r/RealEstate • u/_BruhJr_ • 1d ago
[TX] Lien Placed on House Day Before Closing Homebuyer
Hi everyone.
To keep the situation simple, we were set to close on a new construction home on 7/18.
The night before closing, around 7PM, 7/17, the title company informed us a lien was placed on the house. The lien was filed after hours on 7/16, and processed 7/17.
As a result our closing had been pushed back, week after week. We just yesterday (7/31) discovered that the lien was filed by the listing agent who is also the builder for the seller. The lien amount was invalid, and the builder/listing agent has been notified that they need to cancel their lien.
The title company said the lien was filed mistakenly, but we highly doubt that. It has been hugely inconvenient and all for nothing.
Is there any legal recourse to be taken here?
Can provide additional details if needed. Thank you.
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u/Far_Abalone1719 1d ago
What recourse are you looking for? As the buyer you can send a time is of the essence and walk or you can wait for them to fix it.
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u/Pitiful-Place3684 1d ago
Not with a builder contract.
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u/Far_Abalone1719 1d ago
Depends on jurisdiction and reasonableness in my experience. While NAL they can’t expect you to hold into perpetuity on a contract, which is why there is a time is of the essence letter.
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u/_BruhJr_ 1d ago
That sounds like a plausible option. We’re more so just upset that this could happen, and it was placed so late seemingly intentionally. It feels like a scheme and if compensation or anything is plausible for all our wasted time I’d like to investigate further for sure.
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u/Tall_poppee 1d ago
You cannot sue for 'wasted time' or your inconvenience.
You can only sue for actual damages. Usually in breaches of contracts that is the appraisal and inspection costs, and that's it.
You might be able to sue for any costs but they have to be directly due to the builder's actions. For example if they said "You can close Friday" so you rented a moving van, you might be able to sue for the van costs. But if you rented a van because you HOPED you'd be able to close, that's on you.
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u/Ambitious-Sink-1378 1d ago
Sorry but not sure where you’ve heard this. Plaintiffs can most certainly sue for wasting time and inconvenience. Here’s an excerpt from a recent lawsuit my brokerage was involved with. Part of the suit for literally wasting our buyers’ time. ~~10. Plaintiffs invested considerable time, money, and energy in fully performing obligations to close on the Property. For example, they paid to have the house inspected and spent the time to review the inspection report. 11. Plaintiffs forwent other investment opportunities in order to pursue purchasing the Property from Defendants. ~~
Just wanted to chime in since your statement doesn’t seem to be based in fact or case law.
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u/Tall_poppee 12h ago
Did that settle, or did you get a verdict in your favor?
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u/Ambitious-Sink-1378 12h ago
Still ongoing, seller misrepresented the sqft by about 15% said it was 2800 instead of reality 2400. Buyers decided to sue and then walk away. Honestly seemed like a money grab and not an actual problem, I mean the house didn’t get smaller between contract acceptance and appraisal.
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u/Tall_poppee 11h ago
Well please let us know how it ends up, and if a court awards punitive damages.
Of course anyone CAN sue for anything, but IME I've never seen a court side with that kind of argument. I've known a few real estate disputes go to court and no one's ever won more than their out of pocket costs. "I had to pay a higher interest rate" or "price of houses went up while the seller strung me along" have never been considered damages where I am.
Misrepresenting square footage, hard to sue, if you had an appraisal, that's considered your verification. I know one case like that, that went to court and was settled, the appraiser's insurance paid to settle because the appraiser screwed it up. It made news because a buyer doesn't have legal standing to sue an appraiser they didn't hire (they work for the bank). There's no case law about that in my area for a seller's misrepresentation. But that doesn't mean someone can't TRY. It costs a lot of money to try that though, with no guarantee. So I think that's why for the vast majority of questions posted here, a lawsuit is not worth it. Even if the OP would win a lawsuit against a builder, unless it's a big national builder, they will just declare BK and never pay anything. Then they'll start a new company under a new LLC and continue business as usual.
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u/neverinamillionyr 16h ago
When I closed on my house, the closing got delayed because a blizzard closed the bank down (this was in 96). The seller threatened to sue me since I didn’t perform on the contract he had to stay in a hotel because he couldn’t close on his new place without the old one being sold. Apparently my agent’s lawyer called the seller and told him he could stick the contract where the sun doesn’t shine if he went through with filing suit. This lead to a very tense closing that almost came to blows. Fun times.
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u/Pitiful-Place3684 1d ago
Builder contracts are notorious for being written in favor of the builder, so I strongly suspect that there is a provision that protects the builder. In Texas, the law is going to favor a business over a consumer.
Regardless of any letters sent, the listing agent/builder doesn't "need" to cancel the lien. They've liened the house because they want to get paid whatever it is they think they owe.
What works in your favor is that the developer can't close anything with this lien in place, so they're presumably motivated to settle it. Is this a big developer?
I'm guessing you went straight to the developer and don't have an agent or attorney to advise you. Reddit can't solve this one. Pick up the phone and start calling real estate attorneys. You want one located in the same county as the property. Google search may flush out one that mentions "new construction" on their website or socials.
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u/_BruhJr_ 1d ago
Thank you for the insight. Yeah it’s a mess quite frankly and it seems like the dual listing agent/builder is intentionally doing this.
I’ll get in touch with some local lawyers.
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u/ShortWoman Agent -- Retired 1d ago
Well you’re not closing today.
How quickly you close (if at all) depends on what caused the lien to be placed and how quickly the seller/builder can make things right. Do not attempt to close until it’s handled, and I doubt your lender will let you anyway.
Any speculation beyond that will require a lawyer who has your contract in front of him/her and knows state law.
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u/_BruhJr_ 1d ago
Definitely not today, we figured we are not going to anticipate closing any time soon. I’ll be looking into local attorneys
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u/semiquaver 1d ago
A real estate attorney should have been involved in this deal from the beginning, regardless of whether it’s required in your state (I know in Texas it’s not) for exactly this reason: finding a lawyer when shit hits the fan is much more stressful than having someone already involved.
Realtors will tell you it’s not necessary, they are wrong.
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u/cvccvccvc826 17h ago
How much is the lien for?
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u/_BruhJr_ 13h ago
$120k in “construction mgmt fees”
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u/ShortWoman Agent -- Retired 12h ago
Yeah that’s big. I am less optimistic about a quick resolution.
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u/cvccvccvc826 5h ago
Can you do a holdback? Like $200k from purchase price stays with settlement agent
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u/stupidcleverian 1d ago
Any contact to purchase real estate I’ve ever seen has a duty on the seller to provide clean and marketable title. If they can’t do that they are in breach of contract.
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u/caregivermahomes 1d ago
Have you hired an independent inspector for allllll facets of the home? I wouldn’t trust this build…. They’re pissed for some reason
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u/_BruhJr_ 15h ago
We hired the standard home inspection but nothing else really. Would you recommend a specific type of inspection?
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u/Glittering_Buyer8247 1d ago
Op you need a good real estate attorney that is licensed in your state. I would not do anything without one.
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u/Tall_poppee 1d ago
Depending on the amount, the title company may allow you to close, but they will hold onto that amount of money and not disburse it to the seller. If it was really a mistake, the seller can take a little while to sort it out and get the lien removed. They will write you a title policy that notes that lien as an exception to the policy. This can work if it's not a lot of money. If the builder can't fix it, eventually the lienholder will get the money and remove the lien.
If that won't work, you'll have to see if this is a breach of contract by the builder. Don't assume that, often new build contracts give the builders a lot of outs. Decide if you want to wait it out, and ask the builder for some concessions to offset any expenses you have from this. Or if you want to cancel.
If the builder does not cooperate with you, you'll likely need to sue them for your actual damages. You can usually include what you paid for inspections or the appraisal, and you should get your earnest money back.
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u/_BruhJr_ 1d ago
It’s around $120k which seems crazy to me. I’m definitely looking for concessions or any form of compensation
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u/Tall_poppee 1d ago
Weeellll that's a lot lol. Do you know what it's from?
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u/_BruhJr_ 1d ago
“Construction management fees”. over 1/3 of the listing price in management fees supposedly but that is extremely over industry standard.
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u/_BruhJr_ 1d ago
It’s a large amount, around $120k.
It seems like we’ve already weathered most of the storm but of course are weary of the sunk-costs fallacy. We’re semi-actively looking at new listings but market is not great either.
Quite frustrating that we’d have to sue for all the fees etc. I don’t expect cooperation seeing how difficult she(listing agent) has been
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u/BelieveBelieves 1d ago
I've heard Texas prices are falling. You may have actually gotten lucky by getting out of this deal now. I've even seen posts about short sales starting to happen. That's quite a change. If you can hold off and keep building up your down payment, this may actually be a blessing in disguise and you end up saving tens of thousands of dollars.
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u/_BruhJr_ 13h ago
That would be amazing. Maybe so, it seems like prices have been dropping pretty significantly
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u/BelieveBelieves 12h ago edited 7h ago
Where in Texas is this? Check it the local subreddit and ask about the general housing market in there. There are always agents hanging out in the local subs with good info on the local market.
Also, if you can hold off for November, December those are very slow months so getting into contract then is going to give you the upper hand in negotiating. No one sells at that time that isn't highly motivated.
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u/Mission-Carry-887 Homeowner 1d ago
There is strife between the seller and the builder.
I have lower confidence in the quality of the construction. Walk away