Smith Mountain Realty

Review: I signed a contract to buy a house from Mr. [redacted] (Smith Mountain Realty, LLC). There was a funding contingency in the contract that cancels it if the funding is not approved. The funding was not approved. Mr. [redacted] provided a contract release which I signed and returned. He later told me that he was not going to honor it (despite it being in violation of real estate rules not to do so). He told me that I still had to buy the house. It is one that he owns personally (and which he misrepresented, I later found, in order to sell it).

He told me that I was still legally required to buy the house despite the funding contingency that releases potential buyers from a contract. When I didn't buy the house, he then sent correspondence demanding payment. He then stated that if I paid him $5,000 that he would release me from the contract and return my $500 earnest money deposit. I told him that this also was illegal, and his presentation of it felt like extortion, so I said no.

At this point, months had passed, so I again asked for Mr. [redacted]'s broker and realtor's number (which according to DPOR I am entitled to have), so I could work this issue through the realtor's association, DPOR, etc. Instead of providing his real estate licensing information, returning my good faith deposit, working the issue with the realtor's association etc. or handling the situation honorably or within the rules of real estate ethics, Mr. [redacted] instead threaten to tell lies about my company and me. That happened today, so I decided to file a complaint.

A few other details:

- Mr. [redacted] worked as a dual agent (and is suppose to represent the interest of both sides), but he didn't. He instead tried to trick, threaten, and manipulate me into buying his personal property which he had been trying to sale for years to no avail. He also misrepresented the property in order to sell it.

- Mr. [redacted] lied about real estate regulations and repeatedly violated the realtors code of ethics.Desired Settlement: Mr. [redacted] has tried to extort money from me, threatened to tell lies about me and my business, and harassed me to buy his personal property when we do not have a valid contract. Even if we did, his numerous real estate violations and omissions and dual-agency violations would have also invalidated it.

At this point, I would like for Mr. [redacted] to return my $500 EMD, to stop threatening to tell lies about me and my business, & to leave me alone.

Business

Response:

Response to Consumer

Complaint # [redacted]

A contractual dispute [redacted] / [redacted]

[redacted] does exist concerning a valid purchase agreement on real estate. The complaint submitted by [redacted]

belongs in the domain of a Virginia court of law to determine its legitimacy

not under the purview of Revdex.com.

I am surprised that Revdex.com would

permit anyone to register a complaint against a business without providing supporting documentation of their claim

and/or the specific federal or state regulation supposedly violated.

Consumer

Response:

I have reviewed the response offer made by the business in reference to complaint ID [redacted], and have determined that this proposed action would not resolve my complaint. For your reference, details of the offer I reviewed appear below.

1. April 2015 Contract prepared by [redacted]- The attached contract states that sale (of the house that [redacted] owns and was attempting to sell to me) is was as follows:Sell subiect to buyer convertinq CSC Retirement account to a self-directed account which allows the purchase of real estate. Buyer has provided proof of funds from this account. Buyer would like quick settlement; date to be determined based on self-directed IRA's settlement of transferred funds. 2. I contacted CSC, the company that holds the funds. They told me the following (which I already had relayed to Mr. [redacted]):- Former employees are not allowed to borrow from the plan to purchase houses or for any other purpose.- The rep said they are not allowed to write letters for individuals, but anyone (and I explained the current situation) could call and ask general questions and that they would confirmed that I would have been told that when I called about using the money to purchase a home. - I was told that anyone who wanted to validate that could call ###-###-####. 3. Conversion to a self-directed account- I contacted various firms asking if I could set up a self-directed IRA and use the CSC funds to purchase a primary residence. I was told that the most I could do was to take a loan for up to 50% of the funds in the account. At the time I submitted the contract to Mr. [redacted] the account had a vested balance of $102,233.88. (Please see attached file with the contract document. It shows the CSC proof of funds that I submitted to Mr. [redacted] in April.) I was told that the max loan that I could take for use on a residence would be 1/2 the balance of the account (that would have been minus fees for setting up the self directed account and other fees on the CSC end for the rollover). I was told that the max amount that I could take, under any circumstances, was $50K (but less than that would have been left after I paid fees). I also would have had to leave some money in the account for self-directed IRA account fees. CSC had advised me, that even if I were a current employee and eligible to take a loan, that I would have been subject to those same rules since they are set at the federal / IRS level and not by individual companies. 4. The price of Mr. [redacted]s house was $72,900. So, I was told that I could not, by law, take a loan to purchase the house, because IRS rules limited the total amount for a primary home purchase (regardless of how much was in my account) to $50K max. Therefore, I was told even if I converted the account to a self-directed IRA, I would not legally be able to purchase Mr. [redacted]'s house as my primary home. So, I left the funds in my CSC account. They are still there (but the account has dropped 6%), so now the balance is lower that what is reflected on the attached document. 5. When I called the CSC rep, I was told to download and attached the following two documents from their website:- CSC Map Loan Procedures (attached as CSC_MapLoanProcedures.pdf)- CSC Map Summary Plan Description and Prospectus (attached as CSC_MAPProspectus.pdf) The rep said these two documents are their official (aside from being willing to answer general questions and verify the information if called) response to the request that they provide a written response about my case in particular. Again, that number is ###-###-####. If called, the rep said CSC would verify that the policy is not write a letter or give specific information about any one individual and that they would verify that I would have been advised as I have relayed here in. And they would relay the information (that I have shared herein as well as with Mr. [redacted]) about the IRS rules and why the funds could not be used for me to purchase his home as a primary residence. The attached CSC documents state that former employees cannot borrow from accounts. The max amount limits etc. also are explained. The self-direct IRA companies that I contacted follow the same rules regarding the max amount to be used for a primary residence being set to 1/2 of the value to the account not to exceed $50K. Again, I was told that ALL companies do this, because this is a law set by the federal government / IRS and that there were no exceptions made to it. 6. IRS Website The IRS Website says the following:3. Under what circumstances can a loan be taken from a qualified plan?A qualified plan may, but is not required to provide for loans. If a plan provides for loans, the plan may limit the amount that can be taken as a loan. The maximum amount that the plan can permit as a loan is (1) the greater of $10,000 or 50% of your vested account balance, or (2) $50,000, whichever is less. For example, if a participant has an account balance of $40,000, the maximum amount that he or she can borrow from the account is $20,000.

Regards,

Business

Response:

The complainant defaulted in the purchase agreement when

she did not close on the contract settlement date of May 8, 2015. The only written reason given at the time

was “ a business-related emergency on our end” …. as the reason to “put the

[redacted] purchase on hold”.

Complainant

either misrepresented the reason for refusing to close on May 8 or now through the Revdex.com. Who knows. Only laying out the facts in a courtroom

could determine the truth.

The

complainant has had a settlement offer on her table prior to her registering

this complaint. If she is not willing

to negotiate on a settlement, then we are headed to the courtroom and only

lawyers will benefit.

Consumer

Response:

I have reviewed the response offer made by the business in reference to complaint ID [redacted], and have determined that this proposed action would not resolve my complaint. For your reference, details of the offer I reviewed appear below.MESSAGE FROM BUSINESS:

The complainant defaulted in the

purchase agreement when she did not close on the contract settlement date of

May 8, 2015. The only written reason given at the time was “ a

business-related emergency on our end” …. as the reason to “put the [redacted]

purchase on hold”.

Complainant either misrepresented

the reason for refusing to close on May 8 or now through the Revdex.com.

Who knows. Only laying out the facts in a courtroom could

determine the truth.

The complainant has had a

settlement offer on her table prior to her registering this

complaint. If she is not willing to negotiate on a settlement, then

we are headed to the courtroom and only lawyers will benefit.

REPLIES

FROM SMITH MOUNTAIN REALTY: The complainant defaulted in the

purchase agreement when she did not close on the contract settlement date of

May 8, 2015.

MY REPLY: The contract contained a contingency for

funding. The funding was not approved.

Since the funding was not approved, the contract was void. I provided the

contract showing the funding contingency and the information from both CSC (the

company that held the funds and administered the retirement account in which

they were held) as well as the IRS rules also stating that the funds could not

be used.

With other transactions (where Mr. [redacted] did not own the property

in question), if a contract settlement date passed, the protocol was to extend

the contract in writing, amend it in writing, or considered it expired and to

do a written release. It was my

understanding (and per verbal conversations with Mr. [redacted]), the contract was

expired on May 8th,, meaning my obligation to buy the house had

expired due to both parties (both Mr. [redacted] as the property owner and I as the

potential buyer not going to settlement). Mr. [redacted] did the paperwork for the

transaction and did not send the proper written extension or contract amendment,

because he knew that he had agreed to the release, so that is what he

sent. (I’ve provided it to the Revdex.com.) I

believe to use one protocol with properties he does not own and a separate one

for those he does own is illegal as well as in violation of the realtor code of

ethics, DPOR regulations, etc.

FROM SMITH MOUNTAIN REALTY: The only written reason given at the

time was “ a business-related emergency on our end” …. as the reason to “put

the [redacted] purchase on hold”.

MY REPLY: When Mr.

Scott originally tried to sell me the house, I told him that I was not ready commit

to buying the property, because I had to work out some things on my end. Those

things included the me not being sure about the location for the move (it

depended on me moving for work, which was not set, and some other business

issues). Also, I was not sure if the

funds in question would be approved to be used for the sale. Mr. [redacted] said that all was fine and that if

I didn’t move or if anything changed that I didn’t have to buy the house. He

also said that because we were friends etc. that we’d do everything

verbally. A bit after that he then sent

a written contract instead. It only

mentioned the funding contingency as a reason for release and not the other

reasons, to which Mr. [redacted], had agreed such as if I didn’t move to the area

for work. When I asked him about it, he

said that he would still let me out of the contract if I didn’t move and/or for

the pending business issues we had discussed.

So, when the work move didn’t happen, I explained to Mr. [redacted] in

detail what had happened, and he had proof of the veracity of the facts. I didn’t

just say that it was a business-related emergency. I explained the situation in

full, and Mr. [redacted] said he would send the release. He sent the release, I

signed it, and then later he said that he had changed his mind and that I had

to buy the house. When I mentioned what he had promised verbally he said that

he was no longer going to honor it (and it was clear from the language that he

used that he had set out to trick me in that regard from the beginning). My response was that our verbal agreement

aside that I was to be released from the contract based on the funding contingency

that Mr. [redacted], himself, had documented.

FROM SMITH MOUNTAIN REALTY: Complainant

either misrepresented the reason for refusing to close on May 8 or now through

the Revdex.com.

MY REPLY: I gave Mr. [redacted] two reasons: 1. not moving to the area combined with a

related business issue (both of which we had verbally agreed) and 2. the funding contingency which Mr. [redacted]

wrote in the contract himself. I didn’t

provide the Revdex.com with proof that I didn’t move for work, because it was based on

a verbal agreement between Mr. [redacted] and I which he chose to ignore. But I can provide proof that I still live at

the same address and can provide the same info to the Revdex.com if necessary.

I did provide the Revdex.com (and Mr. [redacted]) with the contract showing

the funding, the contingency, the release that Mr. [redacted] prepared, and the

information from both the fund and the IRS showing that the money could not be

used to buy his property.

FROM SMITH MOUNTANIN REALTY: Who knows. Only

laying out the facts in a courtroom could determine the truth.

REPLY: Mr. [redacted] knows that what I have said is

true. All he has to do is look at the same information that I provided to the

Revdex.com showing that the funds could not be used. It is obvious that he told me

that he would release me (since he prepared the release himself and sent it to

me) and then dishonestly decided to lie, deceive, and break his word. It also

is obvious that Mr. [redacted] knew that, our verbal agreement aside, that I was to

be released from the contract due to the funding contingency since he wrote the

contract.

As from laying out the facts in court, I thought we were supposed

to seek arbitration first, and I believe the National Realtors Association and

the Department of Professional and Occupational Regulation (DPOR) are generally

used before litigation as well. I tried

to discuss this with Mr. [redacted], but he ignored me in some instances and gave me

inaccurate information in others. So, if

that only leaves litigation, I am fine with that. Having consulted an attorney, it is my

understanding that Mr. [redacted] is in violation of our contract.

FROM SMITH MOUNTAIN REALTY: The

complainant has had a settlement offer on her table prior to her registering

this complaint.

MY REPLY: Mr. [redacted]’s settlement was that instead of

him releasing me from the contract as agreed and as required by the funding

contingency that he originally demanded 1) that I pay the full amount for the

house and, later and currently, 2) that I pay him $5,000 in exchange from him

releasing me from the contract.

Please note that “demand” was Mr. [redacted]’s word choice (not mine) and

he sent his demand to me in writing. I

can provide the copy of that letter from him to the Revdex.com if necessary. When he started asking for the $5,000, I let

him know that the way that he presented this seemed and sounded like extortion,

since he also said that he would tell (what he knows to be outright lies about

my business) if I did not pay the money so we could “move on” as he phrased it.

I told Mr. [redacted] that asking for money to move on and not tell

lies about my business and to honor the funding contingency was extortion did

not stop Mr. [redacted] from persisting saying that I needed to pay him $5,000 in

order for him to “move on” to use his language (from a written correspondence

that he sent to me and from verbal conversations as well).

I am ready and willing to go to court if Mr. [redacted] wishes. In addition to his attempt to extort $5,000

(in exchange for honoring the funding contingency in the contract and for not

knowing spreading lies about me), Mr. [redacted] has violated various articles of

the Realtors Code of Ethics, so I believe going to court would protect others

from his coercion, ethics violations, outright lies, extortion attempts, etc.

FROM SMITH MOUNTAIN REALITY: If she is not willing to negotiate on

a settlement, then we are headed to the courtroom and only lawyers will

benefit.

MY REPLY: The public at large will benefit as well when

it becomes public record how Mr. [redacted] purposely mishandled this transaction

from beginning to end. I hope going to

court will also right other items, such as him conducting real estate transactions

in NC (when only licensed in VA) and other misdeeds will come to light and

serve as a warning to the public to not conduct business with him.

Regards,