EVERY case, there are a few factors to consider (very heavily) before pulling the proverbial "legal trigger" - Once that trigger gets pulled, there's no getting the bullet back:

Time - What is YOUR time worth? (think of how this will affect your time, your family, your life, stress, e-v-e-r-y-t-h-i-n-g that goes into worrying over a case like this)
Risk - What is the TRUE Risk factor (1 low -10 high)? I know many lawyers who have seen LESS provable cases won in court because a judge was in a bad mood or overlooked something CRITICAL - it happens and is a RISK.
Cost - What will it cost to fight? (time, actual fees, potential losses?)
Outcome - What will YOU get back IF you prevail? Everybody goes into this thinking if they winn they get 100% (plus) lawyers fees - NOT SO. A judge has the right to modify the amounts, and even if an attorney fee clause is in the contract, a judge could cap it and you might not get back all that you have spent).

If after doing some math, you realize that you will not be compensated, and that even a 1-2 on a the risk scale IS STILL A RISK, and IF this will cost $10k plus to fight, possibly more... Consider what this JERK is willing to give you back... It may not be what YOU want, but it may be worth it to take the beating and let him deal with the bad karma...

I'll be floating around - I like this place!

CommonLAW