Dishonest Home Seller; what can we do?

southwardbound2 · Jul 24, 2008

We made an offer on a DR house through a real estate agent and confirmed it in writing with an email, since we had already returned to USA.

Agent submitted our offer via email and telephone to seller, who was also in USA. Seller accepted verbally to agent and then sent email to his attorney in DR, stating terms of sale contract and instructing him to accomplish the sale. Seller carbon copied this email to the agent, who then sent it to buyer. All this happened on Day 1.

Buyer retained DR attorney on Day 2. Buyer attorney contacted seller attorney, informing of this arrangement.

Buyer retained a builder for home inspection which was completed at buyer's expense on Day 2 after offer accepted. Sale was "as is condition" and buyer accepted the defects found.

Seller communicated with agent by email on Day 5, just before paying retainer to his attorney, essentially making sure the buyers intended to complete sale after the inspection, because he had to pay non-refundable legal fees. Agent reaffirmed by email that buyer was moving at all possible speed to close as soon as seller's attorney finished with paperwork.

Inventory was accomplished by agent and finalized by seller on Day 10, then emailed to seller's attorney for inclusion as part of closing paperwork.

On Day 12 closing was confirmed to agent as set for Day 16 after offer accepted by seller. (a weekend in the middle here).

On Day 14 seller notified agent by email that he would not complete the sale and was selling to someone else who made him a better offer! Too bad for the buyer and the agent who were acting in good faith!

And he's not even embarrassed that he admits his word is no good and will not reconsider! Does this kind of thing happen in DR all the time??? We have spend thousands of $$ starting to close our house up here, buying a car in DR, changing phones, etc., etc.

What can we as buyers do anything about this about this? I am shocked that a seller can do this and cheat a real estate agent out of a commission as well.

BushBaby · Jul 24, 2008

More knowledgable people will doubtless come in on the matter of Dominican & US Conveyancing laws but what does your US attorney have to say about this? The 'Agreement' was made & actioned from the US, via e-Mails from within the US. Maybe you have a case through US Courts? ~ Grahame.

Robert · Jul 24, 2008

Your lawyer should be able to help you out and advise what needs to be done.

Do you have a preliminary contract (Promise of Sale or Option to Purchase)?

This is normally drawn up by your lawyer. Also, the better law firms will refund money based on the amount of work they have completed. They usually break this down from day one, so you now exactly what you will need to pay at each stage.

southwardbound2 · Jul 24, 2008

No, our lawyer was doing that as part of the closing since that was only 2 weeks from our offer. Maybe we got bad legal advice....but both we (buyers) and seller are in USA while all this is going on, so no one was in DR to do this. However, the trail of emails in this are very detailed. It seems liked like it would be more than sufficient to constitute a contract. But I am hoping to somehow stop the sale to new party (friend of the buyer who is in DR) so I can at least have a chance to get legal relief. We are out of pocket big bucks.

Hillbilly · Jul 24, 2008

Sue the bastard!! Get a lawyer in the US present the paperwork and go after him....

It "seems" that there is a breech of contract involved here...

HB

Tamborista · Jul 24, 2008

all eyez on me said:
There is no breach of contract. you dont have a leg to stand on

You should have exchanged subject to a survey not the other way round

It sounds like you know how this works, are you The Donald perhaps?

tambo'

southwardbound2 · Jul 24, 2008

I don't understand

all eyez on me said:
There is no breach of contract. you dont have a leg to stand on

You should have exchanged subject to a survey not the other way round

Sorry, what does "exchanged subject to a survey" mean?

and "not the other way round" doesn't mean anything to me. Would you mind explaining these please?

southwardbound2 · Jul 24, 2008

I'm obviously new here

Tamborista said:
It sounds like you know how this works, are you The Donald perhaps?

tambo'

OK, who is "The Donald"? Donald Trump???? So is this a joke I don't get?

And how DOES this work? I had hired an attorney because I knew I we didn't understand DR law, and did everything else I could as soon as I could. But somehow it wasn't correct. I wanted to do a contract like we do in the USA, but was told that wasn't the way it was done in the DR. OK, who was I to tell my attorney how to do his job? And this attorney was recommended as a very good one.

Got to say, this is not a nice way to start out in a new country. But the seller is an American, not Dominican, so it's not the fault of this country that he is unethical.

bob saunders · Jul 24, 2008

all eyez on me said:
aaw poor you

if a small inconvenience like this ruffles your feathers this much, i dont think you are suited to living in a foreign country

You made several comments - now qualify them. Why doesn't he/she have a leg to stand on. If you are going to make such bullsh-t comments at least have the cojones to answer them.

Chris · Jul 24, 2008

Oh man... I think you're full of it. What does your attorney say? Or do you have a good 'email trial' with him/her too?

SKing · Jul 24, 2008

all eyez on me said:
aaw poor you

if a small inconvenience like this ruffles your feathers this much, i dont think you are suited to living in a foreign country

Por el amor de Dios....just shut up.
Offer the person some advice, answer their question, or keep it moving.
You are just so rude.

Just what we need on this site, another a**hole!
SHALENA

Lambada · Jul 25, 2008

southwardbound2 said:
But I am hoping to somehow stop the sale to new party (friend of the buyer who is in DR) so I can at least have a chance to get legal relief. We are out of pocket big bucks.

I don't know if you can hold up the sale by using a lien on the property until you are reimbursed to some extent - a good lawyer would be able to advise whether you have sufficient burden of proof to achieve this. Certainly there are properties here in DR which have remained unsold for years because they have liens on them. And if you can't stop the sale you might want to ensure that everyone concerned pays the correct taxes by having a friendly chat with the DGII

.

southwardbound2 said:
and did everything else I could as soon as I could. But somehow it wasn't correct.

Therein, I'm afraid, lies part of the problem. You probably went at this too quickly and insufficiently informed about the pitfalls. Talk to your lawyer about remedies and if your lawyer is no good, do a search of these forums for recommendations for a good one. The Promise of Sale is one of the protections good lawyers usually insist upon.

southwardbound2 · Jul 25, 2008

Lambada said:
I don't know if you can hold up the sale by using a lien on the property until you are reimbursed to some extent - a good lawyer would be able to advise whether you have sufficient burden of proof to achieve this. Certainly there are properties here in DR which have remained unsold for years because they have liens on them. And if you can't stop the sale you might want to ensure that everyone concerned pays the correct taxes by having a friendly chat with the DGII .

Therein, I'm afraid, lies part of the problem. You probably went at this too quickly and insufficiently informed about the pitfalls. Talk to your lawyer about remedies and if your lawyer is no good, do a search of these forums for recommendations for a good one. The Promise of Sale is one of the protections good lawyers usually insist upon.

What is the DGII? So that might be a way to get at least reimbursed for some of this?? Because we suspect this new sale is a done deal, see below, not an arm's length transaction at all. In fact, the new buyer claimed he was the new owner a least two days before the seller even notified us that he was reneging.

At first my lawyer was as outraged as we were. He said there was no question that we had a contract; the only question was whether it was a legally enforceable contract. He said ALL the parties involved know the TRUTH of the matter was that an offer was made and accepted AKA a contract, but the seller is now acting in bad faith. He was to be researching if the emails would be accepted in DR courts as they are in USA system.

Then, through the coconut telegraph, we learned a guy who is a friend of seller (lives in the DR) claims to be the new buyer. And, because of the feedback here on the forum (Thank you everyone!) we are figuring out that our lawyer may have not done what he should have.

Problem is, now that we know who claims to be new owner, my lawyer just withdrew from the matter due to "conflict of interest"! His email withdrawing states this is because one of his clients "might be involved in the transaction" ....his client is the brother of the seller. So that was another shock and we are getting suspicious. We must have gotten a better deal on this house than we knew, although it has been on the market like 5 years!! So now I have to find another attorney as well.

Lambada · Jul 26, 2008

southwardbound2 said:
What is the DGII? So that might be a way to get at least reimbursed for some of this??

Direcci?n General de Impuestos Internos - the tax people. No, they won't reimburse you, they will go after buyer if taxes haven't been paid. The wink sign signified emotional satisfaction not financial.

Your ex-attorney has a client who is the brother of the seller? Wouldn't this have been known at the outset (I mean the guy didn't just become his brother!). Could all be innocent I suppose or......... it could have been a set up. Either way, your questions indicate your beginning level of knowledge about house purchase in the DR and you really do need a good lawyer. Get one & take it from there. Good luck.

cobraboy · Jul 26, 2008

Why wouldn't wording in the contract outlining severe financial penalties for the seller if, for any reason on HIS* contractural performance, the deal is not consumated by a specific date, including reimbursement for the buyers costs accrued to the point of the contract cancellation. Wording that would hold up in a Dominican court.

Additionally, how about a contract with the attorney stating penalties for HIM* should any conflict of interest not be specifically disclosed. Hiring a lawyer without doing some research for such an important matter would be like hiring a baby sitter without doing due diligence on her*.

I have read the OP's statement of events. I see emails were exchanged about terms of the sale. Nowhere do I see where an actual contract was drawn up and signed/witnessed by both parties. If I'm wrong, please correct me.

Based on the above, if I understand correctly, I don't see where 1) there was any enforceable contract and 2) any disclosure of legal representation conflict of interest.

I think the OP is screwed, and doesn't have a legal leg to stand on.

Caveat Emptor. The OP just paid school tuition.

In the memorable words of one Ronaldo Magnus, "Trust, but verify." Contracts and due diligence are like fences: they make good neighbors.

J D Sauser · Jul 27, 2008

Real Estate transactions don't always go smooth. They also bear risks and costs. Just the intent of selling and buying can bear costs which may never be recuperated by either party whether the "deal" does or does not close in a satisfactory manner to all parties involved. Being an investor does not come free.

I can't find any indication of a contract or sale (promesa de compra venta) or option agreement (opcion de venta) having been signed by both parties with the customary deposits or option premiums having exchanged hands in the OP's initial description of events (post #1).
Verbal "contracts" are legal in some countries... but I doubt that this would stand the test of the courts in this country, neither is it an advisable way to proceed when doing Real Estate transactions in most any country in my opinion.
E-mail correspondence may be acceptable as proof of a promise of sale in some countries... but then... I think it is a long shot to try to force somebody into a sale, especially if no deposits have been paid to the seller.

I think that the OP, should instead indeed feel somewhat lucky, as, besides some fees here and there and the time wasted, at least he is not in the undesirable position of having to fight an unwilling seller to get his deposit(s) back.
Let it also be reminded that it should be usual to pay agents and attorneys a percentage fee or honorary on a deal closed. Certainly, contractor costs, like building inspectors are advance fees a fond perdu.

My advice is, take it as a lesson, as a buyer in general, and move on applying the them.

Again and as always, this is NOT legal advice, just my opinion.

... J-D.

PICHARDO · Jul 27, 2008

southwardbound2 said:
We made an offer on a DR house through a real estate agent and confirmed it in writing with an email, since we had already returned to USA.

Agent submitted our offer via email and telephone to seller, who was also in USA. Seller accepted verbally to agent and then sent email to his attorney in DR, stating terms of sale contract and instructing him to accomplish the sale. Seller carbon copied this email to the agent, who then sent it to buyer. All this happened on Day 1.

Buyer retained DR attorney on Day 2. Buyer attorney contacted seller attorney, informing of this arrangement.

Buyer retained a builder for home inspection which was completed at buyer's expense on Day 2 after offer accepted. Sale was "as is condition" and buyer accepted the defects found.

Seller communicated with agent by email on Day 5, just before paying retainer to his attorney, essentially making sure the buyers intended to complete sale after the inspection, because he had to pay non-refundable legal fees. Agent reaffirmed by email that buyer was moving at all possible speed to close as soon as seller's attorney finished with paperwork.

Inventory was accomplished by agent and finalized by seller on Day 10, then emailed to seller's attorney for inclusion as part of closing paperwork.

On Day 12 closing was confirmed to agent as set for Day 16 after offer accepted by seller. (a weekend in the middle here).

On Day 14 seller notified agent by email that he would not complete the sale and was selling to someone else who made him a better offer! Too bad for the buyer and the agent who were acting in good faith!

And he's not even embarrassed that he admits his word is no good and will not reconsider! Does this kind of thing happen in DR all the time??? We have spend thousands of $$ starting to close our house up here, buying a car in DR, changing phones, etc., etc.

What can we as buyers do anything about this about this? I am shocked that a seller can do this and cheat a real estate agent out of a commission as well.

Without a sale contract signed and stamped, you pretty much have 0 chance of anything in the DR. Offers are not binding in the RE market of the DR. The only thing that that serves a buyer security is a contract between the seller and buyer, were is states the purchasing price agreed to and terms or conditions of the sale. A contract must be the #1 priority of any buyer of Dominican RE. It serves the legal role of securing your expenses in the event that the seller renegades on the terms of the sale or the sale itself altogether.

However with this being said, the terms of sale are open to litigation if the seller's or property (market drive) becomes too uneven in favor of the buyer. Then the courts decide what is a fair contract and terms if the litigation takes place. Once a contract is available a sale WILL take place no matter what! This contract is enforceable from both ends of the deal, buyer or seller.

No matter what experience you have in overseas RE dealings in the DR only a dully signed sale contract is enforceable as a legal instrument in any claim or counterclaim originated by such negotiation.

I could bath your dog, buy an expensive diamond studded collar for him, and pretty much take him to the vet and all bases, yet for all this, it's still YOUR DOG! If I had the chance to make a contract signed with lawyers present and stamped dully. After having spent so much dough in the dog, you MUST sell me the barking mutt like it or not! Simple enough?

Alfredo Guzman · Jul 28, 2008

If buyer and seller want to be mutually protected, they should always have a written and legally binding option to purchase or promise of sale signed. This would allow either party to seek specific performance and/or damages in case the other party breaches the contract. For example, had a properly drafted promise of sale been signed in your case, you could have sued in the land court to have the property legally transferred to you upon payment of the stipulated price.

For years at Guzman Ariza we have been publicly telling clients that American-style offers to purchase are not the best way to handle real estate transactions in the Dominican Republic. As a matter of fact, our website's "How to Buy Real Estate" publication says:

Real estate purchases in the Dominican Republic do not usually follow the North American pattern of a written offer tendered by the buyer to the seller, followed by the seller's written acceptance. Instead, after verbal agreement is reached by the buyer and seller on the price, a binding Promise of Sale is prepared by an attorney (solicitor) or notary public which is signed by both parties. (Notaries in the Dominican Republic are required to have a law degree.)

Because of certain peculiarities of Dominican Real Estate Law, it is recommended that the prospective buyer retain a real estate attorney (solicitor) before signing any documents or making a deposit. Depending on the wishes of the parties, the attorney (solicitor) may proceed with the due diligence first, before preparing the Promise of Sale, or alternatively, prepare the Promise of Sale first, conditioning the purchase to the results of the due diligence to be done in a specified term.

However, American realtors and other persons involved in real estate in the Dominican Republic find it difficult to put aside the method used for real estate transactions in the US. Using the offer to purchase method will almost always leave them without legal recourse in case of breach of contract, because of the very strict Dominican admissibility of evidence rules (Art. 1341).

CJnNJ · Jul 30, 2008

I have a few questions maybe someone can answer regarding this RE transaction and similar contracts in DR.

1. Are email messages valid contracts, since nothing is signed/notarized, and thereby unenforceable?

2. If they are valid, does it make a difference that both parties were american, and initiated and signed these contracts on US soil?

Thanks.

CJ

J D Sauser · Jul 30, 2008

CJnNJ said:
I have a few questions maybe someone can answer regarding this RE transaction and similar contracts in DR.

1. Are email messages valid contracts, since nothing is signed/notarized, and thereby unenforceable?

2. If they are valid, does it make a difference that both parties were american, and initiated and signed these contracts on US soil?

Thanks.

CJ

Being American or what ever make no difference nowhere.
If any form of contract written in the US would be legal in the US... it would only be so in the US... even if it were two Dominicans signing... in the US.

In the Dominican Republic it is Dominican law which rules everything (very similar to how US law governs most everything in the US, no mater the nationality of the parties involved).
In the DR, it would so seem that you need a signed, notarized contract to enter into a legally binding agreement.
If you haven't done so already, you may find studying the attorney's post just above yours interesting.

... J-D.

Alfredo Guzman said:
If buyer and seller want to be mutually protected, they should always have a written and legally binding option to purchase or promise of sale signed. This would allow either party to seek specific performance and/or damages in case the other party breaches the contract. For example, had a properly drafted promise of sale been signed in your case, you could have sued in the land court to have the property legally transferred to you upon payment of the stipulated price.

For years at Guzman Ariza we have been publicly telling clients that American-style offers to purchase are not the best way to handle real estate transactions in the Dominican Republic. As a matter of fact, our website's "How to Buy Real Estate" publication says:
Real estate purchases in the Dominican Republic do not usually follow the North American pattern of a written offer tendered by the buyer to the seller, followed by the seller's written acceptance. Instead, after verbal agreement is reached by the buyer and seller on the price, a binding Promise of Sale is prepared by an attorney (solicitor) or notary public which is signed by both parties. (Notaries in the Dominican Republic are required to have a law degree.)

Because of certain peculiarities of Dominican Real Estate Law, it is recommended that the prospective buyer retain a real estate attorney (solicitor) before signing any documents or making a deposit. Depending on the wishes of the parties, the attorney (solicitor) may proceed with the due diligence first, before preparing the Promise of Sale, or alternatively, prepare the Promise of Sale first, conditioning the purchase to the results of the due diligence to be done in a specified term.

However, American realtors and other persons involved in real estate in the Dominican Republic find it difficult to put aside the method used for real estate transactions in the US. Using the offer to purchase method will almost always leave them without legal recourse in case of breach of contract, because of the very strict Dominican admissibility of evidence rules (Art. 1341).

Dishonest Home Seller; what can we do?

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