There are several ways the contract to purchase a house may be cancelled.  Certain deadlines must be met and several ways of determining value that may be negotiated.

The seller must have the bound posts marked to show where the property lies if requested to do so.  I recommend Brian Moseley & Assoc www.visurveyors.com A survey is standard in the US Virgin Islands and required by lending institutions and title companies because there were no building codes or zoning laws until the 70’s.  An owner could literally have built part of his house or fence on a neighboring property. 

The buyer must have a survey and “as built” performed within seven to ten days.  An “as built” shows where the house is in relation to the rest of the property.  This is done to show there are no encroachments (see previous post) and the buyer can have clear title.

A buyer, as an option, may have a home inspection performed within the first seven to ten days of an executed contract.  I recommend Adrian Bishop at The Home Inspector abishop@homeinspect.vi This would make the buyer aware of possible faults with the house.  The buyer then has the option of requesting the seller correct the faults, renegotiating the price, or backing out of the purchase and having his earnest money deposit returned.  The seller has the option of fixing, renegotiating the price, or saying take it as is.  This clause is in consideration to the condition of the house, it is not related to encroachments and clear title.   

Next is the appraiser.  Having your house appraised is always a good idea especially if you are not familiar with prices in the Virgin Islands.  I recommend Tripp Torcia at Appraisal Associates tripptorchia@gmail.com If you are in need of bank financing, an appraisal will be required.  If the appraisal comes in at the agreed upon price or higher, the bank will probably fund the loan if you qualify.  If the appraisal comes in significantly lower than the agreed upon price, the buyer may try to renegotiate the price to satisfy the bank.  If the buyer is unable to obtain financing within the specified time (usually 30-60 days), he will have to cancel the contract.

If the seller and buyer cannot come to an agreement and both are within the timelines set in the contract, the contract may be cancelled.  If either party is outside the timelines set in the contract, the parties each have their different recourse.

For this post I would like to define two terms.  Encroachment-when a structure of any kind (a building, fence, or wall) or portion of it extends beyond the land of the owner and illegally intrudes on land of an adjoining owner.  Easement-the right given to use the land of another for a specific purpose.

A closing date was finally set for last Friday.  All three lawyers, the buyers, the sellers, the listing agent, the selling agent, a rep from the title co, and a rep from the bank were all available.  All final bills had been submitted and the HUD statement was sent out.  Thursday afternoon I received an email from the sellers atty that the seller did not want to pay the commission to the real estate agents.  Since the seller became mysteriously unavailable until Friday evening, the closing was called off.

Over the weekend the listing agent had a chat with the seller and it was my understanding that the closing would take place on Monday or possibly Tuesday at the latest depending on everyones schedules. 

On Monday the seller decided that since he still had to pay the commission, he would try to have the buyer pay for the cost of removing the encroachments to the tune of about $12,000.  In the contract it states the seller must give clear and marketable title to the buyer.  This means the property has to be clear of encroachments.  The seller is now claiming that the buyer said they would pay for removal of the encroachments.  I have a few issues with this.

1. The buyer NEVER said they would pay to have the encroachments removed. Why would the buyer offer to pay for something that was not their responsibility? 

2. This language was never written in to the contract for sale, added as an amendment to the contract, and is not in writing from the seller or the sellers atty.

3. The buyer was never given estimates, consulted as to cost, or allowed to interview the company to do the work.  Why would the buyer give the seller carte blanche with their checkbook?

4. One of the encroachments was to be given an easement.  This means that the owner of the property to the north was going to say on paper that it was ok for the rock wall to be on their property and that that part of their property now technically belongs to the owner of the property to the south. 

5. The seller spent unnecessary money he is now trying to charge to the buyer for removing the wall that was to be granted an easement. 

6. The removal of the wall reduces the value of the property.

7. When the closing was scheduled for the week before and the bank requested all final bills to be submitted, there was no mention of the buyer owing the seller $12,000+. 

8. And finally, THE SELLER IS ALREADY SUING HIS TITLE COMPANY FOR THE MONEY SPENT ON CURING THE ENCROACHMENTS!!!   He is claiming his bank allowed him to purchase the land with encroachments without telling him.

You would think the seller and his lawyer would have remembered about a bill as large as $12,000.  It was only after the seller saw the amount of money they were receiveing from the sale of the house and the commission that was to be paid that the attemt to not pay the commission was tried.  After that failed,  the seller and his atty brought this bill up.

The problem for the buyer is that even though seller put his house on the market knowing about the encroachments, and the buyer has been waiting for the encroachments to be cleared for 7  1/2 months (they are still not officially cleared),  and the buyers have kept to everything on their side of the contract, the buyers cannot make the seller sit down and sign the paperwork.  The seller can tie up the buyers earnest money deposit that is held in escrow.  The only recourse the buyer has is to sue the seller.  This means going to court and could take years to settle.

Let me start by saying, buying a home here is the same process as buying one in the states.  Oh wait, but it is not.  

As far as I can remember, the lending institutions here need all the same information, they just go about collecting and organizing it differently.  There are a few additional requirements (like hurricane insurance) that were not required in other states I have lived in.  My customer and I have been under contract since February 14th, 2008 to purchase a lovely two unit home on St Thomas.  Today is September 21st and we still do not have a closing date.  Now it is not all the banks fault because there have been some changes and the seller has been slow (very slow) about some items, but I do believe if the banks here had more of an interest in doing things in a timely manner, this would not be taking quite so long. 

The first problem was that the property had three encroachments.  This means that a part of a structure (building, fence, driveway, etc) from one property is actually on another property.  Every time a home or lot of land is purchased in the USVI, a surveyor must go to the property and map the boundries.  According to the original builder of this house, everything was built two feet within the properties boundries, however the current surveyor has said that this is not true, so the present owner of the house has to “cure the encroachments” prior to closing.  Normally a lending institution will not lend you money if someone else can lay a claim on part of the land they are funding.  The present owner of this house was fully aware of the encroachments before listing the property.  In the contract it states that the owner has 60 days from notification to cure encroachments or leins against the property.  The encroachments were supposedly cured and resurveyed by August 15, 2008. 

My buyer could have (in retrospect should have )backed out of the contract after the 60 days.  The problem was that there was not a alot of choice in that price range, they really liked the house, and they could see a lot of potential for improving the property.

So, the next issue… the banks take on the appraisal.