#168 in a series of true experiences in real estate
October 1996, Hills Newspapers
What a nightmare. We can’t close escrow.
All the papers were signed, our buyers’ money was in the title company, and within hours title would be theirs. Suddenly, unexpectedly, the Internal Revenue Service brought everything to a full stop.
The seller, IRS claims, owes them money. But there isn’t any money available. After all the seller’s liabilities are paid off – back property taxes and his loan and quite a lot of money already slated to go to IRS –there is nothing left.
And what’s really crazy is that there is less money as every day goes by. Because the seller’s loan costs and taxes go on, there is even less available for IRS.
Our buyers want to close the sale; they held up their end of the deal. This delay, now in the second week, is causing them anxiety, disruption to their lives. They had already given notice to their landlord that they would be moving, had hired movers, packed their things.
The title company talks to someone at IRS everyday, often several times a day. Things seem to be moving forward toward a resolution, but there isn’t one yet. Various IRS people have gone over the file and have come to the same conclusion. Nothing more can be squeezed from this rock. If the seller owes them more money, it will have to come from somewhere else.
It’s particularly frustrating to be in this spot because we tried so hard to avoid it. We knew from the start that the seller has financial troubles. He is behind in his loan payments, was close to foreclosure when he put the house up for sale. He had been remodeling the house but hadn’t quite finished the work. The kitchen counters were never done; they are covered with plywood, and so is the kitchen floor.
The walls were painted but the bathtub left unplumbed. Light fixtures are missing and there is a hole in the roof where a vent was to go. We knew all this, and so we alerted the title company: Find any and all liens against the seller. Let’s be sure that there is enough money to close this sale.
The title company did their job. They searched the public records, gathered all the available information. Weeks ago, when there was still plenty of time, they sent a notice to the holder of the loan, and they contacted IRS. As the demands came in, the money that the seller would have to pay was added up, and he was short.
There were a few anxious days during which the seller assembled canceled checks to show a couple of payments that hadn’t been credited to his account. Other adjustments were made, and we got past this crisis, or so we thought, until IRS filed this additional lien throwing a money wrench into the works.
Was there anything any of us might have done to avoid this situation? Could we have been more alert, smarter, more diligent? Unfortunately, no.
We don’t know of a thing we might have done differently. Not that that helps our buyers. They’ve been very patient, very understanding, but their high spirits, their glee at moving into their own house have been rather dampened.
They’d like to recover. We’d like them to recover. Phone calls today with IRS seem to indicate that they are now speeding the release process along. Hopefully, we’ll get an “all clear” in the next five or six days.
We realize that we are fortunate that nothing like this has happened to us before. We certainly hope that it won’t happen again, but it could. There are things that surprise in real estate sales, things that cannot e controlled, that make agents and buyers and sellers want to tear their hair out. Usually the surprises can be fixed. But fixing always takes thought and time.
Often emotions run high. Because buyers and sellers are in the midst of change, feeling at bay, they may, when there is a problem, speak and act too hurriedly. It is up to the agents to provide a voice of reason, to look at the overall picture and suggest thoughtful solutions. Or, having considered, to offer encouragement, good listening and patience while everyone waits.
Waiting is maddening, maddening for us all. We talk to our buyers everyday. We want very much to make that one call to them: It’s done. Congratulations!
