Closing Day Showdown!

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A friend of mine recently told me, “You need to watch Tango & Cash.  You just need to.  Trust me.”

I wasn’t sure why, or to what end, but I figured, what the heck?

After finishing the movie in three different 35-minute sittings, I texted my friend and simply said, “Greatest film ever made.”

Ah, the 1980’s!

I don’t know what it is about films from this era, but they just give me that shiver down my spine.

The music, for one thing.  Something about that synthesizer, I guess.  Every song from every movie sounds like the synth in “Beverly Hills Cop.”

Tango & Cash was a classic 80’s movie, not really any good, but you can feel just how good it would have been if you saw it in the theatre in 1989.  Maybe the Hyland or the Hollywood at Yonge & St. Clair?  Those were great spots!

When I think of classic 80’s movies, I’m not quite as enamoured with the cult-classics.  The Breakfast Club seems to jump out at most people, and yes, I’ve seen it a thousand times.  Sixteen Candles also had a home on the shelf in our basement, along with all the other Beta-Max movies that my mother taped off TV.  But growing up, there was one movie that I saw more than any other, and I still know every line in the movie, off-by-heart.  The movie?

Footloose.

This movie probably fell into the “cult classic” bucket eventually, and a 2011-remake (that I’ve never seen) likely jump-started the love for Kevin Bacon’s 1984 film once again.

Everything about childhood is remembered for being bigger, longer, or more exaggerated when you’re an adult, looking back.  But I swear, with minimial-to-no exaggeration, I think we watched this movie once per week for five years in the 1980’s.

Every time my sister and her friends babysat, it was Kevin Bacon, Sarah Jessica Parker, Chris Penn, and the one that everybody remembers, but Hollywood forgot: Lori Singer.

If you’re a Footloose fan, you have your favourite scene, or scenes.  There’s nothing quite like the dance scene at the end of the movie, and I really do get shivers watching that.  God DAMN the 80’s, just, wow…

My favourite scene?  Without a doubt, the tractor scene.

For those of you that have three minutes, humour me.  Please?

 

 

Ah, I just watched this.  I got a shiver when Ariel threw her hat in the air.  Laugh if you want, but my arms had goosebumps the whole time.  Oh man, when Chuck jumped – I felt the shivers to my core.

I think I need a minute…

…anyways…

By way of introduction today, Footloose gives us the classic game of “chicken,” and it’s what many buyers and sellers play with one-another leading up to the day of closing.  When a dispute or disagreement arises before closing, it’s not always resolved right away.  Many of you can attest to this, and let’s agree that while it sure makes things easier to resolve the disagreement as soon as possible, it’s not always as lucrative.

Who is to blame is often open to interpretation.  But then there are times when right and wrong are as clear as black and white, and I always find the responses of all parties involved to be very, very interesting.

Let me tell you about a situation I’m going through as we speak.

A client of mine purchased a condo over two months ago, and negotiated a long-enough closing date to ensure the tenant would vacate before possession was taken.

Surprisingly, this is not about tenancy, but that’s coming up a lot more often these days.

My client purchased a simple 1-bed, 1-bath condo, with parking and locker, that he plans to rent out as an investment property.

Our offer was simple as well.  There was a series of back-and-forths on the price, but the general terms were accepted by both parties right off the hop; deposit, closing, inclusions/exclusions, clauses, and a condition on a lawyer’s review of the status certificate.

Now before I move on, perhaps a quick introduction to “legal description” of unit, parking, and locker is warranted.

Any real estate agent can go into Geowarehouse or Public Records and check out the legal description of a freehold, as follows:

The same goes for condominiums.

In fact, Geowarehouse and Public Records are exceptionally helpful for us agents, who are trying to make up for a poor job done by other agents.

Case in point: how many listings agents will detail the exact legal description of parking or locker?

Very few.

If a condo comes with parking, many agents simply denote “1” parking space, or “owned.”

Here’s an example of an agent not doing their job:

Great, that’s really great help.

Although to be fair, maybe we blame the Toronto Real Estate Board for not making the “Prk Lev/Unit:” field mandatory.  This simply allows listing agents to be lazy, and not spend ten goddam seconds looking it up.

Here’s an example of an agent who has done half of the job:

There’s one space, and it’s P3-68.

Great.

But that’s not the legal description, and P3-68 does not go into the Agreement of Purchase & Sale.

Here’s how the listing should be done, and I will note that, while I picked this listing at random, it comes as no surprise that it belongs to the biggest listing agent in Liberty Village:

That is how the MLS listing should read.

The parking spot number is 322, but more importantly, we know it’s “Level D, Unit 142” as per the legal description.

How goddam easy is this?

Here, look:

Easy enough, right?

There’s our legal description for: a) the unit, b) the parking space, c) the locker

But as you saw above, some agents don’t do this.  They don’t bother to look up the legal description, and simply put “owned” in place of the locker or parking space.

So back to the offer I made on behalf of my investor-client.  Well, guess what route the listing agent there took?  That’s right – she didn’t put anything on the listing other than “owned” for both parking and locker.

So I went into Geowarehouse, looked up the legal description of the parking and locker assigned to this particular unit, and wrote this into my offer.

Our offer was, presumably, viewed by the seller – multiple times, since there were multiple sign-backs, and never was any issue made of the parking or locker.

Fast-forward to last week, and the listing agent called me.

Now to tell this story properly, I have to detail that there was a significant language barrier present.  I’m not trying to insult anybody, or be insensitive, but it goes with the story, and I always like proper perspective to be shown.

The listing agent called me last week and told me that there was a “mistake” on the listing, and that there was no locker.

No locker…….where?

No locker, with this unit, I was told.

I asked the listing agent why the seller had sold us a locker – one that was detailed in Geowarehouse as being assigned to this unit, and the agent told me that the owner has a few units in the building, and a few lockers, a few parking spaces, and they’re all mixed up.

Personally, I like when people take blame voluntarily.  It shows character, resolve, and humility.  But I knew that was not going to be the case here.

The listing agent said, “No locker, no locker” to every follow-up question I had, including the single-most important question I asked: “What do you propose as a solution to this problem we have on our hands?”

No locker.

That was all she said, and that was her solution.

Again, maybe it was a language barrier, but when I told her, “We purchased a condo with parking and a locker, and the condo wouldn’t have cost as much if there was no locker,” she simply said, “No, no, no locker,” and made a case that the seller would never have sold for less, even if there was no locker.

That’s nonsense, of course.

After a frustrating conversation, I realized that her solution was that we simply move forward and close on this property, at the same price, without a locker.

And that simply would not be the case.

Her mere suggestion was so misplaced, words escape me.

We had a legally-binding agreement of purchase and sale for a condominium unit, legally-described, as well as a legally-described parking space, and a legally-described locker.

The seller was obliged to provide all three pieces of real property as agreed upon, otherwise, the seller would be in breach of contract.

But the seller, as we soon learned, didn’t see it that way.

First, came their offer of a $3,000 abatement on the price, which simply served to show how unapologetic they were for their mistake, and how cheap and petty they wanted to be.  A locker is “worth” at least $5,000, and you could claim it’s worth more in different buildings, and far more when you consider the legal fees on the transfer alone (if you were solely buying/selling a locker) could be $1,500.  Not to mention, how often does a locker come up for sale?  What if this were a building where lockers were hard to come by?

Eventually, the seller offered $5,000, and I told my client, and he said he would think about it.  He told me, “I really want the locker though.  I’m not all that interested in the $5,000.  I mean, $475,000 or $470,000 for this condo, it’s not a big difference.”

That’s fair, and ultimately it’s his decision.

So I told the agent that we wanted the locker that they sold to us; the locker that was agreed upon, via legal description in the legally-binding agreement.

I know this sounds redundant, but I can’t stress this enough!  We had a legally-binding deal, and what happened next goes to show you how little that meant to the seller.

My client called me later in the week and said that the seller’s lawyer had contacted the buyer’s lawyer, and said they “didn’t want to close.

Really?

Didn’t want?

We’re doing “didn’t want” and “don’t want” now?

If only it were that simple.

They signed a legally-binding document, and then decided they “didn’t want” to close.

Yeah, well I “didn’t want” to go to a birthday party last weekend for a 2-year-old I’ve never met, but I went because it was important to my wife that we attend together, and because, apparently, this is how human beings socially interact in today’s world.

I can give you a long, long list of “didn’t” and “don’t” want, as I’m sure you could give me.

And those aren’t legally-binding!

I told my buyer-client that I was somewhat amused by the seller’s stance.  I wouldn’t use the word “cute” to describe their actions, but it was naive for sure.

My buyer’s lawyer told the seller’s lawyer that we wanted the locker upon closing, as was agreed upon, and that if they didn’t provide the locker, that they would be in breach of contract, and responsible for damages.

So here’s the million-dollar-question: what can the seller actually do?

Well, we were never told whether or not this locker existed.  It existed on Geowarehouse, and it existed enough for the seller to sell it along with the condo and the parking space two months ago, but what’s actually going on here?  Perhaps the seller owns three condos, and two lockers, and didn’t know which belongs to which.  Perhaps the seller already sold this locker to somebody else, who knows.

Bottom line: if this seller owns another locker, then can provide this one upon closing, and the deal will close as scheduled.

If the seller does not want provide a locker, and if the buyer and seller do not agree upon a price abatement, then the deal will not close.

The leverage exists with the buyer, and only the buyer.

When the seller said, “I don’t want to close,” it made me laugh.  The seller could probably sell this condo for another $10,000 today, and the seller may or may not have possession of a locker, so of course the seller doesn’t want to close.  But does the seller really think that he or she is in any position whatsoever to be talking about not closing?

The seller has zero leverage.

The seller is facing a breach of contract.

The blame, not that it’s important, rests equally with the seller and the listing agent.  Both agreed that there was a locker to be sold with the condo, both looked over the offer and signed off on the locker as legally-described, and now both will have to figure out how to address their “mistake.”

As I told my client, I think the seller will offer up $7,000 – $8,000 on closing day, and this deal will get done.

I’m not one to quibble over a couple grand, but in this case, with the seller and the listing agent not owning their mistake, or offering anything even close to an apology, then arrogantly making demands, I’ll chase the money.

You know, I made a mistake last month.  A fair-sized one, although not about money directly.

I called the listing agent I was working with, and I told her, “I fucked up.  It’s been a long day, it’s late at night, I’m tired, and I really did screw up here.  We’re both going to wear this if we don’t figure it out, so can you help me find a solution here?”

She was a pro.

And she said, “It happens, David, don’t worry.  What do you want to do?”

We sorted it out, and both buyer and seller were happy.

I then dropped off two bottles of red wine at her office to say “thanks.”

Every agent approaches these situations differently, and I still think “You kill ’em with kindness.”

When that agent tried to tell me that there simply was “no locker” and that we should all expect to move forward without one in the deal, even though what likely happened is her client, owning multiple units, just happened to be using that locker for her own personal belongings, I decided that I wanted to push this one as far as it would go.

It looks like there’s a closing-day showdown afoot, but even Sun Tzu would admit that the ending here was never in doubt…

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