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Go On, Leave The Money & Run

I was teaching yesterday, and another member of the panel was dealing specifically with default clauses and the occasions sellers can keep buyers’ downpayments if deals don't go through. 

I added in response to an audience member’s question that my default clause was meant to compel a buyer to keep her or him in the transaction for fear of losing a great deal of money, and that in 27 years of practice, I haven’t had to litigate defaults.  Mostly because the sellers don’t want up to 10% of the transaction--they want 100% by selling rather than suing, so we work it out.  And when we can’t, we usually reach a settlement.

But I joked as an aside about only having two deals where the buyers totally lost their downpayments, and both left the money behind without a whimper.  And of course I figured my readers might want to hear the stories.

Story number one is kind of boring.  Buyer came to our area for a new job and put down $15,000 and signed the contract with my clients.  Then he got another (presumably much more lucrative) job and moved away, telling the sellers they could have the money “for their troubles”. 

Number two was a lot more juicy.  I was representing the Buyer, a very charming man from Brazil with the most enthralling of accents.  He did a lot of business in our area, he told me, and had decided it was more cost-effective to buy than to keep staying in efficiency hotels.

Senhor Buyer-from-Brazil put down $24,000 and the transaction proceeded smoothly.  The day before closing, he called me to say that he was back in Brazil and couldn’t close, and then he said about the downpayment:  Estoy me nas tintas”, as close as I recall, which I confirmed meant he didn’t really care what happened to the money.

I asked him to put it in writing, and he promptly sent me a signed fax saying it was OK to give the sellers the $24,000.  The other attorney ranted and fumed but he was grateful that he wouldn’t have to chase a Brazilian defendant.

I called the person who had referred the Buyer-from-Brazil to me, and without giving away any confidences, asked if he knew what was going on with him.  Turns out, he gleefully told me, Senhor Buyer-from-Brazil had a wife and kids in Brazil, and a girlfriend in New York he was going to live with while transacting his (non-monkey) business in the US.  Somehow Senhora Buyer-from-Brazil found out about the shenanigans before closing and blew the plan to smithereens. 

I bet more than just my client’s wallet was hurting after his wife discovered his treachery.

***

Have a great weekend!  The March issue of Boating Times Long Island will be on-line this weekend, and we’ll be at the Suffolk Boat Show if you want to say “hi”.

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