Is this a fair resolution to assignment agreement discrepancy?

[gentlepuppies]

This was way too complex to explain to my parents (whose funds I apparently no longer need in light of a new smaller upfront cost to the assignment purchase), and since I'm a visual person I made a chart for them.

Basically, when everyone signed the assignment agreement, no one noticed that the $79,500 in paid deposits plus $265,000 in deferred purchase price added up to $9,000 short of the original $353,500. Assignor claims to have paid the missing $9,000 deposit shortly after our agreement was signed... (i've shifted the closing date with him to be the same date as closing with builder so that I can verify this before paying him any extra.)

I like to interpret the $79,500 number in the assignment agreement as the PORTION of paid deposits that I agreed to reimburse the assignor for, rather than the total amount of deposits made by assignor (the latter would clearly be a mistake in which case assignor is entitled to correct). My lawyer says I'm unreasonable since that makes my purchase price $367,000 rather than the agreed-to $376,000. But if the assignor already told me in text messages to my realtor during price negotiations that there's "nothing left to pay on closing except for land transfer tax, utility deposits and condo fees", isn't that equivalent to throwing in $9000 worth of free furniture to sweeten the deal? Am I wrong?

Anyway I have the worst lawyer in the world. He tried to make me agree to paying the $4,500 as well, even though the assignor specifically named those items during price negotiations as things he already paid for (in fairness he wasn't there during price negotiation, but he didn't bother to ask the right questions). He is hard to get old of, and made numerous errors. Having already paid a $25,000 deposit, when I was about to make a cheque for the remaining $77,000 to close with assignor, his secretary called me up to make it for $96,000 instead, with no explanation. I had to call the lawyer and point him to the big bolded part of the agreement showing my $102,000 commitment to the assignor before he realized there's a mistake. After some back and forth with the assignor, we finally agreed that I owe $86,000 ($77,000 plus $9000 deposit). The next day he sends me a email asking for $89,000 of course...

 

[interested]

To me and I don't fully follow,
it depends on what where you both talking about in the negotiation. Were you agreeing to give him $22K profit or were you agreeing to a final price.
It seems to me that you agreed to pay a total price of $376K. How you arrive at that figure is almost irrelevant at that point as that should be the figure.
I would ask you the following question. If the agreed to total price was $376K and you found out after the fact that you and the seller thought he had paid instead of $353500; $362500...in otherwords that instead of the profit he thought and you thought he was making was not $22K but in fact $13K and he said you should increase the price to $385K ($376+$9K) would you think that was reasonable?
I believe I would argue if I were you that we agreed to a total price and you should not be responsible for a profit he wants to make. The knife however would have to cut both ways.
If you agreed that he should make $22K profit and arrived at the price that way, then I would adjust the price upwards.

I am guessing that you agreed to a price based on a profit of $22K over what he would have spent and therefore it would be reasonable to make it up. I am sure he said that he had paid this much and wanted to make $22K profit and you agreed and came up with a final figure. If he had to pay more, should the $22K profit figure change?

I personally always try and put myself in the other party's shoes and ask, if I were the vendor, would I think what you are proposing is fair to me?

The other alternative would be to say neither of you should come out ahead in this for an obvious error and for the sake of fairness to both of you...split the difference if you can't agree to how you arrived at the figures. You pay somewhat more than you thought...he gets somewhat less than he thought he would get. It is unfortunate but most people purchase based on a total price.
Again, it depends on the terms and how you negotiated the deal. $9K is a lot of money but what if had been $30K....you probably would say you don't want to buy.

I guess one other way out of it would be to cancel the agreement if you wished to and can't agree on how to resolve the $9K but given the market now I am guessing you probably don't want to do that.

Good luck. Most unfortunate.

 

[gentlepuppies]

I've circled in black the only numbers that do appear on the assignment agreement. "$22k profit" is merely implied and listed on the chart just for full accounting (it doesn't appear on any document)... the seller doesn't actually profit that amount given the closing fees already paid, and is well into negative territory after factoring in agent and lawyer fees. Between my lawyer and realtor, only I think that $9k is debatable. They believe the seller would probably take us to court if he doesn't recover all of the amount he's already put into the initial $353k.

 

[interested]

I think you have to listen to your lawyer and realtor but I rather suspect they will be co named in any law suit because they should have picked up the error in the numbers.
Frankly, more so the realtor/vendor who should be expected to provide correct numbers.

From what you say now and I am not a lawyer and this is not legal advice...just an opinion ( based solely on what you are saying and there are 2 sides to this).

It does clearly say that you are to pay the deposits paid by the assignor to the seller but it also clearly states that amount is $79500. That number is incorrect. Whose fault is that? Yours, the sellers, the realtor/ the lawyer.

It says your sale price in the agreement is $376K and that would be the price you would pay normally but the agreement also says the agreement between the builder and the assignor is $353500. Now given the first clause that the deposits paid by the assignor are to be paid by the seller I think a judge may well say you have to pay the additional $9K as you agreed to pay the deposits. However, since there is nothing about the money profit or loss he is to make, I fail to see unless I am missing the point why or how you should be paying more than $376K. Even if you pay $79,500 +$9000 or $88500 the seller has not written in that he is to get a $22K profit or any profit. If this is correct, you are paying his $88500 and he makes less profit (or a loss after assignment costs).

All that said, I would read the contract carefully....possibly get an independent legal opinion or ask another agent/broker how they would interpret (lawyer would be more expensive) this but you have to ask yourself a question. Given prices, are you not already getting a good deal and is it worth the risk. To go to court will cost either one of you more than the $9K.

I personally would think you would have a good argument to rescind the contract if you want out because clearly there is not a meeting of minds required for a valid contract. You would reasonably argue while all these numbers are interesting....anyone buying agrees to make up the deposits paid...they got the numbers wrong not you...was up to the agent and the vendor to supply what was paid and you agreed to a final price.
It is not up to you to decide what is a reasonable profit/loss for the vendor. As I said before, however, if I was the vendor and we said during the negotiations it was agreed you pay all expenses and I am selling to you at $22K profit...implied as we both thought the original sale was $353500 which included all the deposits, and there was an additonal $9K deposit and we were pricing to arrive at a $22K profit there might be a case.

I think one would have to read the whole agreement in total...something I can't do...and probably have a lawyer do it. The problem as I said...more expensive to go to court than the $9K.
So while your lawyer says you probably would be sued, I would think the vendor would quickly come to the same conclusion.

I guess given the market and what is going on, I know it is not fair, but is $385K still a good price for the unit because if it is you don't want to threaten to cancel I don't believe.

One final thought, you could go to your lawyer and the realtor(your realtor/lawyer) and state that you are going to file a complaint to both the law society and the real estate board for negligence and put in writing that like everyone(assuming there is nothing more in the contract) you agreed to a price based on the numbers the vendor presented $376K but that in the interest of being reasonable, you feel everyone should take some pain from this problem as it is not of your doing. You can say that the realtors should take $3K....$1.5K each(yours and their realtor)....I am guessing they have commissions of about $12-15K, brings it to $6K each to $7.5K each...you pay $3K more and the vendor is out $3K. Perhaps you can even get your and possibly the vendor's lawyer to take $1500 combined and share with the realtor in that $3K portion though I doubt they will because they know you can't sue....too expensive. Before I would do that, I would go and get an independent legal advice to read your contract, explain the issue and hear what the lawyer says....should be a real estate lawyer.
I think some compromise amount is your best bet because if it goes to court. one wins, one loses. That said, only the lawyers come out on top because the $9K will quickly be $25K.

I think you need though a proper and thorough read of the contract now and unfortunately your lawyer is probably not the ideal person because he has a vested interest to say "you should pay" especially if it would be determined that he failed to do his job properly.

Good luck....a nightmare really.

Addendum: It may be unreasonable for the lawyer and even the realtor to make up some as they will say they relied on the numbers provided by the vendor. However, even in that case, you would still go to the vendor and state: Look I am not happy, you are not happy...but I did not provide these numbers and you did not know about the additional $9K. Like all buyers, we look at the final price. As a vendor, you look at your profit. Let's both share the pain because to go to court...only lawyers will win and both of us will out more than the $9K we are arguing about. You want to make a sale, I want to buy. Let's both come out with less than an ideal result.